In this article, we discuss the 35 most important AI stocks for 2025 according to JPMorgan.
Investors have become increasingly concerned about the rising capital expenditures on artificial intelligence, with many wondering whether the expectations embedded in financial markets today project a realistic path ahead. According to a recent report on the topic by investment bank JPMorgan, investors should focus on opportunities that will prevail right along the AI value chain. Analysts at the bank have advised investors to weigh future potential earnings against what is already embedded in the price. Per JPMorgan, cheaper valuations and less demanding earnings expectations outside of mega-cap tech stocks suggest that even AI bulls should be positioned for further broadening across sectors in 2025.
The Investment Outlook 2025 report by JPMorgan takes a look at the soaring valuations of the Magnificent Seven group of stocks and their importance to the AI revolution. The bank highlights that while each of the companies in the Magnificent Seven are geared differently to the AI theme, this group of stocks now makes up nearly 35% of the S&P 500 market cap and has driven over 70% of returns since the beginning of 2023. This performance, compared against the rest of the market, has allowed for the expansion of valuations. JPMorgan underlines that while the rest of the S&P 500 trades on a 12-month forward earnings multiple of 19x, the largest 10 stocks in the index now trade on 29x.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
Analysts led by Karen Ward, the Chief Market Strategist for EMEA at JPMorgan, contend that the valuation discrepancy between tech and the rest is unsustainable. The report stresses that if the broad AI ecosystem generates sufficient revenues to justify the earnings expectations already assumed for a handful of companies, the rest should catch up over time. It also cautions that if instead, the broader corporate universe does not see the clear use case of these technologies and is unwilling to pay for them, then a catch down scenario is more likely. However, when the strong fundamentals of these mega caps are compared to other parts of the S&P 500 today, as well as to the 2000s tech bubble, a catch down seems unlikely, it notes.
JPMorgan broke down the AI revolution into five key areas. These were identified as AI hardware, AI hyperscalers, AI developers, AI integrators, and AI essentials. Hardware firms were defined as the companies that drive the design and manufacture of the semiconductors that are key to generating computing power. Hyperscalers were picked out as the companies that provide physical AI infrastructure such as cloud services and data centers, create custom silicon chips, and build large language models that can be used by other companies. AI developers were recognized as software companies that leverage hyperscaler technologies to provide solutions for end users.
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.
AI integrators were pinned down as the larger organizations that have sufficient technology functionality to build their own AI solutions, as well as the IT services companies that support them. AI essentials were singled out as companies that are less directly impacted by the technology itself, but provide the resources that enable the whole AI value chain to work, whether that is energy, air conditioning, raw materials or even the data to train models. JPMorgan has warned that there is a substantial gap between the revenue expectations of hardware companies and the revenue growth that can be generated by the AI ecosystem. The bank has cautioned that this weakness can spread throughout the AI value chain.
The report notes that the attention of investors has so far focused on AI hardware and AI hyperscalers, two areas of the AI industry more exposed to the technology and communication services sectors. Per JPMorgan, high levels of valuation dispersion in these categories suggest that opportunities for skilled stock pickers persist, but investors must recognize that any earnings disappointment could lead to substantial volatility. The report further highlights that these categories are also likely to be the most exposed to escalating trade tensions between the US and China. The bank predicts ample opportunities for investors in the AI essentials and AI developers bucket over time.
Our Methodology
For this article, we selected AI stocks by combing through a note on the AI industry by investment bank JPMorgan. 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 overhead view of a modern networking technology suite in a data center.
35 Most Important AI Stocks for 2025 According to JPMorgan
35. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high performance server and storage solutions based on modular and open architecture. The company has existed as an AI data center firm for close to two decades. Yet over the past year and a half, it has gained popularity as the primary packager of NVIDIA GPUs inside customized servers. These servers offer DLC liquid cooling technology, keeping powerful processors from overheating. The NVIDIA brand has propelled the firm to double revenues in three of the past five quarters. However, the firm has not filed official disclosures with the SEC since the middle of 2024, prompting a significant pullback in the shares. Since it was included in the S&P 500 back in March 2024, the share price has fallen close to 75%. The company has also been removed from the Nasdaq-100 index.
34. 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. The company has a virtual monopoly over chip designs that are powering AI data centers around the globe. This monopoly stems from the energy-efficient chip designs that are unique to the company. The AI boom has served to launch the firm into the global spotlight. Since debuting on the stock market more than a year ago, the shares have tripled in value. Arm is a trusted partner of NVIDIA, the poster child of the AI revolution. Arm-based chips are a part of the new Blackwell series of AI processors that NVIDIA is providing to hyperscalers for their AI data center build. Following market-beating earnings results earlier this month, JPMorgan analyst Harlan Sur recently raised the price target on the stock to $160 from $140 and kept an Overweight rating on the shares.
33. Celestica Inc. (NYSE:CLS)
Number of Hedge Fund Holders: 40
Celestica Inc. (NYSE:CLS) offers a range of product manufacturing and related supply chain services. The firm supplies equipment to the data centers and server farms that provide the computing power for AI models. It has huge customers like Google, Meta, and Amazon, among others, who have all pledged tens of billions towards AI data center build in the next few years. One of the statistics that highlights the AI-related growth of the firm is that the AI and machine learning business of the company has more than tripled compared with 2022, gaining a 30% share in the overall revenue mix of the firm. The share price has also skyrocketed and is up more than 210% over the last year. At this rate, the share price will soon touch the all-time high of $120 per share that it reached at the peak of the dotcom boom. UBS recently initiated coverage of the stock with a Neutral rating and $95 price target.
32. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR) is a public American company that specializes in software platforms for big data analytics. It is cashing in on the AI boom through Artificial Intelligence Platform (AIP), an AI platform that is used to test, debug code and evaluate AI-related scenarios. It also provides software to governments that visualizes army positions. The success of AIP, which certain independent researchers have claimed is better than comparable offerings from even the tech giants, has enabled a close to 300% rally in the stock. The bullish sentiment is not entirely unfounded. The firm grew US government revenue, which represents 44% of total sales, by 40% in the third quarter. The commercial revenue also jumped 54%, highlighting the efforts of the firm to decrease reliance on government contracts. Wedbush analyst Daniel Ives has an Outperform rating on the stock with a price target of $75.
31. Juniper Networks, Inc. (NYSE:JNPR)
Number of Hedge Fund Holders: 47
Juniper Networks, Inc. (NYSE:JNPR) designs, develops and sells network products and services worldwide. It is heavily invested in leveraging AI to enhance networking solutions, particularly in AI-driven data center infrastructure and network management. For example, it markets the Mist AI engine that offers innovative features for simplifying and optimizing networking operations. These innovations have attracted substantial demand from cloud computing firms investing in AI infrastructure. In the third quarter of 2024, Juniper reported revenues of $1.33 billion, surpassing expectations of $1.26 billion. CEO Rami Rahim attributed this success to robust orders from cloud customers during Q3 in support of front-end and back-end AI networking initiatives. The anticipated acquisition of Juniper by HPE for $14 billion further underscores the value attributed to AI advancements of the firm.
30. Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 47
Elastic N.V. (NYSE:ESTC) is a search artificial intelligence company that delivers hosted and managed solutions designed to run in hybrid, public or private clouds, and multi-cloud environments. The company has collaborated with AWS to enhance generative AI capabilities, integrating Amazon Bedrock into the Elastic AI Assistant to provide users with richer, more contextualized results. In November 2024, Elastic expanded this collaboration by offering large language model (LLM) observability support for Amazon Bedrock in Elastic Observability, enabling detailed insights into LLM performance and usage. These AI initiatives, particularly the collaborations with AWS, have played a significant role in shaping company performance, with positive market responses to advancements and strategic partnerships.
29. NRG Energy, Inc. (NYSE:NRG)
Number of Hedge Fund Holders: 49
NRG Energy, Inc. (NYSE:NRG) operates as an energy and home services company in the United States and Canada. In November 2024, NRG announced a partnership with Renew Home and Google Cloud to develop a 1-gigawatt AI-powered virtual power plant (VPP) in Texas. This initiative aims to distribute hundreds of thousands of smart thermostats by 2035, enhancing grid resilience through AI-driven solutions. These AI initiatives have positively impacted the financial outlook of the firm. In the third quarter of 2024, the company reported an adjusted EBITDA of $1.06 billion, surpassing market expectations. Consequently, NRG raised the 2024 adjusted profit forecast to a range of $5.95 to $6.75 per share, up from the previous $5.00 to $6.30, and projected 2025 profits between $6.75 and $7.75 per share, exceeding analyst predictions.
28. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 51
Coherent Corp. (NYSE:COHR) develops, manufactures, and markets engineered materials, optoelectronic components, and devices worldwide. In March 2024, Coherent announced a significant breakthrough in vertical-cavity surface-emitting laser (VCSEL) technology, enhancing bandwidth for next-generation AI networks. This advancement paves the way for optical transceivers operating at 200 Gbps per lane, crucial for AI and high-performance computing applications. Financially, Coherent reported strong first-quarter fiscal 2025 results, with revenue increasing by 28% year-over-year to $1.35 billion. Non-GAAP gross margin expanded to 37.7%, and non-GAAP earnings per share surged by 357% to $0.74. These results were driven by high demand for AI-related datacom transceivers, including 100G, 200G, and 400G models. Analysts have responded positively, with Jefferies assigning a Buy rating and a $135 price target.
27. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 52
Digital Realty Trust, Inc. (NYSE:DLR) brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. The company developed Apollo, an in-house AI platform, to improve energy efficiency across the global portfolio. Initially piloted in Europe in 2019, Apollo expanded to 16 sites across six countries and plans to double its footprint by the end of 2024, including new deployments in Melbourne and Singapore. In the third quarter of 2024, the company reported adjusted funds from operations (FFO) of $1.67 per share, up from $1.62 the previous year, surpassing expectations. This growth is attributed to businesses leveraging generative AI and cloud migration, leading to increased demand for data center services. UBS recently upgraded Digital Realty stock from Hold to Buy, citing the ability of the firm to raise rents due to constrained data center space and increased AI-driven demand.
26. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 55
Equinix, Inc. (NASDAQ:EQIX) is a California-based real estate trust that operates data centers and other technology assets. In February 2024, Equinix partnered with NVIDIA to launch a private cloud service, enabling organizations to manage NVIDIA DGX supercomputing infrastructure for developing custom generative AI models. In November 2024, Equinix announced the construction of a sixth International Business Exchange data center in Singapore, named SG6. With an initial investment of $260 million, SG6 will operate on renewable energy and feature liquid cooling capabilities to support compute-intensive AI workloads. These AI-focused developments have positively impacted the financial performance of the firm. In the first half of 2024, the company experienced increased demand for data center services, driven by an artificial intelligence land grab among tech giants like Alphabet, Amazon, Microsoft, and Meta. This surge in demand allowed Equinix to raise rents, with prices for hyperscale tech tenants increasing by 19% during this period.
25. 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. In 2024, the company expanded its AI offerings, including AI-integrated PCs, GPU-enabled servers, and advisory services, leading to substantial revenue growth. Strategic partnerships with tech giants like NVIDIA, Qualcomm, Intel, xAI, and Meta further bolstered its position in the AI sector. In the third quarter of 2024, Dell’s revenue from AI-related products surged to $11.4 billion. In the second quarter of 2024, the company’s Infrastructure Solutions Group, which includes server sales, saw a 38% revenue increase. Demand for AI-optimized servers grew by 23% sequentially, reaching $3.2 billion. Consequently, Dell raised its annual revenue and profit forecasts, with expectations for its AI pipeline increasing to $11–13 billion from the previous $8–10 billion estimate.
24. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 63
Analog Devices, Inc. (NASDAQ:ADI) designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems products. In January 2024, ADI partnered with SambaNova Systems to deploy the SambaNova Suite, aiming to integrate generative AI capabilities across its enterprise operations. This collaboration focuses on enhancing customer engagement by streamlining access to extensive data resources, thereby improving field sales and support. Financially, ADI reported better-than-expected fiscal fourth-quarter earnings in November 2024, driven by increased demand for automotive chips. The company posted adjusted earnings per share of $1.67, surpassing the anticipated $1.64. Revenue, although declining by 10% year-over-year to $2.44 billion, exceeded forecasts. Chief Financial Officer Richard Puccio noted that automotive orders regained momentum in Q4 after a dip in Q3 bookings. Despite revenue challenges in fiscal 2024, CEO Vincent Roche expressed cautious optimism for fiscal 2025, anticipating a strong growth year.
23. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 64
ASML Holding N.V. (NASDAQ:ASML) makes and sells advanced semiconductor equipment systems. The firm provides advanced lithography equipment essential for manufacturing high-performance chips used in AI applications. The company’s cutting-edge extreme ultraviolet (EUV) lithography machines are crucial for producing the intricate and dense circuitry required by AI processors. Major chipmakers, including NVIDIA and Taiwan Semiconductor Manufacturing, rely on ASML’s technology to develop AI-optimized chips. In November 2024, ASML’s CEO, Christophe Fouquet, highlighted the positive impact of the AI boom on the company, noting that the surge in demand for advanced logic and memory chips is expected to boost sales of ASML’s high-end tools. He projected a 9% annual growth for the chip market through 2025, with AI and memory chips anticipated to constitute around 40% of the total chip market. Over the past year, the stock has declined by approximately 30% from its peak, primarily due to reduced sales expectations for 2025 and broader market challenges, including geopolitical tensions affecting the tech sector.
22. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Fund Holders: 66
Western Digital Corporation (NASDAQ:WDC) develops, manufactures, and sells data storage devices and solutions. In June 2024, the company introduced a six-stage AI Data Cycle framework, designed to optimize storage solutions for AI workloads. This initiative aims to enhance efficiency and reduce the total cost of ownership for AI workflows. Financially, Western Digital reported robust earnings in the first quarter of fiscal 2025, with adjusted earnings per share of $1.78 on $4.1 billion in revenue, surpassing analysts’ expectations. A key driver of this performance was a 153% year-over-year increase in cloud revenue, reaching $2.2 billion, attributed to the rising demand for AI and cloud computing services. The firm is benefiting from a recovery in the hard drive market and a strategic focus on AI-related storage solutions.
21. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 68
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. In September 2024, Intel unveiled its 5th Gen Intel Xeon processors, optimized for AI applications in data centers, and the Intel Gaudi 3 AI accelerator, designed for large-scale generative AI workloads. Despite these technological advancements, Intel’s stock has faced challenges. Over the past six months, the stock has declined by approximately 32%, primarily due to concerns about the company’s ability to penetrate the AI chip market and internal challenges, including manufacturing issues and missed sales targets. Rumors are also swirling about plans by the firm to sell major divisions to rivals in a bid to restructure itself.
20. Amphenol Corporation (NYSE:APH)
Number of Hedge Fund Holders: 69
Amphenol Corporation (NYSE:APH) specializes in designing, manufacturing, and marketing electrical, electronic, and fiber optic connectors. In the third quarter of 2024, Amphenol reported a 26% increase in sales to $4.04 billion and a 28% rise in earnings per share to $0.50, surpassing Wall Street expectations. This growth was driven by strong demand for sensors and connectors in IT, data communications, and defense sectors, with the IT and data communications market accounting for about 19% of Amphenol’s sales. Looking ahead, the firm projects its AI-related revenues to surge from $1 billion in 2024 to $3 billion in 2025, driven by increasing demand and capital spending in AI data centers. Analyst Samik Chatterjee from JPMorgan recently reiterated an Overweight rating on Amphenol, noting its favorable positioning within AI data centers.
19. 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. In May 2024, Arista announced a collaboration with NVIDIA to deliver holistic AI solutions, aiming to optimize GPU and network performance for AI data centers. This partnership enables customers to configure, manage, and monitor AI clusters uniformly across key components, enhancing efficiency and reducing job completion times. Arista reported robust third-quarter results in 2024, with a 20% year-over-year increase in sales to $1.81 billion and a 30% rise in earnings per share to $0.60. This growth was driven by strong demand for networking solutions in AI data centers, particularly from major technology companies like Meta and Microsoft.
18. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 71
Datadog, Inc. (NASDAQ:DDOG) provides a monitoring and analytics platform for developers, information technology operations teams, and business users in the cloud in North America and internationally. In the third quarter of 2024, Datadog reported revenue of $690 million and adjusted earnings per share of $0.46, both exceeding analyst expectations. This performance was driven by increased demand for its AI-enhanced cybersecurity products, as more customers deploy AI applications in live production environments. Analysts have recognized Datadog’s strong positioning in the AI sector. Evercore ISI recently initiated coverage with a Buy rating and a $150 price target, highlighting the company’s potential for consistent growth over the next 12-24 months, driven by its expanding market and new AI offerings.
17. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. There is growth in the HBM, DRAM, and advanced packaging markets as AI data center build gathers pace. Applied Materials is a leading supplier of these products to tech giants like Intel, Apple, and Samsung. The financials of the chipmaker remain as strong as ever. In the fiscal third quarter of 2024, the company reported record-high revenue of $6.78 billion, a 5% increase from the previous year, driven by the surge in AI-related semiconductor manufacturing. CEO Gary Dickerson noted that the race for AI leadership was fueling demand for our unique and connected portfolio of products and services.
16. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. QUALCOMM’s AI initiatives primarily focus on edge computing, where AI processing occurs on devices like smartphones, IoT products, and autonomous vehicles, rather than in centralized data centers. This strategy aligns with the growing demand for energy-efficient, low-latency AI solutions. The company’s Snapdragon platforms, which integrate advanced AI processing capabilities, have been pivotal in enhancing its market presence. Features such as on-device generative AI, real-time language processing, and advanced imaging technology have contributed to the adoption of QUALCOMM chips across industries.
15. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Constellation Energy Corporation (NASDAQ:CEG) generates and sells electricity in the United States. As a leading provider of clean energy, Constellation leverages AI to optimize its renewable energy assets, streamline grid operations, and improve energy efficiency for customers. AI-driven predictive analytics play a critical role in maximizing the output of its wind, solar, and nuclear energy plants. By using machine learning models, Constellation can predict maintenance needs, reduce downtime, and enhance energy production efficiency, directly impacting profitability and investor confidence. Furthermore, the company’s AI initiatives to manage energy demand and provide real-time data for smart grids appeal to environmentally conscious investors seeking growth in sustainable technologies. Constellation has entered into a 10-year, $840 million contract with Microsoft to supply nuclear-generated power for Microsoft’s data centers, which are integral to its AI workloads.
14. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
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. The rise of generative AI and machine learning applications has driven a surge in demand for hyperscale and edge data centers, directly benefiting Vertiv. Its AI-focused products, such as intelligent cooling systems and predictive maintenance tools, allow data centers to operate more efficiently, reduce downtime, and lower energy costs. Gio Albertazzi, the CEO of the firm, has said that the demand for high density liquid-cooled chips was a reality that was accelerating demand for AI infrastructure not only in North America, but across other large markets, especially in China.
13. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 97
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. In 2024, the company’s shares soared over 350%, outperforming even tech giants like NVIDIA. This growth was largely attributed to the increasing electricity consumption of AI data centers, which require substantial and continuous power. As a leading power producer with a diverse energy portfolio, including nuclear and natural gas assets, Vistra is well-positioned to meet this rising demand. Strategic initiatives have further bolstered Vistra’s market position. The acquisition of Energy Harbor expanded its nuclear power generation capacity, enabling the company to supply the substantial energy needs of hyperscale data centers. Additionally, partnerships with major tech companies, such as Microsoft and Amazon, have resulted in significant power purchase agreements, securing long-term revenue streams and reinforcing Vistra’s role in supporting AI infrastructure.
12. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company. Tesla’s AI-driven projects, such as its Full Self-Driving (FSD) technology and the Dojo supercomputer, have drawn significant attention from investors due to their potential to revolutionize the automotive and AI industries. The Dojo system, designed to process massive amounts of video data for training Tesla’s neural networks, is expected to boost the company’s self-driving capabilities and unlock substantial revenue through software and AI-as-a-service offerings. Morgan Stanley has previously highlighted Dojo as a game-changer, predicting that AI advancements by Tesla could create a $500 billion market opportunity for the company.
11. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. Tech innovation has helped AMD transform from a struggling entity to a semiconductor leader, with its stock price climbing from $3 to $140 over a decade. In 2024, AMD introduced the Instinct MI325X AI accelerators and next-generation networking solutions, aiming to strengthen its presence in the AI data center market. The market share of the firm as a provider of infrastructure for data centers has grown from single digits to about 30% in just a few years. Data center infrastructure has also expanded to more than 50% of the revenue of the company. Last year, the firm purchased ZT Systems in a deal worth close to $5 billion. ZT Systems designs and markets servers for AI data centers.
10. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. In early 2024, Micron began mass production of HBM chips for NVIDIA’s AI graphics processing units, enhancing its position in the AI ecosystem. In September 2024, Micron reported a significant year-over-year revenue increase, driven by robust AI demand. The company projected record revenue for the following quarter, further boosting investor confidence. However, in late 2024, Micron issued a weaker-than-expected forecast for the fiscal second quarter, citing challenges in the NAND industry and reduced demand in PC and smartphone markets. Despite these hurdles, the company’s HBM business continued to grow, doubling its revenue sequentially due to AI-driven demand.
9. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) operates as a diversified software company worldwide. Back in 2023, Adobe introduced Firefly, a collection of generative AI models designed to enhance creative workflows. This innovation led to increased customer engagement and a notable rise in subscriptions to higher-tier plans. Building onto this, in June 2024, the firm reported revenue and profit figures that surpassed investor expectations, attributing this success to the robust expansion of its Creative Cloud, Document Cloud, and Experience Cloud services, all bolstered by AI enhancements. However, in December 2024, Adobe projected its fiscal 2025 revenue to be between $23.30 billion and $23.55 billion, slightly below Wall Street estimates of $23.78 billion. It cited challenges in the rapid monetization of its AI tools and growing competition from other generative AI software makers as contributing factors.
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. In December 2024, the company reported a 51% year-over-year increase in total revenue to $14.05 billion, with AI-related revenue surging 220% to $12.2 billion for the fiscal year. This robust growth propelled Broadcom’s market capitalization past the $1 trillion mark, reflecting investor confidence in its AI strategy. The company’s success is largely attributed to its development of custom AI chips for major hyperscaler clients and its leading Ethernet networking portfolio, which are essential for AI workloads. Broadcom’s CEO, Hock Tan, highlighted the company’s strong position in the AI sector and projected the addressable market for its AI components to reach $90 billion by fiscal 2027.
7. 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. In 2024, TSM reported a record fourth-quarter net profit of NT$374.68 billion, driven by robust AI-related demand. The company anticipates this momentum to continue into 2025, projecting mid-20% growth in sales, largely fueled by global investments in AI infrastructure. AI-related servers and processors significantly contributed to this growth, with revenue tripling in 2024 and expected to double in 2025. TSM’s high-performance computing division, encompassing AI and 5G chips, accounted for 53% of its revenue, underscoring the company’s pivotal role in advancing AI technologies.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. Core AI applications that the tech giant is heavily invested in include Siri, Apple’s voice assistant, and features like on-device machine learning for predictive text, photo categorization, and personalized recommendations across devices. These AI-driven innovations contribute to user retention within Apple’s ecosystem, driving demand for hardware like iPhones, Macs, and wearables, as well as services such as iCloud and Apple Music. In recent years, Apple has ramped up investments in AI, including acquiring AI startups and developing proprietary AI chips like the Neural Engine, which powers real-time processing for AI tasks. Rumors of generative AI projects and expanded use of AI in health monitoring and augmented reality have further positioned Apple as a key player in the AI landscape.
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. In May 2024, during its I/O developer conference, Alphabet unveiled several AI advancements, including AI Snapshot for Google Search and the PaLM 2 large language model. In December 2024, Alphabet introduced AI innovations such as the Veo 2 video generator and the Gemini 2.0 language model. These developments have contributed to a nearly 6% increase in Alphabet’s stock year-to-date, reflecting investor confidence in the company’s AI direction. The firm is developing several AI products, building AI data centers to power these products, and developing AI-focused chips.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. The company’s GPUs are integral to AI applications, leading to significant financial growth. The company has added nearly $3 trillion to its market value in the past twenty-four months as the AI business thrives. In the third quarter of fiscal year 2025, NVIDIA posted a record $35.1 billion in total revenue, up 94% from the year-ago period, driven by strong demand in Data Center AI from cloud service providers and enterprises. Jensen Huang, the CEO of the firm, has said that beyond cloud service providers, generative AI has expanded to consumer Internet companies and enterprise, sovereign AI, automotive, and healthcare customers, creating multiple multibillion-dollar vertical markets.
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. The firm is investing heavily in AI data center building. Despite rising capital expenditures, the core business continues to generate stellar value. In the fourth quarter of 2024, the company reported revenue of $47.02 billion, a 17% increase year-over-year, with earnings projected at $17.52 billion, up from $14.02 billion the previous year. Analysts have attributed this growth to AI contributions to ad revenue, growing messaging revenue, and workforce reductions. Bank of America recently reaffirmed a Buy rating and increased the price target on the stock to $710, citing AI as a key factor in Meta’s performance.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. The company is expected to unveil the latest quarterly earnings report and AI-driven revenues remain an area of focus for investors. Economic experts on Wall Street expect the tech giant to report revenue of $68.92 billion, up 11% year-over-year; and earnings of $23.36 billion, or $3.13 per share, up from $21.87 billion, or $2.93 per share a year earlier. These analysts also project that the revenue from the cloud business of the firm, heavily invested in AI, will surge close to 20% to $25.76 billion. Investment advisory Wells Fargo has hailed the company as a leader and share gainer in cloud infrastructure and positioned to benefit from a significant artificial intelligence-enabled product cycle.
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. Amazon Web Services (AWS), its cloud computing arm, has been a leader in AI innovation, offering machine learning (ML) tools such as SageMaker and AI-powered services for businesses. In addition, Amazon’s AI-driven consumer products, like Alexa and the recommendation algorithms on its e-commerce platform, have cemented its position as an AI leader. More recently, Amazon’s push into generative AI, including launching Bedrock – a service to help developers build generative AI applications – and custom AI chips like Inferentia.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a 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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