In this article, we discuss the 15 AI stocks making waves on Wall Street.
Data centers are at the heart of the AI disruption sweeping markets across the world. However, the massive investment into these data centers has raised concerns about their impact on the environment. According to a report by news agency Reuters, the growing demand for electricity from data centers, fueled by advancements in AI and cloud computing, risks a near-term increase in fossil fuel reliance. Utility firms across the US, Europe, and Asia are turning to natural gas and even coal to meet the surging power needs due to the slow pace of renewable energy expansion, per the news agency. An example of this can be seen in Northern Virginia, which houses the largest concentration of data centers globally.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
The news agency contends that globally, the scenario is similarly challenging. Countries like Poland and Germany are partially relying on coal due to inadequate renewable capacity, with Poland’s energy mix still dominated by over 60% coal as of 2023. In Ireland, where data centers now consume more than 20% of electricity, operators have postponed plant retirements and leaned on natural gas for grid stability. In Malaysia, less than 50% of auctioned green power is being utilized, as companies opt for cheaper fossil fuels. While hyperscalers have pledged renewable energy use, critics argue that these commitments often involve diverting clean energy already available to others, thereby not contributing additional renewable capacity. McKinsey projects that most of Europe’s data center power by 2030 will come from low-carbon sources, but this may include natural gas.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected AI stocks by combing 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).
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AI Stocks Making Waves on Wall Street
15. Rubrik, Inc. (NYSE:RBRK)
Number of Hedge Fund Holders: 23
Rubrik, Inc. (NYSE:RBRK) provides data security solutions to individuals and businesses worldwide. The cybersecurity platform of the firm uses AI and machine learning to monitor for threats and provide sophisticated data recovery. On November 22, KeyBanc raised the price target on the stock to $57 from $48 and kept an Overweight rating on the shares. The advisory sees a high bar for October security reporters given strong stock performance despite muted Q3 security earnings results thus far, saying its checks have been solid. KeyBanc says feedback has been positive on catalysts from the Digital Operational Resilience Act driving increased attention on backup/recovery among global and European financial services customers.
14. Wolfspeed, Inc. (NYSE:WOLF)
Number of Hedge Fund Holders: 26
Wolfspeed, Inc. (NYSE:WOLF) operates as a bandgap semiconductor company that focuses on silicon carbide and gallium nitride (GaN) technologies. On November 22, Roth MKM analyst Craig Irwin kept a Buy rating and $20 price target on the stock after hosting meetings with its management team. The analyst notes that the down payments required for 200mm SiC wafer offtakes could be 5 times the deposits for 150mm offtakes, and Roth MKM expects the device demand inflection after the Trump inauguration to catalyze commitments. The advisory adds that it remains positive on Wolfspeed as a strategically important US leader in SiC semiconductor materials.
13. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. On November 22, Wells Fargo initiated coverage of the stock with an Overweight rating and $155 price target. The advisory thinks Arm can deliver upside to consensus estimates, driven by a transition to v9 with higher royalty rates, coupled with modest share gains Arm-based CPUs. Arm’s v9 lays the foundation for a compute subsystems adoption story, the advisory told investors in a research note.
12. EMCOR Group, Inc. (NYSE:EME)
Number of Hedge Fund Holders: 40
EMCOR Group, Inc. (NYSE:EME) provides construction and facilities, building, and industrial services. The firm has deep links with the hyperscale data center customers, domestic semiconductor firms, and clean energy component manufacturers. On November 21, Goldman Sachs analyst Adam Bubes initiated coverage of the stock with a Sell rating and $445 price target. The advisory has been impressed with the company’s productivity gains, margin expansion, and value added M&A track record. At the same time, Goldman sees a challenging cyclical backdrop in the medium term with EBIT margin leading indicators turning lower and a forecast for nearly flat private non-residential construction spending growth in 2025.
11. ON Semiconductor Corporation (NASDAQ:ON)
Number of Hedge Fund Holders: 45
ON Semiconductor Corporation (NASDAQ:ON) provides intelligent sensing and power solutions in the United States and internationally. The firm markets innovative power supply solutions used to power high-density servers that can handle the larger data loads and intense power consumption required to power many Gen-AI applications and tools. On November 22, Wells Fargo analyst Joe Quatrochi initiated coverage of the stock with an Overweight rating and $85 price target. While semiconductor demand continues to bounce along the bottom, On’s competitive position can drive accelerating revenue growth from expanding opportunities related to battery electric vehicle adoption of silicon carbide, the advisory told investors in a research note.
10. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 60
Dell Technologies Inc. (NYSE:DELL) designs, develops, manufactures, markets, sells, and supports various comprehensive and integrated solutions, products, and services. On November 21, Morgan Stanley analysts led Erik Woodring penned an investor note on the firm, backing the fundamentals of the firm to accelerate further in 2025, led by AI servers, even before considering any potential share shift from Super Micro Computer, which was a key factor supporting CY25 EPS estimates that are 12% above consensus. However, the analysts added that near-term estimates were likely constrained by sub-seasonal PC market trends, a mixed storage backdrop, and flattish Q/Q AI server growth.
9. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 70
Arista Networks, Inc. (NYSE:ANET) engages in the development, marketing, and sale of data-driven, client to cloud networking solutions for data center, campus, and routing environments. On November 21, investment advisory Evercore released an investor note on the AI industry, noting that the strong earnings and guidance of NVIDIA had wide-ranging implications for a number of other companies, including Arista Networks. Per Evercore, Arista should be a beneficiary of a rising tide lifts all boats scenario, as back-end Ethernet spending should get a boost, amid commentary about particular strength for Ethernet-based products.
8. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. The AI-capable chips of QUALCOMM are now making their way into cars and IoT devices, after powering smartphones globally. Baird analyst Tristan Gerra recently highlighted the diversification efforts of the company in an investor note, stressing that the company’s relevancy across multiple industries is increasing. Raymond James analyst Srini Pajjuri has echoed these thoughts, but noted that issues related to Apple’s modem could keep revenue/EPS growth muted for the next 2-3 years.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. TelecomTalk, a popular Indian telecom news portal, recently reported that AMD CEO Lisa Su, who is on a visit to the South Asian country, has outlined her vision for an open-source, hardware-agnostic software ecosystem to accelerate artificial intelligence development. During an address at the Indian Institute of Science, Su said AMD was focusing on a holistic system design to balance performance, power, and cooling constraints in advanced data centers.
6. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. On November 21, the company was mentioned in an investor note by Citi on the earnings results of chipmaker NVIDIA. Per the advisory, TSM looked set to benefit from the strong showing of NVIDIA. Citi analyst Chia Yi Chen said that Taiwan Semiconductor is looking to double its chip-on-a-wafer-substrate capacity again in 2025, with NVIDIA being the biggest contributor to the foundry’s AI business.
5. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. Rezolve AI, a firm that leverages advanced AI, process automation, and intelligent algorithms for IT solutions, recently announced a strategic reseller partnership with Google. The partnership positions Rezolve as a comprehensive solution provider in the conversational commerce space, addressing all aspects of the consumer funnel-from initial engagement and personalized recommendations to post-purchase support and loyalty.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. On November 21, Mizuho raised the price target on the stock to $175 from $165 and kept an Outperform rating on the shares after the company reported a strong October-end quarter sales result of $35.1 billion and guided January-end quarter revenue to $37.5 billion, which the advisory notes was in line with consensus at $37 billion, but below buy-side estimates of $39 billion-plus. The advisory, which says Nvidia remains a Mizuho 2024 Top Pick and is leading the AI accelerator market, recommends investors buy the pullback.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family. VSParticle, a nanotech firm based in the Netherlands, recently announced that it would be partnering with the Fundamental AI Research team at Meta to advance clean energy solutions. The University of Toronto would also be part of the partnership. Under the collaboration, the advanced nanoporous layer printing technology of VSP, the testing platform of the university, and the AI models of Meta would be used to quickly create and test new materials.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. Satya Nadella, the CEO of the firm, recently said that AI investments were moving much faster than the Cloud. He was speaking at the Ignite conference where his company unveiled a host of new AI products and features. During the conference, the tech titan introduced the Azure AI Foundry, the Windows 365 Link, new chips for data processing and security, new AI agents, SQL Server 2025, and Microsoft Purview, which provides AI-powered data governance.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. As regulators in the US and Europe tighten antitrust investigations into tech giants amid the fallout from reports of usage of private data to train AI models, news agency Reuters reports that the ecommerce company will likely face an investigation next year by the European Union over whether it favors brands on the online marketplace it owns. Per the report, the company could be fined up to 10% of worldwide sales if it is found to have violated the EU Digital Markets Act.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ: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 timeframe. If you are looking for an AI stock that is more promising than Amazon.com, Inc. (NASDAQ:AMZN) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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