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7 Best Under-The-Radar AI Stocks Hedge Funds are Buying

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The AI-led stock rally that rewarded mega-cap technology stocks has finally started to trickle down to other industry players that were seemingly not related to the AI and tech industry. Consider this: The information technology sector gained about 11% over the past three months, while the S&P 500 utilities sector jumped 18% in the same period. Why? Because investors are scrambling to pile into utilities since they are set to benefit from the dramatic rise in power demand thanks to the data center boom caused by the mass AI adaption. As Nvidia’s CEO Jensen Huang put it in the company’s latest earnings call, the “next industrial revolution” has started with the dawn of AI and across the globe data centers are being “converted into AI factories.”

AI-Led Stock Market Boom: “No Longer Dependent on Just One Stock”

A Wall Street Journal report recently quoted Nadia Lovell, senior U.S. equity strategist, global wealth management at UBS, who said that the market is “no longer dependent on just one stock” when it comes to AI as she sees a “broadening out of the AI trade.”

Insider Monkey’s research backs this notion. Our research recently unlocked several AI stocks that are better than mega-cap AI stocks with soaring valuations. If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

For this article we first conducted thorough research to see which lesser-known companies are offering products and services set to see demand in the AI revolution. These companies included firms making hardware, software, infrastructure and backend products necessary for mass AI deployment and consumption. From these companies we chose 7 stocks with the highest number of hedge fund investors. 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).

7. AXT Inc. (NASDAQ:AXTI)

Number of Hedge Fund Investors: 19

California-based AXT makes semiconductor substrates, the base material used in wireless device fabrication. This makes AXT Inc. (NASDAQ:AXTI) a strong AI play since there is and will be a continued rise in semiconductor demand amid the AI boom. The stock is already up about 40% so far this year.

Earlier in May AXT Inc. (NASDAQ:AXTI) posted Q1 results. Adjusted EPS in the quarter came in at -$0.03, surpassing estimates by $0.05. Revenue in the quarter jumped 17% year over year to $22.7 million, beating estimates by $0.95 million.

6. Recursion Pharmaceuticals Inc (NASDAQ:RXRX)

Number of Hedge Fund Investors: 21

AI-based drug discovery is one of the biggest trends major companies and venture capitalists are betting on. Some estimates suggest AI-led drug discovery could soon be a $100 billion business. Recursion Pharmaceuticals Inc (NASDAQ:RXRX) is an AI drug discovery play, as Recursion Pharmaceuticals Inc (NASDAQ:RXRX) uses high-dimensional data and predictive results for drug discovery and development. Last year, Nvidia decided to invest $50 million in Recursion Pharmaceuticals Inc (NASDAQ:RXRX) in a partnership that would see the combination of Recursion Pharmaceuticals Inc’s (NASDAQ:RXRX) chemical and biological datasets with NVIDIA DGX™ Cloud and other AI tech stack for drug discovery.

As of the end of the first quarter of 2024, 21 hedge funds tracked by Insider Monkey reported owning stakes in Recursion Pharmaceuticals Inc (NASDAQ:RXRX). The biggest stakeholder of Recursion Pharmaceuticals Inc (NASDAQ:RXRX) during this period was Catherine D. Wood’s ARK Investment Management which had a $245 million stake in Recursion Pharmaceuticals Inc (NASDAQ:RXRX).

5. Littelfuse Inc. (NASDAQ:LFUS)

Number of Hedge Fund Investors: 36

Littelfuse Inc. (NASDAQ:LFUS) makes circuit-protection devices, switches and automotive sensors. Earlier this month, Baird upgraded the stock to Outperform and set a $300 price target, up from $270. Baird is bullish on the stock amid strengths in transportation and electronics segments.

Littelfuse Inc. (NASDAQ:LFUS) is poised to benefit from autonomous driving, data center and semiconductor boom thanks to the AI wave. During its Q1 earnings call, the company talked about semiconductors, AI and growing demand:

 “We are seeing new product launches gain traction as customer design activities accelerate. In the quarter, we secured a meaningful medical win with our custom power semiconductors for a customer in China. We also won business for multiple appliance customers in China for both fuses and switches. We delivered a semiconductor win for a space-related communications application. We also won business for data server power supplies for a customer in Taiwan. Finally, we delivered a meaningful telecom win in India that will utilize our core circuit protection offering. Beyond near-term trends, structural electronics end market drivers such as artificial intelligence, automation and technology reliability remain key opportunities as our customers continue to depend on us for innovative engineering expertise.”

Read the full earnings call transcript here

Like other under-the-radar AI stocks, Littelfuse Inc. (NASDAQ:LFUS) also got the attention of hedge funds in the first quarter, as 36 funds reported owning stakes in Littelfuse Inc. (NASDAQ:LFUS) as of the end of March, significantly more than 22 funds in the previous quarter.

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AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.

Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…