Latest reports from the IMF reveal that economic gains from artificial intelligence are likely to outweigh the costs of rising carbon emissions from the data centers needed to run AI models. The report, released at the IMF’s annual spring meeting in Washington, revealed how artificial intelligence is going to boost global output by around 0.5% a year between 2025 and 2030. At the same time, it also noted how these output gains will not be shared equally worldwide.
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“Despite challenges related to higher electricity prices and greenhouse gas emissions, the gains to global GDP from AI are likely to outweigh the cost of the additional emissions. The social cost of these extra emissions is minor compared with the expected economic gains from AI, yet it still adds to the worrisome buildup of emissions”.
-IMF report, “Power Hungry: How AI Will Drive Energy Demand”.
Considering that energy policies remain the same and artificial intelligence use becomes widespread, greenhouse gas emissions will see a cumulative global increase of 1.2% between 2025 and 2030. However, a switch to greener energy policies would limit the increase to 1.3 Gt.
Quantifying the social cost of these emissions, the report calculated that the extra cost is likely to be at $50.7-$66.3 billion, which is smaller than the income gains that can help boost the economy by 0.5% each year through AI.
According to the Grantham Research Institute on Climate Change and the Environment, AI may even be able to generate an overall reduction in carbon emissions if it accelerates advances in low-carbon technologies in the power, food, and transport sectors.
“But market forces alone are unlikely to successfully drive AI’s application toward climate action. Governments, tech companies and energy companies must play an active role in ensuring AI is used intentionally, equitably and sustainably.”
– Grantham policy fellow Roberta Pierfederici.
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. The hedge fund data is as of Q4 2024.
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).
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12. CoreWeave, Inc. Class A Common Stock (NASDAQ:CRWV)
Number of Hedge Fund Holders in Q4 2024: 0 (Due To IPO in Q1 2025)
CoreWeave, Inc. Class A Common Stock (NASDAQ:CRWV) is a cloud platform provider that provides equipment for AI and other computing purposes. On April 22, Bank of America initiated the stock as “Buy” and a $42 price target. The firm believes that the “AI data center leader” is a share gainer and that CoreWeave’s Cloud Platform has been purpose-built for GPU compute to support AI service providers.
“We are initiating coverage on AI hyperscaler CoreWeave, with a Buy rating and $42 PO. The CoreWeave Cloud Platform has been purpose built for GPU compute to support AI service providers.”
11. SoundHound AI, Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 11
SoundHound AI, Inc. (NASDAQ:SOUN) is a voice artificial intelligence company offering voice AI solutions to businesses. On April 22, the company announced that it will be working with Tencent Intelligent Mobility, a part of Tencent’s Cloud and Smart Industries Group (CSIG) business. The collaboration aims to provide world-class voice and conversational AI capabilities to Tencent Intelligent Mobility’s cloud-based solutions for the automotive industry.
By leveraging SoundHound’s conversational AI capabilities, Tencent Intelligent Mobility will be able to offer dynamic user experiences to automotive players so that they can provide their end users with seamless hands-free access to a range of in-vehicle applications. Tencent will be integrating SoundHound Chat AI Automotive, which is one of the most advanced in-vehicle voice assistant on the market.
“We’re excited to be working with Tencent Intelligent Mobility to bring their vision for a dynamic, intuitive infotainment platform to life. Our voice AI will play a critical role in giving drivers safe, hands-free access to a vast range of voice-activated content, changing the way that drivers and passengers interact with their vehicles and creating the intelligent in-vehicle experience of the future.”
-Tom Park, Vice President of Business Development, Asia at SoundHound AI.
10. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 83
Intel Corporation (NASDAQ:INTC) designs and sells computing hardware, semiconductor products, and AI-driven solutions for various industries. On April 22, Barclays analyst Tom O’Malley lowered the firm’s price target on the stock to $19 from $23 and kept an “Equal Weight” rating on the shares. The firm has updated semiconductor and semiconductor capital equipment models to reflect tariffs and the trade war ahead of Q1 earnings, and also reduced target multiples on China and consumer risk.
9. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On April 22, Morgan Stanley reiterated the stock as “Overweight” and said that it’s sticking with the stock heading into earnings after the bell on Tuesday.
“Tesla’s 1Q results face the lowest margin expectations in 12 years. Stock reaction will be dictated by company’s ability to address sub-VW margins and likely cash burn, confidence in ‘robo’ and a sense of increased attention from their CEO.”
On Tuesday, the company reported a 20% drop in Q1 auto revenues – its lowest haul since 2021. Musk has acknowledged these “unexpected bumps” and urged investors to stay focused on the long game. This is where Tesla becomes a powerhouse of autonomous vehicles and humanoid robots.
8. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 162
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce. On April 23, Piper Sandler lowered the firm’s price target on the stock to $315 from $400 and kept an “Overweight” rating on the shares. Tariff, policy, and artificial intelligence adoption hurdles have led the firm to cut estimates and price targets across the cloud applications and analytics sector. The analyst also told investors in a research note that application software names appear “battered and bruised on eroding investor sentiment” due to moderating industry growth for the fourth straight year, as well as AI adoption challenges “that suggest the bloom might be coming off the AI rose.”
7. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 161
Broadcom Inc. (NASDAQ:AVGO) is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets. On April 22, Barclays analyst Tom O’Malley lowered the firm’s price target on the stock to $215 from $260 and kept an “Overweight” rating on the shares. The price target revision follows the firm’s updates on semiconductor and semiconductor capital equipment models to reflect tariffs and the trade war ahead of Q1 earnings. The firm has also reduced target multiples on China and consumer risk.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On April 22, Morgan Stanley reiterated the stock as “Overweight” with a $220 price target. The firm said its survey checks screen positive for Apple regardless of a rough backdrop.
“Amidst a challenging fundamental backdrop, our March ’25 AlphaWise US iPhone survey screens positively and highlights 1) better-than-expected Apple Intelligence adoption, perception, willingness to pay, 2) record N12M US upgrade intentions, and 3) strong interest in a thin and foldable iPhone.”
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 186
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells advanced chips used in artificial intelligence applications. On April 21, the company announced that its role in the semiconductor supply chain limits its ability to ensure export compliance. The announcement comes months after the company’s artificial intelligence silicon was found with US-sanctioned Huawei Technologies Co. through intermediaries.
“TSMC’s role in the semiconductor supply chain inherently limits its visibility and information available to it regarding the downstream use or user of final products that incorporate semiconductors manufactured by it.”
-Hsinchu, Taiwan-based company.
Despite TSMC’s best efforts to abide by relevant export control regulations, the company revealed that there is no “assurance” that it will be able to do so.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On April 22, Deutsche Bank reiterated the stock as “Hold” and lowered its price target to $125 per share from $135.
“While ests being de-risked for China and the resulting valuation being at a meaningful discount vs historical averages is incrementally appealing, uncertainties surrounding the sustainability of AI-related capex appear to be rising given the current trade war.”
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOG) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses. On April 22, Reuters reported that a U.S. Department of Justice attorney has said that Google requires strong measures imposed on it to inhibit it from using its artificial intelligence products to “extend” its dominance in online search. The Justice Department is currently seeking an order for Google to sell its Chrome browser and take other measures to end its monopoly in online search.
Now is the “time to tell Google and all other monopolists who are out there listening, and they are listening, that there are consequences when you break the antitrust laws.”
-DOJ attorney David Dahlquist said during his opening statement.
The report further noted how the DOJ and a broad coalition of state attorneys general are striving to bring back fair competition as search evolves and with new generative AI products such as ChatGPT in the market.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On April 22, Roth MKM reiterated the stock as “Buy” and lowered its price target on the stock to $580 per share from $730. The price target revision was made ahead of earnings on April 30. The firm said Meta is still a favorite idea.
“META is our preferred Mega Cap name heading into 1Q earnings, given AI product catalyst, LlamaCon announcements, and possible change in 2025 OpEx/CapEx guidance narrative.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On April 22, Goldman Sachs reiterated the stock as “Buy” and lowered its price target on the stock to $220 per share from $255.
“Looking long-term, AMZN remains one of our top picks and provides investors with a range of exposures to virtually all key secular growth themes across Consumer Internet and Cloud Computing.”
While we acknowledge the potential of AMZN 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 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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