US technology stocks have surged dramatically this year, largely driven by the growing excitement surrounding generative artificial intelligence (AI). However, according to research by investment firm Goldman Sachs, this rise is not indicative of a financial bubble like those of the past. The performance of these companies is expected to continue delivering solid returns to investors, fueled by the rise of AI superstars outside of the magnificent seven, among smaller tech firms and in non-tech sectors as well. However, Peter Oppenheimer, the bank’s chief of global equity strategy and the head of macro research in Europe, has advised investors to diversify their portfolios to manage risk.
While tech stocks have been dominant, contributing 32% of global equity returns and 40% of US equity returns since 2010, these returns are underpinned by strong financial fundamentals rather than speculative bubbles. The earnings per share for the tech sector have increased by 400% since the peak before the 2008 financial crisis, far outpacing other sectors, which collectively saw only a 25% increase. A key driver behind the outsized returns in recent years has been a small group of hyperscale companies, particularly those in software and cloud computing. These companies have leveraged their vast resources and high profitability to dominate the market, with recent performance surging even further due to optimism around AI.
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.
This has led to rising valuations, largely concentrated among a narrow group of market leaders. Peter Oppenheimer observes that this pattern mirrors historical trends in technological innovation. From the construction of canals in the 18th century to the adoption of the telephone, new technologies often attract vast capital and competition. Although this does not always result in financial bubbles, there is typically a period where prices decline as competition intensifies, ultimately leading to consolidation in the market. Over time, only a few large companies remain dominant, while growth shifts to secondary innovations that build on the original technology. The AI era is unique in that the dominant companies, which lead in AI, were also at the forefront of the previous tech wave — particularly in software and cloud services.
Their scale and profitability have positioned them well to absorb the high costs of AI investments. However, Oppenheimer notes that new competitors are emerging. The number of AI patents skyrocketed to over 60,000 in 2022, up from around 8,000 just four years earlier, suggesting that AI is following the typical pattern of large-scale capital growth and competition. Oppenheimer also points out that the companies pioneering a new technology are not always the ones that will create the most value from it in the long run. For instance, during the internet boom, telecom companies received significant investment, yet it was companies like those in social media and ride-sharing that capitalized on the internet infrastructure and achieved the greatest success. Similarly, as AI evolves, new companies could emerge as the next wave of tech superstars, reshaping industries beyond the current giants.
Let’s now take a look at the list of 35 AI superstars that are on the major bank’s radar. We compiled this list after consulting a report by the bank on the AI industry. These stocks are also popular among elite hedge funds and hedge fund sentiment is an important indicator that we pay a lot of attention to at Insider Monkey.
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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35. Fabrinet (NYSE:FN)
Number of Hedge Fund Holders: 31
Fabrinet (NYSE:FN) offers optical packaging, along with precision optical, electro-mechanical, and electronic manufacturing services. The company manufactures fiber-optic cables that are essential for telecommunications, AI data centers, and the global Internet infrastructure. While demand in the telecom sector has remained relatively subdued, the growing AI industry has helped offset these concerns. In particular, Fabrinet’s datacom division, which supplies fiber-optic cables to AI data centers, has seen significant expansion over the past two years. Starting with $88 million in quarterly revenue in 2022, the company recently reported that its datacom revenue has skyrocketed to over $305 million, reflecting the strong surge in AI-driven demand.
In the third quarter earnings call, Seamus Grady, the CEO of Fabrinet (NYSE:FN), underlined how this 150% jump in datacom revenue had benefited from the rise in demand for 800 gigs technology for AI applications. NVIDIA, one of the biggest winners of the AI craze, is the flagship customer for Fabrinet.
34. Celestica Inc. (NYSE:CLS)
Number of Hedge Fund Holders: 38
Celestica Inc. (NYSE:CLS) offers a range of product manufacturing and related supply chain services. In the second quarter earnings call, Rob Mionis, the CEO of Celestica Inc. (NYSE:CLS), noted that there was strong demand for the Hardware Platform Solutions marketed by the firm, comprising storage, compute, and networking products. This healthy demand, likely to increase in the coming months as hyperscalers invest in AI data centers, had helped the firm post a more than 50% year-to-year increase in connectivity revenues in the second quarter.
Canaccord analyst Robert Young recently raised the price target on Celestica Inc. (NYSE:CLS) stock to $70 from $53 and kept a Buy rating, underlining that the firm had reported another strong quarter with Q2 results ahead of consensus on all metrics, a strong Q3 outlook, and fiscal 2024 guidance that was raised across the board.
33. 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. Rene Haas, the CEO of Arm Holdings plc (NASDAQ:ARM), said during the first quarter earnings call that companies everywhere were investing in AI, driving revenue and bookings for his firm which posted a fourth consecutive quarter of record earnings, growing revenue by 39% year-on-year. License revenue during the period was up 70% year-on-year while royalty revenue was up 17% year-on-year.
Morgan Stanley analyst Lee Simpson recently maintained an Overweight rating on Arm Holdings plc (NASDAQ:ARM) stock with a price target of $175. In an investor note, the analyst underlined that the iPhone 16 release suggested the utilization of an Arm-based A-series processor, the A18, in the device. Arm remained a favored play on the emerging Edge AI opportunity, added the analyst, who expected mobile to drive initial upside, followed by infrastructure and autos.
32. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 41
Teradyne, Inc. (NASDAQ:TER) designs, develops, manufactures, and sells automated test systems and robotics products globally. The company serves key markets such as semiconductors, defense, storage, and wireless testing. It is scheduled to release its Q3 earnings later this month, with analysts forecasting a profit of $0.78 per share, a slight decline from the $0.80 per share reported in the same quarter last year. Notably, the company has exceeded Wall Street’s earnings expectations for the past four quarters, including a 13.2% beat in the previous quarter. For fiscal 2024, analysts project an EPS of $3.02, reflecting a 3.1% increase from the $2.93 reported in 2023.
Teradyne, Inc. (NASDAQ:TER) had historically been heavily exposed to the Chinese market, but has since relocated business elsewhere amid US export controls. Earlier this year, the company claimed that it had pulled $1 billion worth of manufacturing projects in China. This led to a close to 4% drop in revenues from China for the company during the end of last year, down from 16% to around 12%.
31. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 44
Palantir Technologies Inc. (NYSE:PLTR) builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations. Bank of America recently raised the price target on the stock to $50 from $30 and kept a Buy rating on the shares. The advisory viewed Palantir’s capabilities, technology and path forward facing a fundamental misunderstanding and contended that the upcoming S&P 500 inclusion provided a watershed moment for institutional investors to revisit what they know about Palantir. The company’s non-conventional sales approach, where the engineers played a key role, had been highly criticized, but the advisory noted that the engineer-sales bond was also a key factor to the company’s pricing strategy and viewed this approach as a key differentiator to profits’ robustness, especially compared to other software companies.
Ryan Taylor, the chief revenue officer of Palantir Technologies Inc. (NYSE:PLTR), highlighted during the second quarter earnings call that the revenue expectations from AI infrastructure build-out have grown from $200 billion to $600 billion per year in just nine months, noting that his firm was uniquely positioned to take advantage of this as it delivered enterprise AI solutions on a scale unlike any other firm, most of whom were still testing AI prototypes and had not started large-scale production of products, a significant barrier to entry in the AI universe.
30. Juniper Networks, Inc. (NYSE:JNPR)
Number of Hedge Fund Holders: 45
Juniper Networks, Inc. (NYSE:JNPR) designs, develops, and sells network products and services worldwide. To meet the growing demands of the wireless market, particularly for more reliable and easily managed connectivity, the firm recently introduced several upgrades to its AI-Native Networking Platform to help customers and partners fully leverage Wi-Fi 7. The emerging 802.11be standard offers higher throughput, lower latency, greater range, and improved reliability compared to previous Wi-Fi versions. However, to maximize Wi-Fi 7’s potential, the firm would require cutting-edge access points and switches to ensure optimal performance and scalability.
Juniper Networks, Inc. (NYSE:JNPR) recently announced that it would be making a strategic investment in Quantum Bridge Technologies, a security solutions firm. The investment aims to showcase the commitment of the networking company to advance quantum-safe communications by enabling Quantum Bridge to further scale DSKE solutions marketed by Juniper. To further inform ongoing research and product development in the field, the two companies will collaborate through pathfinding projects at Juniper Beyond Labs.
29. Flex Ltd. (NASDAQ:FLEX)
Number of Hedge Fund Holders: 46
Flex Ltd. (NASDAQ:FLEX) offers manufacturing solutions across Asia, the Americas, and Europe, and is making significant strides in the AI sector. The company plays a critical role in the AI ecosystem, meeting up to 80% of data center requirements for large-scale and hyperscale customers as they build out their AI infrastructures. It is also one of the few globally recognized AI-focused industrial stocks, with significant exposure to the automotive industry. This AI expertise drives revenue, with data center and power-related segments contributing over 25% of total earnings. A key advantage for the firm lies in its power pods for data centers, which boast lower construction costs and faster deployment times, allowing its clients to scale more rapidly than competitors.
In the first quarter earnings call, Revathi Advaithi, the CEO of Flex Ltd. (NASDAQ:FLEX), remarked that there was strong demand for cloud solutions in the CEC business of the firm as AI helped drive a transition in data center development and working. She also added that this was helping the demand for power products made by the company.
28. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 47
Coherent Corp. (NYSE:COHR) develops, manufactures, and markets engineered materials, optoelectronic components, and devices worldwide. Susquehanna recently upgraded the stock to Positive from Neutral with a price target of $120, up from $80. The advisory believes new CEO Jim Anderson, and his platform optimization program, will ultimately transform the company’s long-term financial model, potentially providing the company with over 1,000 basis points of net margin expansion, the advisory told investors. The firm has emerged as an important player in the AI space, marketing 800G transceivers which read and write data at a speed of 800 gigabytes per second.
In the third quarter earnings call, Chuck Mattera, the CEO of Coherent Corp. (NYSE:COHR), highlighted how the demand for 800G transceivers had led to a 50% sequential increase in non-GAAP earnings per share. He added that the firm expected AI tailwinds to continue to bolster earnings in the fourth quarter and into 2025.
27. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high performance server and storage solutions based on modular and open architecture. The company offers a wide range of AI products, including comprehensive server and storage solutions, modular blade servers, workstations, full racks, networking equipment, server subsystems, and specialized software for server management and security. In Q4 2024, the firm reported record-breaking revenue of over $5.3 billion, marking a 143% year-on-year increase and surpassing the total revenue of 2022. A standout product is its AI SuperClusters, an advanced network of interconnected computing resources designed specifically for AI workloads.
Charles Liang, the CEO of Super Micro Computer, Inc. (NASDAQ:SMCI), highlighted during the fourth quarter earnings call that AI SuperClusters were helping the company build a prominent profile among hyperscalers. Liang revealed that his company was using the latest DLC liquid cooling technology in these clusters, helping customers reduce deployment times.
26. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 52
NXP Semiconductors N.V. (NASDAQ:NXPI) makes and sells various products related to semiconductors. The company recently announced two significant capital return initiatives. The board approved an interim dividend of $1.014 per share for the third quarter of 2024, payable to shareholders of record in the second week of October. The board also authorized an additional $2 billion for share repurchases, supplementing the existing $726 million remaining from the previous authorization. These two announcements highlight the strong capital structure and the confidence of the management in long-term growth and cash flow generation. Per existing laws, the dividend will be subject to a 15% Dutch withholding tax, but there remains the potential reductions or refunds for certain shareholders.
TD Cowen recently lowered the price target on NXP Semiconductors N.V. (NASDAQ:NXPI) stock to $310 from $330 and kept a Buy rating, noting that the slope of the recovery for the firm was disappointing, but stock reaction felt overblown, amplified by a view of investors that the shares were a place to hide within choppy broad-based semis.
25. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 55
KLA Corporation (NASDAQ:KLAC) markets process control and yield management solutions for the semiconductor industry. Citi recently lowered the price target on the stock to $900 from $960 and kept a Buy rating on the shares. The advisory updated its semiconductor equipment sector view and noted the equipment group was heading into a mid-cycle correction in the first half of 2025. While server artificial intelligence demand remained strong, consumer demand across PCs, smartphones, and auto appeared lackluster, the advisory told investors in a research note. Citi cut estimates and, accordingly, lowered the price target by 10%.
Richard Wallace, the CEO of KLA Corporation (NASDAQ:KLAC), noted during the fourth-quarter earnings call that long-term drivers, such as foundry logic, continued technology scaling, and the gradual rise in capital intensity, remain favorable for the company. He also mentioned that memory markets are expected to return to growth in 2025, driven by technological developments in AI, high-bandwidth memory, and an improving supply-demand balance.
24. NRG Energy, Inc. (NYSE:NRG)
Number of Hedge Fund Holders: 56
NRG Energy, Inc. (NYSE:NRG) operates as an energy and home services company in the United States and Canada. Jefferies recently initiated coverage of the stock with a Hold rating and $82 price target. The advisory launched coverage of the power sector with a constructive view, and named Vistra its top pick and also put a Buy rating on Talen Energy. Constellation Energy, NRG Energy and PSEG had strong tailwinds but these were priced into the stocks already, the advisory told investors in a research note. Jefferies claimed that while data center transactions had been delayed, it still expected deals by 2025. The December PJM auction was the biggest sector risk around re-regulation, the advisory added.
Larry Coben, the CEO of NRG Energy, Inc. (NYSE:NRG), recently raised the fiscal year 2024 earnings forecast of the firm, and said that it was an exciting time for the company as it raised financial guidance for the year, reflecting the strength of the integrated platform and the best-in-class execution of leading consumer strategy. He added that his firm was confident in the ability to drive growth and capitalize on the emerging opportunities in markets.
23. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 64
Analog Devices, Inc. (NASDAQ:ADI) designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems products. Bank of America recently lowered the price target on the stock to $255 from $260 and kept a Buy rating on the shares. Following the company’s earnings report, the advisory lowered its FY25 and FY26 pro-forma EPS estimates by 13% and 7% to $7.07 and $8.43, respectively, on a softer start to FY25 due to a sluggish autos recovery and consumer segment seasonality. Examining the read-across from Analog Devices, the advisory said the company’s comments suggested slightly positive trends for more industrial exposed peers like Texas Instruments and Microchip, while pointing to modestly continued headwinds for peers with higher autos exposure.
Vincent Roche, the CEO of Analog Devices, Inc. (NASDAQ:ADI), said during the second quarter earnings call that data center customers were investing in new vertical power architectures to meet the intensified energy and processing demands of AI compute systems. Per Roche, the solutions offered by his firm in this regard reduced power losses by up to 35% compared to existing architectures. This product is now gaining traction with hyperscalers.
22. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 65
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. The company beat market expectations on earnings per share and revenue in the second quarter earnings and revealed guidance numbers that surprised analysts. In an investor note following the earnings, investment advisory Deutsche Bank raised the price target on the stock to $350 from $295 and kept a Hold rating on the shares. The advisory also increased its revenue estimates for the networking firm in 2024 to 2026 by 2% to 4%, with its new estimates implying 16%, 16% and 13% growth in these years.
The note further forecasts that given higher margins, the new 2024-2026 non-GAAP EPS for Arista Networks, Inc. (NYSE:ANET) had moved to $8.38, $9.43, and $10.66, up 2% to 5% versus prior estimates.
21. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 71
Constellation Energy Corporation (NASDAQ:CEG) generates and sells electricity in the United States. Latest reports, published by the Washington Post, indicate that the company is seeking a $1.6 billion federal loan guarantee to help finance its plan to restart the Three Mile Island nuclear plant and sell the electricity to Microsoft to AI power data centers. Per the report, the firm made the first approach for the loan to the US government back in May. The initial review for the loan has been cleared and the two parties are now negotiating specific terms of the deal. The Three Mile plant was shut down in 2019 and sits next to the unit that has been dormant since a partial meltdown in 1979, but the restart plan has sparked controversy over the merits of providing separate federal subsidies for the project in the form of tax credits.
Per the report, if the loan guarantee is successful, Constellation Energy Corporation (NASDAQ:CEG) would save close to $122 million in borrowing costs. When combined with the tax credits from the sale of power under the Inflation Reduction Act, the total savings could be as much as $200 million per year for CEG and Microsoft.
20. Amphenol Corporation (NYSE:APH)
Number of Hedge Fund Holders: 72
Amphenol Corporation (NYSE:APH) specializes in designing, manufacturing, and marketing electrical, electronic, and fiber optic connectors. The company has business relationships with diverse markets, including automotive, aerospace, industrial, and data communications globally. It is expected to announce fiscal Q3 earnings later this month. In their earnings projections, analysts have forecast that the maker of fiber-optic products for AI data centers will report a profit of $0.45 per share in the third fiscal quarter, up over 15% from $0.39 per share in the same quarter last year. This seems probable as the firm has beaten Wall Street expectations on earnings for each of the last four quarters.
In the most recent quarter, Amphenol Corporation (NYSE:APH) exceeded the consensus estimate by a 4.9% margin. For fiscal 2024, analysts expect the company to report EPS of $1.76, up 17.3% from $1.50 in fiscal 2023. Looking forward to fiscal 2025, EPS is expected to surge 14.8% year-over-year to $2.02.
19. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. As rumors swirl around the recent QUALCOMM offer to takeover Intel, news publication Financial Times reports that the former is only likely to pursue a friendly deal for the latter. Intel is concerned that a deal in this regard would be hampered by antitrust regulators. Intel has been working with elite finance advisors to evaluate the approach by QUALCOMM. Per the report, Intel is considering a wide range of asset sales. Previous reports on the chipmaker had contended that investment bankers from Morgan Stanley had been advising Intel for several months on how to defend itself from activist investors.
Citi analyst Christopher Danely recently reiterated a Neutral rating on Intel Corporation (NASDAQ:INTC) stock with a $25 price target. In an investor note, the advisory highlighted that Intel announced a multi-billion deal with Amazon Web Services to supply AWS with custom Xeon chips and also produce new artificial intelligence fabric chips. The advisory did not count the Xeon win as a true foundry win since these chips were something Intel already made. Citi was also concerned that customizing a Xeon would be a lower margin product.
18. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 77
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. Analysts led by CJ Muse at Cantor Fitzgerald recently penned an investor note on the semi market, detailing that recent issues from Intel and Samsung were likely to negatively impact the semiconductor equipment market, with wafer fab equipment spending coming in lower-than-expected. Referencing Applied Materials, the analysts detailed that the lower estimates would translate to earnings implications for the company, and forecast the chipmaker was likely to earn $10 and $12 per share in fiscal 2025 and 2026. The analysts also discussed the possibility of rerating the stock.
Per the note, Applied Materials, Inc. (NASDAQ:AMAT) stock, on 1yr average multiple, seemed cheap, but on 3yr and 5yr averages, it had considerable downside. The note claimed that orders were bottoming and fundamentals would modestly recover in CY25 with even greater recovery into CY26, even as regulatory risk remained, but cyclically, the market was at the point where you were supposed to buy the stock.
17. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 81
ASML Holding N.V. (NASDAQ:ASML) makes and sells advanced semiconductor equipment systems. The company focuses on making and selling lithography machines. These machines are essential for companies who want to manufacture smaller chips. The lithography machines use photolithography, a process in which a light source is used to expose circuit patterns from a photomask onto a semiconductor wafer. The latest technological advances in this segment allow chipmakers to continually increase the number of transistors on the same area of silicon, with lithography historically representing a meaningful portion of the cost of making cutting-edge chips that are faster and more efficient than previous models. Chipmakers require EUV lithography tools developed by ASML to continue past the 10-nanometer process node.
Berenberg analyst Tammy Qiu recently lowered the price target on ASML Holding N.V. (NASDAQ:ASML) stock to EUR 945 from EUR 1,100 and kept a Buy rating on the shares. Deutsche Bank analyst Robert Sanders also recently lowered the price target on ASML to EUR 950 from EUR 1,100 and kept a Buy rating on the shares.
16. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 84
Lam Research Corporation (NASDAQ:LRCX) markets semiconductor processing equipment. The company is the third leading supplier of wafer fab equipment in the world. Within the semi space, the company focuses on submarkets of deposition and etch. These entail the buildup of layers on a semiconductor and the subsequent selective removal of patterns from each layer. In the latter, the company holds the top market share, and in the former, it has the second largest share. The overall business of the chipmaker is more exposed to memory chipmakers for DRAM and NAND chips. Some of the top customers of Lam include the largest chip makers in the world, including TSM, Samsung, Intel, and Micron.
Lam Research Corporation (NASDAQ:LRCX) fundamentals remain as compelling as ever. The firm posted a 20.71% revenue growth rate in the fourth fiscal quarter, reflecting a substantial increase in top-line earnings compared to peers in the information technology sector. It also has an impressive net margin of close to 27%, showing strong profitability and effective cost control. The return on equity hovers around 12.3%, highlighting efficient use of equity capital.
15. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 88
Dell Technologies Inc. (NYSE:DELL) designs, develops, manufactures, markets, sells, and supports various comprehensive and integrated solutions, products, and services. Investment advisory Bernstein recently penned an investor note on the AI market, highlighting that while investors generally believed more spending was going to inferencing, ever-increasing efficiencies in that area had prompted Bernstein to contend that training cost significantly more. Referencing Dell, the advisory said the fortunes of the firm remained tethered to training and Tier 2 hyperscalers for the foreseeable future, where profits were very low, as opposed to on-premise inferencing, where margins were likely to be much higher.
Latest reports, published by news platform Bloomberg, claims that Dell Technologies Inc. (NYSE:DELL) will continue to reduce its workforce this year. The move is part of a larger plan by the hardware company to control costs amid concerns that demand for PCs hasn’t rebounded and sales of servers optimized for artificial intelligence aren’t as profitable as other products. Dell has said that a limitation on outside hiring, job reorganizations and other actions will produce continued reduction in our overall headcount in the fiscal year ending in February 2025.
14. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 92
GE Vernova Inc. (NYSE:GEV) is an energy company that engages in the provision of various products and services that generate, transfer, orchestrate, convert, and store electricity. HSBC recently downgraded the stock to Hold from Buy with a price target of $255, up from $240. The stock’s valuation was already pricing in a strong gas equipment and service cycle, and HSBC saw cost overrun risks to GE Vernova’s remaining offshore wind deliveries in 2025 and 2026, the advisory told investors in a research note. The note added that although the company was well placed to benefit from rising US onshore wind demand, there were risks of higher than expected costs to deliver its $3 billion offshore wind backlog.
Latest reports, published by news agency Reuters and news publication The New York Times, contend that GE Vernova Inc. (NYSE:GEV) has presented a proposal that plans to cut the size of its offshore wind business, a move that could result in the elimination of 900 jobs around the world. The company cited cost inflation and supply chain challenges that have hurt the wind sector over the last year, but also said it suffered delays to two major projects it is supplying, as some of the reasons for the proposal.
13. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 92
Vertiv Holdings Co (NYSE:VRT) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. Mizuho analyst Brett Linzey recently upgraded the stock to Outperform from Neutral with a price target of $92, down from $95. In an investor note, the analyst detailed that the company’s operational footing was firm with free cash flow higher and leverage lower. The note added that order expectations had been reset while Vertiv’s product funnel remained robust with artificial intelligence optionality. Mizuho claimed the shares looked attractively valued on a variety of metrics, adding the risks keeping analysts on the sidelines had now become tailwinds.
Vertiv Holdings Co (NYSE:VRT) beat market expectations on earnings per share and revenue in the second quarter by $0.10 and $10 million respectively. This beat was driven by an increase in demand for AI products for hyperscale customers building data centers. The firm also recently declared a quarterly dividend of $0.025 per share, in line with previous. The forward yield was 0.13%. The firm has paid a dividend to shareholders for the past three years.
12. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 92
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. BMO Capital recently raised the price target on the stock to $146 from $125 and kept an Outperform rating on the shares. After hosting the management team of the power firm for discussions, the advisory released an investor note. The note detailed the strong fundamental outlook, noting the cyclical tightening in power supply/demand fundamentals and an associated improvement in pricing driven by economic development and data center demand due to a lack of sufficient dispatchable capacity and forward price well below new build economics. BMO also saw a robust set of opportunities for Vistra to expand its existing capacity and exposure to this accelerating demand outlook, with over 2GW of augmentation already identified, as well as over 150k acres of sites with transmission rights that could provide additional exposure.
Vistra Corp. (NYSE:VST) stock has been impacted by recent geopolitical events and the fears of an Israeli strike on Iranian oil and gas facilities. This has led to a big jump in the prices of oil and natural gas. This jump will translate into a price hike at power companies as well, specially those that have large natural gas portfolios. The hike will impact AI data center power plans for hyperscalers across the world, possibly increasing capex.
11. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 100
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. Bank of America recently penned an investor note on the company, maintaining a Buy rating on the stock. In the note, the analysts from the advisory stressed that a possible QUALCOMM takeover of Intel was intriguing but perhaps impractical. The note further detailed that the scale benefits were outweighed by regulatory and financial hurdles. If such a deal were to be contemplated, the note underlined, potential pros would include greater scale with $90 billion in pro-forma sales, leadership across mobile, PC and server central processing units, and opportunity to utilize Intel’s large fab footprint. However, the challenges overwhelm the potential benefits with a tough regulatory environment, the note highlighted.
Bank of America analysts questioned the merits of any such proposed transaction for QUALCOMM Incorporated (NASDAQ:QCOM), citing China worries and Intel financials, given the large cash burn at the latter, including $53 billion in debt and large capex intensity required to support an extensive fab network. The note claimed that any announcement of the deal could create confusion given potential for headcount and roadmap disruptions and be a relative positive for Intel rivals.
10. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. Lisa Su, the CEO of the firm, is set to appear at an upcoming AI event hosted by the chipmaker that will outline the future growth plans. Su has been a driving influence at the company as it transitions into an AI powerhouse. Previous history suggests that she is up to this task. When Su took over the company in 2014, the stock was at $3. In the decade since, it has climbed to above $170. The increase is attributable to the focus on manufacturing of central processing units (CPUs) used in laptops and PCs, and graphics processors used in gaming consoles and now AI clusters. AMD recently closed the purchase of Xilinx and the $1.9 billion acquisition of data center networking company Pensando.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is seeking to rival NVIDIA in the manufacture of GPUs. So far, the MI300X chip of the company competes with the H100 chip of NVIDIA in terms of power and efficiency, but AMD still lags behind NVIDIA when it comes to more advanced chips like the H200, as well as Blackwell. Su recently told Time that the chipmaker wants to become a high-performance computing leader.
9. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 120
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. The company recently revealed, per a Barron’s report, that President and CEO Sanjay Mehrotra plans to sell up to $20 million worth of shares of the chipmaker. In a filing with the Securities and Exchange Commission in the US, the company disclosed that Mehrotra would use the Mehrotra Family Trust, where the CEO serves as a trustee, to make the transaction under the Rule 10b5-1 trading plan. The sale would consist of up to 200,000 shares of the chipmaker beginning in the first week of November at the earliest, per the disclosure. This amounts to total sales of around $20 million, according to the latest share price.
TD Cowen recently raised the price target on Micron Technology (NASDAQ:MU) stock to $135 from $115 and kept a Buy rating on the shares. The advisory said despite continued inventory builds at PC/smartphone customers and end-demand softness, the expected mid-cycle in memory spanning between now and CQ2:25 seemed to be shallower than feared as the strength from datacenter customers continued.
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. The stock has rallied since latest numbers from the Semiconductor Industry Association revealed that semi sales had risen significantly in August. According to SIA, semiconductor sales in August rose nearly 21% year-over-year to surpass $53 billion. This also represented a 3.5% month-over-month increase in semi sales. John Neuffer, the CEO of SIA, said the global semiconductor market continued to grow substantially in August, hitting its highest-ever sales total for the month of August, and month-to-month sales increased for the fifth consecutive month. Year-to-year sales also increased by the largest percentage since April 2022. Per Neuffer, this increase was driven by a 43.9% year-to-year sales increase into the Americas, and month-to-month sales were up across all regions for the first time since October 2023.
The Broadcom Inc. (NASDAQ:AVGO) stock rally in the past few weeks had increased the valuation of the firm to more than $825 billion. This forces the chipmaker into conversations around the Magnificent Seven, a group of seven firms dubbed the largest in the world and certainly the biggest in the United States. Carmaker Tesla occupies the seventh spot in this group, but the market capitalization of the EV firm is now less than that of Broadcom.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. The company is one of the first chipmakers in the world that exclusively focuses on designing and manufacturing chips for other companies. Before TSM became the global phenomenon that it is today, most businesses designed their own chips and outsourced manufacturing. However, as the demand for chips skyrockets, this has changed. TSM has many important customers because of the first-mover advantage, including AI giants like NVIDIA, Apple, AMD, QUALCOMM, and Broadcom, among others. TSM is a pure-play foundry stock, ahead of other firms in the space. For example, GlobalFoundries, a TSM competitor, has an annual revenue of $7 billion compared to $70 billion for TSM.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) operations could be impacted by the recent devastation in North Carolina caused by Hurricane Helene. The hurricane has damaged the production of quartz in Spruce Pine mines. This quartz is crucial for semiconductor manufacturing. The two companies that control more than 85% of the global quartz market in semis own the rights to mining for quartz in North Carolina.
6. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 165
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. Waymo, the autonomous driving technology company led by Google, recently announced that it had entered into a deal with carmaker Hyundai to get the IONIQ 5 EV, developed by the latter, as part of the Waymo robotaxi fleet. In the first phase of the deal, the two companies will integrate the sixth-generation fully autonomous technology, named the Waymo Driver, into the IONIQ 5 SUV, which will be added to the Waymo One fleet. The report predicts that the initial on-road testing with Waymo-enabled IONIQ 5s will start before the end of next year. The Hyundai SUV will be manufactured in the US.
Latest reports, published by news platform TechCrunch, indicate that Alphabet Inc. (NASDAQ:GOOG) intends to start showing ads in AI Overviews, the AI-generated summaries it presents for certain Search prompts, and will also add links to relevant web pages or some of those summaries. Per the reports, the company is also launching AI-organized search results pages in the US this week.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. William Blair analysts Sebastien Naji and Jason Ader recently released an investor note on the AI landscape, placing the chipmaker among the top picks for large cap generative artificial intelligence companies. The note detailed that the company had already seen tremendous growth for its GPU and parallel computing systems, and there was time for continued growth, driven by robust training demand from hyperscalers and enterprises, and a ramping inference opportunity. Per the analysts, Nvidia had also created a sustainable moat as its CUDA software stack was the standard interface for working with GPUs and AI, and there was room for growth in both training and inference as the new Blackwell cycle began.
NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang expects billions of dollars in revenue from Blackwell sales in the coming months. Blackwell is expected to cost between $30,000-$40,000 per unit and is in demand from major companies like Microsoft and Meta, as well as other firms building AI data centers to power products like ChatGPT and Copilot. Huang recently called Blackwell demand insane during an appearance on CNBC.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. Citi analyst Atif Malik recently released a research note on the firm, maintaining a Buy rating on the stock with a price target of $265. Malik cut the iPhone unit forecasts in the September and December quarters by 2 million each and now expects iPhone 16 units to be 83 million this year. He also increased the March and June 2025 quarter iPhone unit estimates up by 4 million and 7 million, respectively. Citi now expects 2024 and 2025 iPhone units to be 224 million and 246 million, respectively, or down 3% and 9% on a year-over-year basis. With Apple Intelligence to be released in the US later in October and a major Siri update likely next year, the iPhone refresh will happen in 2025 with the iPhone 17 launch, the analyst told investors in the research note.
Latest reports indicate that Apple Inc. (NASDAQ:AAPL) has successfully defended itself against patent infringement claims concerning user verification and data security technology placed into iPhones. According to a report by news publication Bloomberg, the Austin federal jury for the US District Court of the Western District of Texas determined that the US tech giant did not infringe four asserted patents by placing tech for Face ID, Touch ID, and passcode security features into iPhone smartphones.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. Argus analyst Joseph Bonner recently raised the price target on the stock to $660 from $600 and kept a Buy rating on the shares. In an investor note, the analyst detailed that Meta was benefiting from a re-acceleration in advertising revenue, significant margin expansion as a result of deep cost cuts, and robust cash flow. Per the analyst, the company had also become competitive in the generative artificial intelligence space. Bonner expects AI to begin to pervade Meta’s applications to provide another means of optimizing company performance and efficiency.
Latest reports indicate that the top court in Europe has ruled against Meta Platforms, Inc. (NASDAQ:META) over the approach of the tech giant to data retention in the continental ad business. The ruling will add hurdles for social media names looking to garner European ad dollars. The Court of Justice of the European Union found in favor of activist Max Schrems, who challenged Facebook Ireland on issues including harvesting data from the social platform indefinitely for targeted advertising.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. Morgan Stanley analyst Keith Weiss recently penned an investor note on the firm, maintaining an Overweight rating on the stock with a price target of $508. In the note, the analyst highlighted that investor patience appeared to be wearing thin with the tech giant regarding generative AI revenue, and questions were being asked around the return on investment in GPU spending and the environmental impacts of rising data center demand. Weiss underlined that as a perceived leader in the GenAI opportunity, investors looked to Microsoft for indications on the proper time horizons for seeing revenues start to flow.
Weiss also discussed the return of investment on capex spending by Microsoft Corporation (NASDAQ:MSFT), which has risen 75% year-over-year to $55.7 billion, including capital leases. In fiscal 2025, that is expected to rise another 41% to reach $78.4 billion. Per the analyst, the spending question needed to be split into two, with one focused on the gross margin potential of GenAI related solutions, and the other on future model training costs.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. JMP Securities analyst Nicholas Jones recently penned an investor note on the company, maintaining an Outperform rating with a price target of $265. In the note, the analyst underlined that it was possible for Amazon to save more than $20 billion annually by deploying autonomous technology combined with electric combination trucks for middle-mile transport and replacing internal combustion engine delivery vans with electric Rivian Automotive delivery vans. Per the analyst fuel cost tended to be 25%-30% of the per mile costs in middle-mile and last-mile delivery, while electric vehicles could generate a nearly 50% reduction in per-mile energy costs.
JMP viewed this as a medium- to long-term opportunity for Amazon.com, Inc. (NASDAQ:AMZN). More near term, as the company converted its last-mile fleet to electric Rivian fans, there was potential for up to $7 billion of annual savings, globally, contended the analyst. Amazon has deployed 15,000 Rivian vans in the US and thousands across Europe, according to JMP.
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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