In this article, we will take a detailed look at the 10 Stocks in Wall Street’s Watchlist.
Dan Niles, Niles Investment Management founder, in a latest program on CNBC reiterated his concerns about a slowdown in AI spending and said that major technology companies were already facing the impact of a downbeat trend in the industry before the tariff wars started:
“When the MAG 7 reported the December quarter or calendar Q4, six of the seven had their March revenue estimates already cut. So think about that for a second. But the thing is, when the Fed’s cutting like it was last year, nobody cares, right? If the stocks are going up, the charts look good. Why worry about fundamentals or valuations?,” Niles said. “Because the stocks are going higher. So looking forward, I expect all the estimates to come down yet again for the June quarter. When these companies report the March quarter, they were already having troubles when they reported the December quarter before all this tariff stuff kicked in.”
Niles said that companies were buying more ahead of the China tariffs because they expected that duties were coming from the US.
“You can just see that from the China export data already, where for China as a whole, in the month of March, exports were up 12.4%. People were expecting 4.6%. So that’s a massive beat there. And so you can already tell demand’s being pulled forward. So my thought was there was a payback period coming anyway.”
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 Wall Street analysts have been talking about lately. With each stock, we have mentioned its hedge fund sentiment. 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).
New York Wall Street sign.
10. Target Corp (NYSE:TGT)
Number of Hedge Funds Investors: 49
Stephanie Link, Hightower Advisors CIO, explained in a latest program on CNBC why she’s buying Target Corp (NYSE:TGT) shares despite the stock declines and retail industry struggles.
“This is a turnaround story, but I think you’re seeing hints of improvement. The stock is down 24% since February. It’s trading at 12 times earnings, and they just gave earnings guidance for the full year, which I thought was actually better than expected. It yields 4%. This has never been a traffic problem. Traffic in the past quarter and several prior quarters has been around the 2% level. They just haven’t had the right product mix, with more discretionary versus consumables. But last quarter, you actually saw an improvement in discretionary, and their same-store sales beat expectations by 1.5%.
It’s a tough environment across the board in retail, but I think they’re doing all the right things. The issue with Target is they now need to string along quarters like the one they just had for the next few quarters to gain back investor confidence because it’s been very inconsistent.
While it’s a “show me” story, I do think they have the right products. Inventories are under control, and they’re focused on where they need to be, which is operating margin expansion.”
9. United Airlines Holdings Inc (NASDAQ:UAL)
Number of Hedge Funds Investors: 54
Joseph M. Terranova, Senior Managing Director for Virtus Investment Partners, said in a latest program on CNBC that United Airlines Holdings Inc (NASDAQ:UAL) is one of the airline stocks that “don’t look good” amid industry headwinds. Terranova’s fund owns a stake in the company:
“I’m going to be transparent—there’s a quarterly rebalance coming up, and these stocks could be removed. I agree with every one of these price cuts because I think the positive momentum in the airlines has been lost. It was good while it lasted, and we benefited from it. Now, in terms of fundamentals, there’s a clear challenge to revenue growth. You’re seeing lower fares and the potential for a fare war, while demand is starting to wane. I wanted a publicly traded fund so people could see my performance, and if I’m doing that, I have to be honest about what I see ahead. I’ll call it like it is—yes, we own it and can’t do much about it right now, but these stocks don’t look good.”
Patient Capital Management stated the following regarding United Airlines Holdings, Inc. (NASDAQ:UAL) in its Q4 2024 investor letter:
“United Airlines Holdings, Inc. (NASDAQ:UAL) had a strong fourth quarter, gaining 70.2% in the period. The company benefitted from continued strong demand that surprised the market as well as the initiation of a buyback program, the first since COVID. There continues to be strong travel demand from both retail and business travelers. According to the International Air Transport Association (IATA), global air passenger travel is still below the pre-COVID implied trend path despite reaching a new all-time high this year. United’s focus on the customer over the last few years has led to strong improvement in net promoter scores (NPS) which should continue to flow through the model via better TRASM (total revenue per available seat mile) and higher cash flows and earnings. As of today, United alone accounts for ~30% of the overall industry’s profits. We expect this market share to grow and be defensible as we transition to an environment where customer service becomes the differentiating factor, and scale provides unparalleled ability to reinvest in the customer experience.”
8. Delta Air Lines Inc (NYSE:DAL)
Number of Hedge Funds Investors: 57
Despite owning shares in Delta Air Lines Inc (NYSE:DAL), Joseph M. Terranova, Senior Managing Director for Virtus Investment Partners, believes there’s trouble ahead for Delta Air Lines Inc (NYSE:DAL). Here is what he said in a latest program on CNBC:
“I’m going to be transparent—there’s a quarterly rebalance coming up, and these stocks could be removed. I agree with every one of these price cuts because I think the positive momentum in the airlines has been lost. It was good while it lasted, and we benefited from it. Now, in terms of fundamentals, there’s a clear challenge to revenue growth. You’re seeing lower fares and the potential for a fare war, while demand is starting to wane. I wanted a publicly traded fund so people could see my performance, and if I’m doing that, I have to be honest about what I see ahead. I’ll call it like it is—yes, we own it and can’t do much about it right now, but these stocks don’t look good.”
7. Palo Alto Networks Inc (NASDAQ:PANW)
Number of Hedge Funds Investors: 64
Stephanie Link, Hightower Advisors CIO, explained in a latest program on CNBC why she’s buying Palo Alto Networks Inc (NASDAQ:PANW).
“Palo Alto is a fairly new position. I only started buying it about a month ago. It’s down 14% since I bought it. You know, I’m a big believer in cybersecurity, and these guys are a top-five player in the cybersecurity sector. They are building out scale through platformization, which could be a $15 billion annualized recurring revenue opportunity for them.
I think the biggest thing is that it’s trading at 14 times price-to-sales, which is not cheap, but CrowdStrike is trading at 22 times. It’s recovered all of its valuation discount post the glitch that they had. So I sold CrowdStrike and bought Palo Alto.”
6. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Funds Investors: 99
Steve Quirk, Robinhood chief brokerage officer, recently talked about the latest retail trade data released by his platform for February. Asked about the retail investors’ interest in Tesla Inc (NASDAQ:TSLA) despite the latest declines, Quirk said:
“You know, there’s a lot of people that have strong beliefs in Tesla, and that’s it. And you know, they are looking at this as an opportune time to add to portfolios. And you know, they’re a lot like portfolio managers. These, these, they’re quite savvy, our customers. They’re, they rotate out of names where they see nice appreciation, and they rotate into ones where they think there’s an opportunity.”
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“The largest relative detractors in the quarter were Tesla, Inc. (NASDAQ:TSLA) (not owned), Thermo Fisher Scientific, and Broadcom (not owned). We’ve spoken at length about our rationale for not owning Tesla. The stock enjoyed a 54% return during the quarter, with effectively all of the share price performance strength coming in the post-election period, as the market expressed a positive view on Elon Musk’s prominent role in the incoming Trump administration and its potential implications for Tesla. While we agree this development should be a net positive for Tesla and recognize the company’s interesting future prospects for autonomous driving and humanoid robots, its current valuation demands that shareholders pay primarily for potential innovations that have yet to materialize, with uncertain risks and timelines, presenting a different type of risk profile than we are comfortable with. Today, Tesla is an automobile manufacturer limited to the higher-income segment and is increasingly challenged to sell vehicles when interest rates are not zero. As such, we continue to question the company’s long-term growth profile, its ability to scale a large robotaxi service (which seems to be the source of euphoria in Tesla shares), and its corporate governance.”
5. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Funds Investors: 121
Steve Weiss, Founder and Managing Partner of Short Hills Capital Partners, disclosed in a latest program on CNBC that he’s piling into Netflix Inc (NASDAQ:NFLX) shares and gave his reasons:
“If you take a look at Netflix, also I’m looking at companies that are insulated. Netflix—you know, people have cut the cord, so what will they do before they cut Netflix? They’ll cut the services, streaming services they’re not happy with. You can also trade down, go to the ad-supported service.”
RiverPark Large Growth Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q4 2024 investor letter:
“Netflix, Inc. (NASDAQ:NFLX): NFLX was a top contributor in the fourth quarter powered by a 3Q earnings report that included stronger-than-expected revenue and operating income, solid subscriber additions, and positive forward commentary. Anti-password sharing and ad tier initiatives continue to drive subscriber growth while improving revenue per user trends, from recent price increases, drive margin expansion. The company was optimistic about future revenue growth, margin expansion, free cash flow generation and future return of capital programs.
The recent re-acceleration of subscriber growth, plus price increases on premium memberships and a stabilization of content investments, should position the company for low double digit annual revenue growth over the next few years while driving operating margin to more than 25%. We also believe that the stabilization of content spend should allow the company to continue to scale its free cash flow.”
4. Apple Inc (NASDAQ:AAPL)
Number of Hedge Funds Investors: 158
Erik Woodring from Morgan Stanley explained in a latest program on CNBC the reasons behind his price target cut for Apple Inc (NASDAQ:AAPL). The analyst decreased his price target for the iPhone maker to $252 from $275.
“Apple has always traded on its own paradigm. I think as an Apple analyst and knowing this stock for 10 plus years, you really have to get the fundamentals right first and then valuation second. If we made a valuation argument over the last 10 years, we would have said it was expensive. And so that’s not to say you shouldn’t take into account valuation, but the point is more let’s understand where the numbers are going. Are we seeing growth accelerate or decelerate? Are they missing numbers or are they beating numbers? At the end of the day, we still do believe growth can accelerate, just not to the same degree that we had baked in.
And so yes, we are seeing some multiple contraction, rightfully so, as some of the predictability of the model that maybe we thought was embedded is not necessarily there. That’s not to say that the multiple can’t further if there’s more concerns or rate. In the event we had more confidence in the Apple intelligence rollout. And so again, it remains a very dynamic situation here. But to directly answer the question in the near term, it’s kind of the market movements combined with the Apple-specific risks or lack of predictability in Apple intelligence that is causing some of the wind to come.”
Woodring said that the delay in Siri update for AI is likely to cause a decrease in the number of expected iPhone upgrades. This prompted the analyst to revise his estimates for Apple.
Many analysts believe that just a few AI apps would not be enough to trigger a broader upgrade cycle for iPhone. Apple is dealing with currency headwinds as the stronger US dollar is expected to reduce top-line growth by 2.5% next quarter. For Q2 FY2025, management expects overall revenue to grow in the low to mid-single digits. Apple’s stock is trading at a premium valuation, with a price-to-earnings ratio of 39-40x, a price-to-free-cash-flow ratio of 33-34x, and a PEG ratio exceeding 3x. Upcoming quarters would be difficult for Apple and its current valuation is not justified.
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.”
3. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM)
Number of Hedge Funds Investors: 158
Steve Weiss, Founder and Managing Partner of Short Hills Capital Partners, said in a recent program on CNBC that he’s buying Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) shares because he believes the stock is undervalued.
“Taiwan Semi—look, I don’t think anybody’s crazy enough to stop the supply chain for semiconductor chips. And I don’t think there’ll be, you know, heavy tariffs on it, particularly when they talk about investing. But they’ve got a queue of people waiting for capacity—we hear Intel talk about that all the time. So to me, this stock is very undervalued.”
Baron Emerging Markets Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed in the fourth quarter due to a cyclical recovery in semiconductors and significant incremental demand for AI chips. We retain conviction that TSMC’s technological leadership, pricing power, and exposure to secular growth markets, including AI/high-performance computing, automotive, 5G, and internet of things, will allow the company to sustain strong double-digit earnings growth over the next several years.”
2. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Funds Investors: 235
Steve Weiss, Founder and Managing Partner of Short Hills Capital Partners, explained in a latest program on CNBC why he’s buying more Meta Platforms Inc (NASDAQ:META) shares:
“I said this when the stock was trading at the highs—it was overvalued, and I knew it would correct because it just couldn’t maintain that valuation. That was euphoria on Trump’s win, which was obviously misplaced. So I was willing to suffer for it coming down, and I had trimmed. I had a super-sized position, and I had trimmed a little bit.
Now at this point, when you’re selling at a slight discount to the market despite having, I would say, not complete protection against the craziness and the chaos in DC but pretty good protection—except for, you know, the supply chain for the data centers, which they are largely having others build, which is a small number relative to the overall revenue—so I think that’s the time to step up when the multiple comes down.
Look, could it go lower? Absolutely. Could it go lower? You know, it could go lower. But to your point, you can’t market time—it’s impossible. So when I bought the stock, when I added to it yesterday, it was my final trade yesterday.”
Meta crushed expectations in the last quarterly results but yet again pointed to higher expenses in the future. In 2025, it 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 ads 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.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on an investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6 years holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Funds Investors: 286
Stephanie Link, Hightower Advisors CIO, explained in a latest program on CNBC her bullish view on Amazon.com Inc (NASDAQ:AMZN) and why she’s buying the stock:
“I trimmed Amazon in early February. The stock is down 19% since then. It’s now trading at a pretty interesting valuation in my mind—13 times EBITDA versus a historical average of 17.5 times. When I sold Amazon, it was at 17 times EBITDA, so it was rich relative to its history. The story on retail is getting bigger—Amazon, Walmart, Costco—they had 46% market share. Amazon has 28% market share and actually grew their market share by 410 basis points in the past quarter, so they’re humming there. Profitability at AWS is absolutely on the rise, and I think they’re still capacity constrained. So I expect the second half of the year to see an acceleration in AWS.”
Despite weak guidance, Amazon could easily surpass $100 billion in operating income within the next two years because of its AWS growth engine. In the latest quarter, Amazon Web Services sales jumped 19% and operating profit for the segment jumped 62% in 2024 on an annual basis.
The market is currently forecasting $6.27 per share in profits this year (a 13% YoY growth) and $7.59 per share next year (a 21% YoY growth). Amazon’s stock is priced at a profit multiple of 30.2x. This valuation may look rich, but when we incorporate AWS growth, the stock has more upside potential.
Parnassus Core Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) posted better-than-expected quarterly earnings, lifting investor confidence in the e-commerce giant’s ability to generate margin while continuing to invest into its large AI and retail end markets.
Amazon’s shares experienced volatility throughout the year as IT spending and the company’s margin structure came under scrutiny. Despite this, the stock outperformed as sentiment and results improved across both the overall environment for Amazon Web Services and the company’s ability to show margin.”
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN), our conviction lies in the belief that 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.
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