Investors are desperately looking for signs of a market bottom after going through massive volatility and losses. 3Fourteen Research’s Warren Pies said in a latest program on CNBC that we are getting “close” to a market bottom based on his technical analysis. The analyst talked about key indicators he’s looking for:
“I do think that the White House is trying to deescalate the situation. One of the markers we’ve seen is that Peter Navarro hasn’t been on TV since April 13th, and that’s corresponding with this equity rally. Setting that aside, though, I think that a bottom, a confirmed bottom, has two components. You need to see washed out sentiment and positioning. We measured that in a number of ways: we measured it in inverse ETFs for retail, we measured it for vault targeting for institutions, and CTAs for trend followers. Across all those metrics, sentiment is depressed. That’s phase one of a bottom. Then, you look for technical confirmation. Philosophically, we’re always going to be late because of that ordering.”
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
For this article, we picked 10 stocks investors are currently focusing on. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Lattice Semiconductor Corp (NASDAQ:LSCC)
Number of Hedge Funds Investors: 32
Lattice Semiconductor (NASDAQ:LSCC) recently received a Buy rating from Loop Capital, which cited the company’s potential to gain market share.
Loop sees strong growth ahead for Lattice Semiconductor Corp (NASDAQ:LSCC) as it expands in the field programmable gate array (FPGA) space. The firm projects compound annual growth in the high teens, driven by FPGAs gaining traction as cheaper, more flexible alternatives to application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs).
The firm set an $85 price target on the stock.
Lattice Semiconductor Corp (NASDAQ:LSCC) makes FPGAs and related chips used across sectors such as communications, computing, automotive, and industrial.
“We see three main drivers for 70%-plus and 40%-plus gross and operating margins, respectively, for LSCC (vs. 67%/25% in FY24),” said Loop analyst Gary Mobley in a note. “First, mix tailwinds will help (e.g., new product mix, software, end-market mix, etc.). Second, we see relatively good pricing power in the FPGA market, limited competition and a tailwind from newer products like Avant (as much as 20.0x ASP boost). Last, the move to lower cost regions like India & China for R&D should continue to act as a structural tailwind to LSCC’s R&D expenses.”
Artisan Small Cap Fund stated the following regarding Lattice Semiconductor Corporation (NASDAQ:LSCC) in its Q3 2024 investor letter:
“Among our top detractors were iRhythm, e.l.f. Beauty and Lattice Semiconductor Corporation (NASDAQ:LSCC). Lattice shares struggled due to cyclical pressures, most notably within its industrial end market, and a weak environment within the telecom business. We believe some of these ongoing headwinds are set to ease, but it may take longer than previously expected. Lattice expects a return to growth at the end of 2024 or early 2025, partly fueled by a steady flow of new product launches, which continues to drive market share gains. We remain patient.”
9. HubSpot Inc (NYSE:HUBS)
Number of Hedge Funds Investors: 63
Doug Clinton, Intelligent Alpha founder, said in a latest program on CNBC that just like the “vibe coding” trend is creating its effects in the tech industry, “vibe marketing” could help HubSpot Inc (NYSE:HUBS) in the coming months:
“You look at a HubSpot, you know, I think that that’s a name where they are obviously building AI tools for their users. We’ve had this phenomena of vibe coding in the software side for developers, and I think this idea of vibe marketing where people who maybe they’re not designers, they’re not expert creatives, they can go and use some of these AI tools and create really compelling ads. I mean, they look professional. I think companies like HubSpot could benefit from that. We might start to see some inflection in their numbers in the back half of the year.”
TimesSquare Capital Management U.S. Focus Growth Strategy stated the following regarding HubSpot, Inc. (NYSE:HUBS) in its Q4 2024 investor letter:
“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, systems that improve productivity or efficiency for their clients, and others that are growing their shares of corporate IT budgets. Another addition to the sector was HubSpot, Inc. (NYSE:HUBS), a cloud-based customer relationship management platform provider. Its execution has been stellar, with a best-in-class software product driven by a robust innovation engine, a unified underlying data architecture platform, and a focus on the small-to-mid business market where we see high potential for productivity improvements from Generative AI innovation, They subsequently reported a strong third quarter earnings report was highlighted by billings growth and the new business backlog has accelerated. HubSpot added 10,000 net new customers in the quarter.”
8. Chipotle Mexican Grill Inc (NYSE:CMG)
Number of Hedge Funds Investors: 69
Investopedia’s Caleb Silver said in a latest program on Schwab Network that Chipotle Mexican Grill Inc (NYSE:CMG) is expected to be impacted by a decline in consumer spending and tariffs.
“This is right in the middle of everything. This is right in the middle of tariffs. This is right in the middle of consumer spending and sentiment, right in the middle of discretionary spending for consumers. Because when you think about it, a burrito bowl or a burrito — they’re 17, 18 bucks. There’s a lot cheaper options, and I think consumers are going to be looking for those. Plus the pressure from tariffs — we got avocado tariffs probably coming tomorrow. Those are going to hit them big time. And they’re still coming out of that sort of skimpy portion scandal last summer that cost them some reputational damage.”
However, Reuters reported that avocados are among the Mexican items that the U.S. will continue to be able to import tariff-free.
ClearBridge Growth Strategy stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q4 2024 investor letter:
“We also initiated a position in fast casual restaurant chain Chipotle Mexican Grill, Inc. (NYSE:CMG). The recent pullback in shares related to a moderation in industry-wide restaurant sales and CEO Brian Niccol’s August departure created an attractive entry point into a company with industry-leading unit economics in a still underpenetrated market. Chipotle plans to double its store footprint over time while executing initiatives to increase volume growth through technology enhancements, reduced mobile order friction and higher production during peak hours. Better throughput, technological integration and improved mix should help to drive continued margin expansion. Chipotle further diversifies the portfolio, adding to consumer discretionary where we have historically had less exposure.”
7. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Funds Investors: 99
Mark Fields, former Ford CEO, said in a latest program on CNBC that there was a lot of “noise” for Tesla Inc (NASDAQ:TSLA) when it comes to the first-quarter delivery numbers amid the company’s refresh of Model Y and “reputational” issues. The executive believes the second-quarter delivery numbers will show an accurate picture of the company’s business health:
“There was a lot of noise in the quarter for Tesla, right? Because, you know, their sales were down 13% year-over-year. They’ve been kind of losing share, at least on registration data, in all their major markets—whether it’s China, Europe, or the U.S. I think in the quarter, you had a couple of things going on. One is they were refreshing their Model Y, which is their bestselling vehicle, so they had a lot of changeover in their four plants around the globe. That took out production. And then there’s the other piece, which is, you know, how much reputational damage has Tesla incurred because of Musk’s involvement with the Trump administration?
So I think there was a lot of noise in there. I think the second quarter is going to be very telling because you take the noise out of the production interruption that they had in the first quarter, and you really get to see what the true demand is for Tesla—with Musk involved with the Trump administration and the impact on them.”
Tesla’s EV sales are falling all over the world as the company faces challenges from competitors. Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
JDP Capital Management stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) is new core position that I wrote about in 2024 Half Year Letter. The stock was up 115% in 2024. We benefited from the June 2024 timing of our purchase, buying after the stock had declined about 30% in the first part of the year.
We repurchased TSLA at a time when the market had [again] become overly bearish based on slowing vehicle orders despite the company having just achieved a breakthrough in Full Self Driving (FSD v12). If you haven’t had a chance to experience the most recent Full Self Driving software (FSD 13.3) I suggest you try it for yourself. If you’ve had a Tesla for a while, you know that the trajectory of FSD improvement has been nothing less than astounding.
It has become clearer to me that Tesla’s leadership position in the infrastructure layer underpinning mega-trends in robotics, smart vehicles and battery storage will unlock earnings growth that we can ride for years. Similar to AWS or the iPhone, Full-Self-Driving and Optimus will enable new business models to be built across a wide range of industries over time…” (Click here to read the full text)
6. Apple Inc (NASDAQ:AAPL)
Number of Hedge Funds Investors: 158
Jim Cramer in a latest program on CNBC talked about a bearish report on Apple Inc (NASDAQ:AAPL), mentioning a decline in its sell-throughs.
“More negative stuff about Apple: UBS is talking about sell-through drops of 1% year-over-year in February, which would be very negative. And you know what? I just read these things and it just kind of makes my eyes glaze over, but every time that they happen, they happen after a day where Apple goes up and then Apple gives back its gains, and that’s what you’re seeing today. I don’t think anyone thinks Apple’s having great sell-through.”
Apple Inc (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.
Investors had hopes from the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.
Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.
Columbia Seligman Global Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The fund maintained a position in Apple Inc. (NASDAQ:AAPL) throughout the quarter through the release of the company’s new iPhone 16 in September. Company leaders were excited about the release of the new model, as this is the first model that will feature enhanced AI capabilities through the Apple Intelligence features. Sales for the first few weeks in October and November trailed behind year over year sales from the iPhone 15, as availability of Apple Intelligence was not compatible with all iPhone models. Apple announced a partnership with OpenAI that has allowed the integration of ChatGPT into the Apple ecosystem, separate from the core Apple Intelligence features. This partnership highlights continued progress from Apple to introduce AI capabilities into its products and we expect the iPhone 17 to have even more expansive AI capabilities, increasing potential demand for the new model that is on track to be released in 2025.”
5. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Funds Investors: 160
Ben Reitzes, Melius Research head of technology research, said in a latest interview with CNBC that Alphabet Inc (NASDAQ:GOOG) search business is under threat from other companies and it “does not matter” how many models the company releases to keep up with the competition. The analyst brought up Kodak to highlight a possible outcome for Google.
“I mean, it’s confusing. It’s very cluttered. Make a bet. There—I don’t know one other than analysts and investors who can name every model and every product that Google’s experimenting with.What has happened time and again in this market is there’s disruptors who make a bet—this is the way things are going to go—and they move faster. It’s actually not always the best product. It’s not always the best model. Actually, the best model belongs to Google. It’s called Gemini 2.5 Pro. It is the best. We said it in our note. You know, Kodak had the best digital cameras too. Every six months, they’d come out with one that topped Canon. It didn’t matter. It’s—you got to make a bet and disrupt yourself.”
Burke Wealth Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
Alphabet: We parted ways with long-term holding Alphabet during the fourth quarter. We’ve owned Alphabet since the inception of the Focused Growth strategy so obviously, the company has many positive attributes that we admire. That remains the case. We have long contended that Google search is the best business in the world. However, developments over the past couple of years on the competitive front (generative AI search) and the regulatory/legal front have put the sustainability of Google’s search monopoly at legitimate risk for the first time since Microsoft launched Bing in 2009. We cut our weighting in Google in half last year as we wanted to take some time to better assess the threat of generative AI driven search to its business model. To be fair, this emerging threat has been something more akin to a gathering storm than a tornado. Capital continues to flow into the space both from start-ups and the Microsoft/Open AI collaboration. Thus far, this has not resulted in a material erosion of market share but it is certainly something requiring continued monitoring….” (Click here to read the full text)
4. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Funds Investors: 193
Bernstein’s Stacy Rasgon said in a latest program on CNBC that the demand is still strong for NVIDIA Corp (NASDAQ:NVDA) and the company despite concerns in the industry:
“I mean, that is sort of the big question. I would say right now, at least the demand environment still looks really, really strong. Just to pick on Nvidia, like I think they’re going to sell everything that they can get out the door this year. So that that just becomes the question, how much can they get out the door? You know, but at this point, I would say like the only ones that really seem to be worried about the AI-like demand environment seem to be investors. Like the companies that are actually doing the spending right now, their capex forecasts and requirements and everything, they’re going up, not down.”
The market will keep punishing Nvidia for not coming up to its gigantic (and sometimes unrealistic) growth expectations. About 50% of the company’s revenue comes from large cloud providers, which are rethinking their plans amid the DeepSeek launch and looking for low-cost chips. Nvidia’s Q1 guidance shows a 9.4% QoQ revenue growth, down from the previous 12% QoQ growth. Its adjusted margin is expected to be down substantially as well to 71%. The market does not like it when Nvidia fails to post a strong quarterly beat. The stock will remain under pressure in the coming quarters when the company will report unimpressive growth.
Nvidia is facing challenges at several levels. Competition is one of them. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC’s 3nm capacity, which could limit Nvidia’s access to these chips. Why? Because Nvidia also uses TSMC’s 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offers alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia’s offerings. Apple is reportedly working with Broadcom to develop an AI server processor. Intel is also trying hard to get back into the game with Jaguar Shores GPU, set to be produced on its 18A or 14A node.
Harding Loevner Global Developed Markets Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2024 investor letter:
“For the full year, the composite’s underperformance was primarily due to poor stock choices in the US. NVIDIA Corporation (NASDAQ:NVDA), which we sold in the first quarter and repurchased in the fourth quarter, caused almost two-thirds of the strategy’s underperformance. We were hurt by our underweight as NVIDIA’s stock price soared during the first half of the year on the insatiable demand for the company’s graphics processing units (GPUs), which enable generative Al computing.
After ASML’s disappointing outlook led industry valuations to compress, we added a strong company back to the portfolio-NVIDIA.
There were two main reasons we sold NVIDIA last February (after holding the stock for more than five years). First, its biggest customers-data-center behemoths Amazon, Alphabet. Meta Platforms, and Microsoft-have been designing their own custom semiconductor chips, called application-specific integrated circuits (ASICS), that could eventually erode NVIDIA’s dominance. Second, it was unclear to us whether the adoption of Al by large enterprises will be as fast and meaningful as the optimistic views suggested…” (Click here to read the full text)
3. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Funds Investors: 235
Jim Cramer in a latest program on CNBC said Meta Platforms Inc (NASDAQ:META) is the “cheapest” among the major tech stocks and he wanted to buy the stock.
“I wanted to buy some Meta yesterday I talking with Jeff Marks which one do we going to buy for the club but it’s just very hard until we get more over sold and to buy ahead of tomorrow but I think met is the cheapest.”
In 2025, Meta sees total operating expenses in a range of $114-$119 billion, with 19-25% y/y growth. Capex is expected to rise 61-74% y/y to $60-$65 billion, compared to just $37.3 billion in FY24. Advertising rose strongly, but analysts believe it should be seen in the context of higher political ad spend and holiday quarter perspective. In 2025, the company might not be able to keep reporting double-digit growth in ad pricing amid weaker consumer spending and a cautious macroeconomic backdrop.
In the long term, Meta shares are expected to grow because of AI. How?
Meta Platforms (NASDAQ:META) is driving usage and ad revenue by improving its algorithms and user experience thanks to AI. Meta Platforms (NASDAQ:META)’s advancements in Reels and WhatsApp are helping manage CapEx growth as the company strives to stay competitive in AI. Meta Platforms (NASDAQ:META)’s substantial user base of 3.3 billion provides a data and distribution edge that could capture a significant share of the GenAI market.
Nightview Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Core Opportunity: Meta Platforms, Inc.’s (NASDAQ:META) platforms—Instagram, Facebook, WhatsApp, and Messenger—reach nearly half the world’s population daily, making it one of the most powerful advertising ecosystems globally. With investments in AI and augmented reality (AR), we believe Meta is also creating significant optionality for long-term growth.
Competitive Advantage: Thriving Core Platforms: In Q3, we saw Meta achieve a 23% YoY revenue growth,—a testament to strong user engagement across its ecosystem. The advertising landscape as a whole continues to evolve and we believe Meta’s existing platforms offer a defined advantage in this new world. Existing platforms in the age of AI continue to be the most powerful indicator of future success in our opinion.
AI Leadership: Meta’s AI capabilities and the Llama AI model are driving efficiency and product innovation. In our view, these assets have been under-appreciated by the market while enhancing Meta’s ability to further scale and innovate its leading advertising business…” (Click here to read the full text)
2. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Funds Investors: 279
Malcolm Ethridge, managing partner at Capital Area Planning Group, said in a latest program on CNBC that he’s buying Microsoft Corp (NASDAQ:MSFT) because the company’s fundamental bull thesis is intact:
“I like to buy strong companies at moments of temporary weakness that don’t necessarily make any sense. Nothing fundamentally has changed about Microsoft. For those that didn’t really like the fact that their capex was 80 billion to 100 billion, well now you get to buy all the growth that that capex buys at a discount. Right, so you’re looking at something like 18 to 20% off between the two names. To Stephanie’s point, she led off with, I don’t have to buy the second or third best player in a sector anymore at these kinds of discounts. I can go buy the best name in the space, which is Microsoft or Amazon. And so that’s why I’ve been adding to those names in some of those MAG 7 names, especially the ones that aren’t negatively impacted by the consumer.”
Generation Global Equity Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q4 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT), the world’s largest software company, has been in the portfolio for over a decade. We like the firm because its products align closely with society’s evolving needs. As the world digitises, demand for Microsoft’s tools will continue to grow. The company enjoys a wide economic moat – built on its unique market position, deep customer understanding and extensive global footprint.
Microsoft’s management team has a long-term vision. It makes bold investments in future growth, most recently in AI. We forecast that the IT intensity of the economy will double over the next 15 years. Microsoft is a rare company with USD 250 billion in revenues, projected to grow at 16% annually over the next five years.14 Earnings-per share could grow faster. Despite its near-term valuation appearing high, we believe Microsoft is well positioned to lead in the AI era, potentially doubling or tripling its market share. Additionally, we expect returns on capital (ROC) for its AI related investments to match historical levels, despite market scepticism.
There are risks. Demand for AI systems may not materialise as expected, and increasing pricing power among suppliers like Nvidia could pressure margins. Still, from our analysis we see substantial long-term value in this name.”
1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Funds Investors: 286
Malcolm Ethridge, managing partner at Capital Area Planning Group, said in a latest program on CNBC that he’s buying Amazon.com Inc (NASDAQ:AMZN) because the company’s fundamental bull thesis is intact:
“I like to buy strong companies at moments of temporary weakness that don’t necessarily make any sense. Nothing fundamentally has changed about Amazon. For those that didn’t really like the fact that their capex was 80 billion to 100 billion, well now you get to buy all the growth that that capex buys at a discount. Right, so you’re looking at something like 18 to 20% off between the two names. To Stephanie’s point, she led off with, I don’t have to buy the second or third best player in a sector anymore at these kinds of discounts. I can go buy the best name in the space, which is Microsoft or Amazon. And so that’s why I’ve been adding to those names in some of those MAG 7 names, especially the ones that aren’t negatively impacted by the consumer.”
Harding Loevner Global Developed Markets Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“During the quarter, we benefited from strong stocks within the Communication Services and Consumer Discretionary sectors. In Consumer Discretionary, Amazon.com, Inc. (NASDAQ:AMZN) reported strong third-quarter results. Revenue increased by double digits, led by growth in advertising and Al products, while the company’s operating margins also hit an all-time high of 11%. The key reasons for the higher margins were that its international e-commerce operations turned profitable, and there was faster growth in its high-margin cloud-computing business.”
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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