In this article, we will take a detailed look at Analysts Are Talking About These 10 AI Stocks.
Marco Argenti, Chief Information Officer at Goldman Sachs, recently said that in 2025, the world will witness the full potential of AI that has been in development. He used the analogy of a child raised in a library, now ready to step out into the world.
“What if they, we make them interact with sensory data, with vision data, with, uh, you know, like basically opening that door of the library and making this child walk into the real world? I think this creation of word models, like they’re called generally in the industry, where you combine multimodal information, that is not only text but is also videos, but is also sensory data. It might be temperature, it might be anything you can perceive around you, could actually unlock the next level of capabilities,” Argenti said, according to CNBC.
Despite high hopes, a potential plateau in performance improvements in AI systems, high energy consumption of AI data centers and transparency remain key issues tech companies will continue to grapple with in 2025.
READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In
For this article, we picked 10 AI stocks currently trending based on latest news and analyst ratings. With each stock, we have mentioned the 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).
Pixabay/Public Domain
10. Astera Labs Inc (NASDAQ:ALAB)
Number of Hedge Fund Investors: 39
Morgan Stanley recently increased its price target on Astera Labs Inc (NASDAQ:ALAB) to $142 from $94.
“[The] industry view remains attractive, as AI strength now dominates the index weightings, and other areas are bottoming out slowly,” analysts wrote in a client note. “We expect to finish the year with a very strong Blackwell ramp, share gains vs. [application specific integrated circuits], and several aspects that should endure beyond CY25 even if the [artificial general intelligence] ‘arms race’ decelerates,” they added. “Other AI plays all offer promise, including [application specific integrated circuits], but we would still keep nearer term expectations in check.”
Baron Discovery Fund stated the following regarding Astera Labs, Inc. (NASDAQ:ALAB) in its Q2 2024 investor letter:
“AI models are rapidly moving from objects of curiosity to levels of functionality that just a couple of years ago were believed to exist only in the realm of science fiction. We obviously do not invest in large-cap companies that produce AI hardware, which is where significant market attention is focused right now. Yet we continue to look for exciting small-cap ideas in AI hardware. For example, we owned a small-cap AI-oriented semiconductor company in the second quarter called Astera Labs, Inc. (NASDAQ:ALAB). Astera Labs manufactures analog semiconductors that facilitate improved communications within a motherboard (for example between graphics processing units like what NVIDIA makes and central processing units which are made by companies like Intel), and between servers. We bought shares when the company went public, but due to the incredible hype surrounding hardware-based AI companies, the stock quickly doubled and exceeded what we believed was a reasonable long-term valuation (particularly given new competitive offerings on the horizon). Therefore, we sold our investment but continue to monitor its valuation closely for a potential re-entry point.”
9. Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Investors: 70
Morgan Stanley recently increased its price target on Marvell Technology Inc (NASDAQ:MRVL) to $120 from $102.
“[The] industry view remains attractive, as AI strength now dominates the index weightings, and other areas are bottoming out slowly,” analysts wrote in a client note.
“We expect to finish the year with a very strong Blackwell ramp, share gains vs. [application specific integrated circuits], and several aspects that should endure beyond CY25 even if the [artificial general intelligence] ‘arms race’ decelerates,” they added. “Other AI plays all offer promise, including [application specific integrated circuits], but we would still keep nearer term expectations in check.”
Marvell Tech Inc (NASDAQ:MRVL) is rapidly positioning itself as an AI-first company, with its custom silicon business accounting for 73% of Q3 revenues, up from 39% during the same period last year. Marvell has a five-year agreement with Amazon (AMZN) AWS, helping Amazon design its Trainium and Inferentia ASICs, and providing a range of optical interconnect products.
Marvell Tech Inc (NASDAQ:MRVL) is now focusing on the AI opportunity, as evidenced by the recent restructuring charges, and is progressing through the design phase of its 2nm platform.
Artisan Mid Cap Fund stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (GPUs). Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
8. Snowflake Inc (NYSE:SNOW)
Number of Hedge Fund Investors: 71
Doug Clinton from Deepwater Asset Management said in a latest program on CNBC that Snowflake Inc (NYSE:SNOW) could be a good emerging AI story in 2025.
“The mega caps, they’ve already shown that they can do that. But I also think you could look at potentially some software names that start to get an AI bid. Snowflake Inc (NYSE:SNOW) is one example, yet another holding of ours, that has talked more about an AI story. I think companies like that, who can say, “Hey, we do have a play in AI. We’re on the software side, customers are starting to deploy us for AI use cases,” might have a case to work next year too.”
Snowflake Inc (NYSE:SNOW) is a Cloud-based data warehouse offering data storage and analytics services. Snowflake Inc (NYSE:SNOW)’s moat lies in its data technologies that let companies analyze and make sense of unstructured data. Amid the generative AI boom, companies are ready to spend a fortune to use huge datasets to their advantage. This would bode well for Snowflake Inc (NYSE:SNOW). The company’s usage-based pricing model also gives it an edge in the market. Snowflake Inc (NYSE:SNOW) expects the total addressable market for its Cloud data platform to rise to $342 billion by 2028, which is double the market size of 2023.
Baron Global Advantage Fund stated the following regarding Snowflake Inc. (NYSE:SNOW) in its Q3 2024 investor letter:
“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform predominantly used for data analytics. Shares fell 15.2% in the third quarter due to a cybersecurity incident, a shifting competitive landscape, a change in leadership, and general macro complexities which are pressuring customer IT budgets. With generative AI (Gen AI) front and center, both investors and customers are closely evaluating Snowflake’s positioning in the future data ecosystem. Databricks and other competitors whose core users are data scientists who are also key buyers of Gen AI technologies, are benefiting. In addition, while Snowflake’s product innovation push should fuel future growth, it may also lead to short-term headwinds to profitability. Management reported healthy demand for its core data analytics, evidenced by solid growth rates among current customers alongside new go-to-market initiatives that could support growth. We are optimistic the new CEO, Sridhar Ramaswamy, can lead the company towards an AI-centric strategy, and therefore remain shareholders.”
7. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Eddy Gifford from Tactive said in a latest program on Schwab Network that moving into the election he was bullish on Tesla Inc (NASDAQ:TSLA) while he’s still positive about the stock amid Elon Musk’s vision.
“Long term, it’s hard to bet against this guy. I mean, I know that people have been trying to bet against him for a long time, and every time they do, Elon Musk ends up burning them on the other side. So, we’re definitely leaning in, and as long as things continue on the same trajectory, we have no cause to be concerned.”
Looking beyond the recent spike in Tesla shares amid Donald Trump’s victory, Tesla’s fundamentals are challenged. How? Tesla Inc’s (NASDAQ:TSLA) key robotaxi event was short on details. Notably absent was the discussion of a “more affordable” model that Musk had previously mentioned to boost confidence in Tesla’s vehicle sales growth outlook.
What about the $30,000 price tag claim?
Musk has indicated that the Cybercab will have a production cost of approximately $30,000. Operating within the robotaxi fleet is projected to cost around $0.20 per mile. With a production cost of $30,000, the retail price of the Cybercab is likely to exceed this figure. For instance, if the Cybercab is priced at $30,000 per unit, that translates to $15,000 per seat. In contrast, the average price per passenger seat in Tesla Inc (NASDAQ:TSLA)’s most affordable long-range RWD Model 3—factoring in full self-driving (FSD) licensing—is under $10,000 ($29,990 post-incentive vehicle price plus $8,000 for the FSD license, divided by four passenger seats). Regarding operational costs, while the Cybercab is expected to cost $0.20 per mile, charging the Model 3 is estimated at under $0.10 per mile, leaving a significant margin to cover maintenance and downtime.
There is a lot of hype around Tesla Inc (NASDAQ:TSLA) robo taxis but many believe they will not be enough to fix the company’s long-term challenges.
What are these challenges?
Tesla Inc’s (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. Even Rivian’s CEO suggested Tesla Inc (NASDAQ:TSLA) could be nearing market saturation for these models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q3 2024 investor letter:
“The largest relative detractors during the quarter were Apple, Airbnb, and Tesla (not owned). We’ve spoken at length about our rationale for not owning Tesla, Inc. (NASDAQ:TSLA). In short, the market seems to be pricing in a lot of positive optionality for this company in the near-to-intermediate term (and particularly a fully autonomous fleet of electric vehicles in the medium term). What exists today is an automobile manufacturer limited to the higher-income segment that is increasingly challenged to sell vehicles when interest rates are not zero. We continue to question the company’s long-term growth profile and governance.”
6. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 128
CJ Muse, Cantor Fitzgerald analyst, said in a latest program on CNBC that the rising tide of custom AI chips would help stocks like Broadcom Inc (NASDAQ:AVGO).
“Broadcom Inc (NASDAQ:AVGO) reported, and Hock Tan, you know, outlined the vision for custom silicon. That was a change statement in the market appreciating how the world is led by and dominated by Nvidia, but that there’s also a rising tide here for custom silicon that will help the likes of Broadcom Inc (NASDAQ:AVGO) and Marvell as they support, in Broadcom’s case, you know, Google, Meta, TikTok, and, in Marvell’s case, Amazon and Microsoft. So, you know, there’s definitely different spots for the different kinds of areas of silicon.”
Broadcom Inc (NASDAQ:AVGO) continues to be a leader in the AI ASCI and networking chips market. Broadcom Inc (NASDAQ:AVGO) has 3nm AI ASIC chip deals with Alphabet and Meta in addition to many other tech giants aiming massive spending for AI hyperscaling.
However, the stock could face the impact of what Nvidia is facing today: too high expectations.
In the latest quarterly results, Broadcom Inc (NASDAQ:AVGO) revenue was largely in line with estimates. The company has narrowly exceeded revenue expectations by less than 5% in most cases. Some analysts suggest Broadcom’s growth rates will moderate to below 20% CAGR starting the first quarter of 2025. In fiscal Q4, it was +50% topline growth. The market won’t be kind to the stock when the revenue growth rate slows. Broadcom has about $58 billion in net debt, which is relatively high.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“Similar to the earnings results for Nvidia, shares of Broadcom Inc. (NASDAQ:AVGO) initially sold off after the company reported solid earnings that fell light of elevated market expectations, but the stock did recover from its drawdown in the matter of a few weeks. With an enticing combination of custom chip offerings as well as networking assets, Broadcom remains one of the best positioned companies as part of the AI revolution. Broadcom outlined a path to derive a majority of its revenue from the AI end market within a couple of years, and the non-AI part of the business has stabilized after a deep correction. The company’s dominant market position in its end markets, along with durable growth, strong margins and best-in-class capital allocation, presents an opportunity to compound capital over time.”
5. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Tom Forte, Maxim Group senior consumer internet analyst, said while talking to CNBC that Apple Inc (NASDAQ:AAPL) is an expensive stock.
“If you look at the valuation, it’s trading well north of 30 times on a PE basis, which is at or above its peers who are also taking advantage of this AI-fueled rally. When you look at the next couple of years for Apple Inc (NASDAQ:AAPL), on what looks to be a very slow-developing upgrade cycle, if there is a major upgrade cycle, you’re looking at mid to high single-digit EPS growth. So, north of 30 times PE, mid single-digit to high single-digit EPS growth—I think it’s, you know, an expensive stock.”
Apple Inc (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.
Investors had hopes for the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.
Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.
While the company is projected to achieve 9.5% EPS growth this fiscal year and 12.3% growth in the next, much of this growth is already priced in, as the stock trades at nearly 30 times the expected EPS for the fiscal year ending September 2026.
Parnassus Growth Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) shares rose during the quarter, making our underweight position a relative detractor. Investors reacted positively to the new iPhone 16 lineup and its advanced features, including generative artificial intelligence, greater durability and increased processing power.”