With only a few days in, President Donald Trump’s administration has been making significant strides in advancing artificial intelligence technology. Reuters reported on Tuesday that he has announced a private sector investment of up to $500 billion to fund infrastructure for artificial intelligence, aiming to outperform rival nations in the critical technology.
READ NOW: 10 AI Stocks Making Waves on Wall Street and 10 Trending AI Stocks on Latest News and Ratings
In this regard, Trump has also emphasized the importance of keeping the technology within the country.
“What we want to do is we want to keep it in this country. China is a competitor, and others are competitors… It’s technology and artificial intelligence all made in the USA”.
-Trump said in remarks at the White House.
According to Trump, ChatGPT’s creator OpenAI, SoftBank, and Oracle, are planning a joint venture called Stargate. The venture is expected to build data centers and create more than 100,000 jobs in the United States. With other equity backers, these companies have committed $100 billion for immediate deployment. Meanwhile, the remaining investment will occur over the next four years.
Following the news, global shares rose today, January 22nd, driven by a rise in technology stocks. Even though the global market is near record highs, investors are optimistic that they may rise even further.
“We prefer taking risk in stocks and expect corporate earnings to keep driving returns as the fourth-quarter reporting season starts”.
-Jean Boivin, the head of BlackRock Investment Institute.
He also noted that Treasury yields might jump.
“We are in a world of higher interest rates and expect them to stay above pre-pandemic levels. Even with the jump in yields, we still see more room to run, if at a slower pace”.
Speaking of the Stargate initiative, OpenAI’s Sam Altman is also thrilled that they get “to do this in the United States of America”. He thinks this is going to be the most important project of this era. Moreover, according to multiple news sources, the move may signal that the Trump administration will be striving to work with some tech companies.
After all, the President has been proactive in advancing AI technology. One of the first moves that he took returning to office has been to revoke a Biden-era executive order regarding AI guardrails. Overall, spending and focus on artificial intelligence in the US is in full swing. Billionaire businessman Hussain Sajwani also pledged to spend $20 billion or more on AI data centers in the U.S. earlier this month.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An experienced investor staring at a wall of monitors displaying stocks and mortgaged securities.
11. Marchex, Inc. (NASDAQ:MCHX)
Number of Hedge Fund Holders: 5
Marchex, Inc. (NASDAQ:MCHX) is a conversation intelligence company. On January 21, the company announced it would showcase its new AI-powered conversational intelligence solutions at the 2025 National Automobile Dealers Association (NADA). NADA is the industry’s annual event which will be held on January 24-26 in New Orleans. Marchex allows auto dealerships to stay ahead in the industry by providing them with actionable data and insights, improving marketing and sales, and optimizing service requests. In particular, the company’s market-leading AI-powered Engage for Auto Dealerships has been upgraded to offer data-driven insights, allowing dealerships to improve their performance across marketing, sales, and service departments. The AI solutions will allow dealerships to leverage high-value sales and service opportunity alerts, deeper customer sentiment insights, and enhanced marketing campaign management. In turn, they will be able to boost lead conversions, increase revenue, and improve customer relationships.
“Marchex is at the forefront of the innovations which are transforming how dealerships approach customer interactions, and we are delighted to showcase our new and enhanced AI-powered solutions at NADA. By transforming customer conversations into actionable data, we enable dealerships to optimize their operations, deliver exceptional customer experiences, and drive measurable growth”.
-Troy Hartless, Chief Revenue Officer of Marchex.
10. SoundHound AI (NASDAQ:SOUN)
Number of Hedge Fund Holders: 11
SoundHound AI (NASDAQ:SOUN) is a voice artificial intelligence company offering voice AI solutions to businesses. On January 21, the company announced an innovative collaboration with Rekor Systems, Inc., a technology company leading in roadway intelligence technology, to revolutionize emergency vehicle technology. The collaboration will integrate SoundHound’s advanced voice and conversational AI with Rekor’s industry-leading vehicle recognition software, Rekor Scout®, to enable hands-free commands for critical vehicle systems. This will allow law enforcement personnel and first responders to stay informed and proactively respond to situations. Rekor Scout’s® advanced vehicle recognition AI software will provide actionable notifications to officers, while SoundHound’s voice AI will be used by officers to manage systems such as automatic license plate recognition (ALPR), emergency light bars, sirens, two-way radios, PA systems, and more – all through voice commands. Initially, the partnership will focus on police vehicles. However, there are also plans to expand the technology to other emergency vehicles, such as fire trucks and ambulances.
“Our industry-leading voice AI technology has redefined how industries interact with technology. Partnering with Rekor allows us to bring this innovation to law enforcement, where we can empower officers with a hands-free solution that can improve safety, reduce distractions, and support responsiveness in the field. Together, we’re creating the future of voice-enabled police vehicle technology.”
– Keyvan Mohajer, CEO of SoundHound
9. PROS Holdings, Inc. (NYSE:PRO)
Number of Hedge Fund Holders: 25
PROS Holdings, Inc. (NYSE:PRO) is a leading provider of AI-powered SaaS pricing and selling solutions. On January 21, the company announced that it has extended its long-term strategic agreement with Malaysia Airlines through the renewal of PROS Revenue Management Advantage (RMA), an advanced PROS tool available for airlines to maximize their revenues. PROS advanced technology and artificial intelligence (AI) play an instrumental role in the airline’s global operations, as exemplified by the agreement extension. The RMA has also been driving two consecutive years of profitability. Malaysia Airlines also uses PROS RMA to forecast demand accurately and implement dynamic pricing strategies. This in turn increases the likelihood to convert passengers with optimized offers. It also enables data-driven decisions that maximize revenue potential regardless of ongoing cost and supply chain challenges. Overall, the agreement extension strengthens the relationship between PROS and Malaysia Airlines.
“This expansion is a testament to our deep relationship with Malaysia Airlines, as well as the power and innovation of our platform. We are proud to continue to support Malaysia Airlines in achieving their revenue management goals, optimizing offers in a highly competitive market and ultimately continuing on their journey toward offer optimization”.
-Surain Adyanthaya, President, Global Industries, PROS.
8. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Holders: 29
Five9, Inc. (NASDAQ:FIVN) is a technology company that offers cloud software solutions for contact centers. On January 17, Needham analyst Scott Berg maintained their bullish stance on Five9 stock, giving a Buy rating and a $52 price target. The firm had a virtual fireside chat with Five9’s leadership at the 27th Annual Needham Growth Conference, revealing several factors that have led to the buy rating. In particular, the firm’s conversation with the leadership has highlighted how strong Five9’s position is in the AI domain. This in turn demonstrates how their technological advancements allow them to be favored in various selection processes.
The company has been leveraging artificial intelligence for years. In particular, its “Genius AI Suite” helps to power virtual agents, providing personalized customer interactions across voice and digital channels. The firm also had discussions with the company’s CEO and CFO regarding the impact of artificial intelligence on sales cycles. They also revealed positive trends in Net Revenue Retention (NRR) and the factors leading to its improvement. The firm’s positive outlook is also attributed to Five9’s potential to expand its Total Addressable Market (TAM) through the FedRAMP authorization, a certification that states that an organization’s products and services meet federal security standards.
7. Keysight Technologies, Inc. (NYSE:KEYS)
Number of Hedge Fund Holders: 36
Keysight Technologies, Inc. (NYSE:KEYS) is a global technology company that provides electronic design and test solutions. On January 21, the company announced the launch of Chiplet PHY Designer 2025, an enhanced software solution aimed to design and develop high-speed digital chiplets used in AI and data center applications. With AI and data center chips growing complex every day, it is becoming increasingly important to have reliable communication between chiplets for performance. The Chiplet PHY Designer 2025 offers several key benefits, such as ensuring compatibility by verifying the designs meet the latest industry standards, namely UCIe 2.0 and BoW. Moreover, the software also allows accelerating time-to-market through automated simulation and compliance testing, improvements in design accuracy, and optimization of clocking designs.
“Keysight EDA launched Chiplet PHY Designer one year ago as the industry’s first pre-silicon validation tool to provide in-depth modeling and simulation capabilities; this enabled chiplet designers to rapidly and accurately verify that their designs meet specifications before tapeout. The latest release keeps pace with evolving standards like UCIe 2.0 and BoW while delivering new features, such as the QDR clocking scheme and systematic crosstalk analysis for single-ended buses. Engineers using Chiplet PHY Designer save time and avoid costly rework, ensuring their designs meet performance requirements before manufacturing. Early adopters, like Alphawave Semi, attest that Chiplet PHY Designer ensures seamless operation and interoperability for 2.5D/3D solutions available to their chiplet customers”.
– Hee-Soo Lee, High-Speed Digital Segment Lead, Keysight EDA
6. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On January 22, UBS raised the firm’s price target on AppLovin to $440 from $315 and kept a “Buy” rating on the shares. The analyst told investors in a research note that the firm conducted a channel check which has led it to be more confident in Applovin’s e-commerce opportunity. The company’s e-commerce opportunity lies in its ability to leverage AI-driven technology to help brands acquire and retain customers. Initially focused on mobile gaming, the company has been using its AI-powered platform, Axon, to expand into the broader e-commerce sector. According to the firm, channel checks conducted for Applovin have been positive but revealed that the company hasn’t had a major tweak in its algorithm for gaming user acquisition advertisers. It further stated that e-commerce advertisers anticipate AppLovin to gain wallet share in 2025. The growth will be driven by new customers to the brand instead of coming at the expense of other advertising channels.
5. Reddit Inc (NYSE:RDDT)
Number of Hedge Fund Holders: 52
Reddit Inc (NYSE:RDDT) is an American social news aggregation, content rating, and forum social network. The company’s primary business model leverages its vast content archive to license data for training artificial intelligence models. On January 21, Raymond James raised the firm’s price target on Reddit to $200 from $150 and kept a “Strong Buy” rating on the shares. The rating has been issued as the firm is largely bullish on the Internet sector. Analysts told investors in a research note that the year ahead is important for the growth and use of generative AI in businesses.
Back in November, Reddit Chief Operating Officer Jen Wong told CNBC that the company is looking to expand its advertising business and attract more users outside its core US market. In this regard, analysts at Raymond James highlighted that the company’s use of AI to automatically translate its site text to different languages “should help improve local search rankings for Reddit and provide durable hypergrowth”. In this regard, Wong noted that Reddit’s AI translation efforts are key to its international expansion. The analysts also said that Reddit continues to be one of the top five most searched websites. Its “authentic and uniquely moderated (community system) content” will help the company stay on top of search results, ultimately resulting in more Reddit users creating accounts, the analysts wrote.
4. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 61
KLA Corporation (NASDAQ:KLAC) markets process control and yield management solutions for the semiconductor industry. On January 22, Susquehanna analyst Mehdi Hosseini raised the firm’s price target on KLA Corporation to $655 from $620 and kept a “Neutral” rating on the shares. The firm had updated its outlook for the semiconductor industry which revealed that spending on wafer fab equipment, which is used to make computer chips, is expected to be around $94 billion in 2025, down 6% year-over-year. Nevertheless, the firm forecasts spending to increase in 2026 by 6%. It also stated that wafer fab equipment is expected to remain in the $90B-$100B range through 2026. The analysts also told investors in their research note that increased test time and end-market demand diversification are likely to help.
3. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Constellation Energy Corporation (NASDAQ:CEG) is an energy provider specializing in clean, carbon-free energy solutions. On January 20, Constellation Energy Corporation was revisited by a Wall Street analyst, Elizabelle Pang from DBS, who maintained a “Hold” rating on the stock with a $300.00 price target. While several factors have led to the hold rating from DBS, a prominent reason is the company’s acquisition deal from Calpine Corporation. The cash and stock deal, reported on January 10th, has been largely driven by the rapid growth of AI data centers that require huge amounts of energy to power them. The Calpine acquisition deal is anticipated to bring significant earnings improvement from 2026 onwards and also positions the company as the number one power generator in the US by generation output.
Albeit these positive developments, the firm considers the valuation of the company to be rich, trading at a forward price-to-earnings ratio considerably above the historical mean. Additionally, even though there is an increased demand in data center electricity and strategic positioning in key hubs, there are notable risks as well. Some of these risks, noted the firm, include potential extreme weather conditions, uncertainties in policy such as the hydrogen production tax credit, and inflationary pressures on fuel expenses. Due to the above-mentioned reasons, Elizabelle Pang maintains a Hold rating and suggests investors wait for a better entry point regardless of the company’s promising outlook.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that has recently launched Apple Intelligence, its intelligence system. On January 20, Jefferies told investors to dump Apple stock. The analysts warned of a potentially weak revenue number from the technology giant. In this respect, analyst Edison Lee downgraded shares to “Underperform” from “Hold” and also cut his price target to $200.75 from $211.84. Besides highlighting some financial concerns, Lee has also dubbed Apple’s outlook for artificial intelligence “subdued”. The analyst stated that this could be a concern for market participants who have been focusing on the potential of the technology for more than a year. Therefore, this toned-down AI interest is responsible for the weak revenue. The firm also highlighted poor iPhone sales as a cause. According to CNBC, Lee’s rating downgrade is out of line considering nineteen analysts say to buy Apple and six say it’s a hold, according to Tipranks.com.
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On January 22, Bloomberg reported that the company is working on integrating artificial intelligence technology into more of its products. Currently, it is upgrading its popular smart glasses as well as exploring new wearable devices such as watches and camera-equipped earbuds. Reality Labs, the company’s devices group, is all set to develop Oakley-branded smart glasses for athletes this year. It is also planning on releasing new high-end glasses with a built-in display this year. These new products aim to reposition Meta as an AI innovator, particularly focusing on hardware to bring in the next era of computing.
Bloomberg has also reported that Meta aims to release its first true augmented reality product around 2027. This release is going to be a milestone for the technology industry. Meta is also planning on enhancing its Supernova product line, a product line of smart glasses that the company offers in partnership with Ray-Ban. First, this line will be extended into new markets. Second, its smart glasses technology will be broadened to other fashion brands owned by partner Luxottica Group SA. Last but not least, there is going to be a new higher-end offering using a design that’s similar to the current Ray-Ban glasses. Code-named “Hypernova”, it will offer capabilities a bit closer to the long-promised AR experience.
While we acknowledge the potential of META as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
