In this article, we will take a detailed look at Analysts Are Talking About These 10 AI Stocks.
Gene Munster from Deepwater Asset Management said in a latest program on CNBC that the AI hardware trade is still intact and the analyst believes DeepSeek is a net positive for the industry.
“The consensus DeepSeek has been a positive for AI. I think when it comes to the cost of AI inference, it’s going to go through the floor. Sam Altman said after DeepSeek that they expect the cost of tokens to go down 10 to 12x per year for their second-tier model. I mean, that’s basically through the floor. And I think the third piece to this, if those two happen, we get this hardware build-out, we the cost of compute or the cost of inference declining. I think you’re going to see some just profound impacts. And so I’m still bullish on this market. I think that what we’re seeing right now is a funk, and I think that we still got two great years left of this AI trade.”
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For this article, we picked 10 AI stocks currently making moves on the back of the latest news. With each stock, we have mentioned its hedge fund sentiment. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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10. International Business Machines Corp (NYSE:IBM)
Number of Hedge Fund Investors: 60
Mish Schneider from MarketGauge said in a latest program on Schwab Network that International Business Machines Corp (NYSE:IBM) has made a strong comeback after being forgotten for a while.
“What you’d really be looking for right now with IBM is for it to take out, say, 260. And then, if it can get through 260 again—it’s been trading between 245 and 260—then I think you have a situation where you could see 350, maybe even higher. Of course, market conditions always prevail. If we get some kind of major liquidation all around, that will affect everything. But that’s a company everyone forgot about, and now, all of a sudden, Big Blue is back in vogue.”
IBM is indeed making a comeback. As of the end of Q4, IBM’s AI products and services surpassed $5 billion in total bookings, with $2 billion added just since last quarter. Last year, IBM updated its Granite family of AI models for enterprise use, making them about 90% more cost-efficient than large models. RedHat is also key in IBM’s open-source GenAI strategy. Management highlighted that RHEL AI and OpenShift AI platforms are gaining traction, along with IBM’s watsonx AI solutions. The company expects its software business to grow by at least 10% in 2025, up from 8.3% growth in 2024.
9. Arista Networks Inc (NYSE:ANET)
Number of Hedge Fund Investors: 78
Jim Cramer in a latest program on CNBC gave some bullish comments about Arista Networks Inc (NYSE:ANET) and said the company’s management is conservative in guidance.
“Now let me just say this—every time there has been any conservative statement from Jayshree Ullal, you buy, you wait a couple of days, you let the stock settle. This time will be no different. There is no real loss of business at Meta to speak of. And I’ve got to tell you, in the end, everybody raised price. We saw this last week—this phenomenon. Palo Alto gets just trashed the night before, everybody raises price, now the stock is above where it was. This is not the beginning of the end of Arista. They are in almost every data center. They’re doing incredibly well.”
Madison Mid Cap Fund stated the following regarding Arista Networks Inc (NYSE:ANET) in its Q4 2024 investor letter:
“The top five contributors for the quarter were Liberty Formula One, Arista Networks Inc (NYSE:ANET), Copart, Brookfield Asset Management, and Lithia Motors. Arista Networks posted another quarter of better-than-expected revenue and earnings growth. More importantly, the outlook remains robust, with promising results from its AI trials with customers on top of anticipated solid growth in the core business.”
8. Intel Corp (NASDAQ:INTC)
Number of Hedge Fund Investors: 83
Bernstein’s Stacy Rasgon said in a recent program on CNBC that Intel Corp (NASDAQ:INTC) has been in the news a lot amid reports that Taiwan Semiconductor faced some pressure from the US government to help “prop up” the company. However, he said he won’t recommend the stock to investors as of now but would be “terrified” to short it.
“We are not recommending that you buy Intel. That being said, we’ve talked about this. I always kind of joke that I’ve been a noted bear on the company. I’m afraid to short it right now for reasons like this—news flow comes, and we can talk about what’s been said. A lot of it doesn’t really make a lot of sense to me, and we can talk about why.But it’s these kinds of headlines that make me terrified to short it because anything can happen. Trump can tweet something on any given day, or whatever, and it can go up a lot. So it’s a tough short.”
Intel’s last reported quarter increased fears the company will need a lot of time before seeing any kind of significant improvement. In the first quarter, the company sees revenue of $12.2 billion at the midpoint of its guidance, reflecting an 11-18% decline quarter-over-quarter. The company has also scrapped its plans to launch Falcon Shores, its next-generation AI GPUs. A few months back it was a key catalyst expected to debut in late 2025. Intel’s Clearwater Forest AI data center server CPUs, which were set to use its 18A chip (similar to TSMC’s 3nm nodes), have had their launch delayed from FY2025 to FY2026. These setbacks are likely to affect Intel’s already struggling Data Center & AI business segment. Consensus expectations suggest the company won’t see positive free cash flow for at least the next three years.
Invesco Growth and Income Fund stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“Intel Corporation (NASDAQ:INTC): The chipmaker reported weaker-than-expected quarterly results as revenues declined and earnings were below expectations. Management also provided weaker guidance going forward; the stock fell on the news. We sold the position during the quarter.
The chipmaker’s quarterly earnings report was weaker than anticipated as revenues declined and earnings were below expectations. Management also provided weaker guidance going forward. Given that a potential recovery appears to be further in the future than we originally anticipated, we sold the position.”
7. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Investors: 107
Don Kaufman from TheoTrade said in a latest program on Schwab Network that there’s a lack of clarity on Alibaba Group Holding Limited (NYSE:BABA)’s future and the company’s AI offerings.
“Alibaba has gone on an absolutely parabolic run from 80 to 129. Maybe in the last two days, we’re seeing a little bit of a pullback, but really, it’s all about earnings—just kind of stalling out before the earnings. I mean, I think this one is going to be plain and simple: buy the rumor, sell the news. There is no clarity whatsoever on the future of Alibaba. We don’t know what tariffs are going to look like, we don’t know if their AI is actually going to be effective with Apple. There’s too many unknowns for this underlying. I like the bearish tilt.”
Conventum – Alluvium Global Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2024 investor letter:
“On 24 September the People’s Bank of China unveiled a massive three part stimulus package involving: (1) slashing the amount of cash banks need to hold in reserve and lowering the main policy interest rate; (2) cutting mortgage rates on existing home loans by 0.5% and reducing down payment requirements for second homes from 25% to 15%; and (3) supporting equity markets by a USD 114b lending pool to encourage companies to buy back shares and non-bank financial institutions to buy local equities (which may be expanded by the same amount two more times)5 . We are flabbergasted. But we shouldn’t be. After all, these types of arrangements have been all too common over the last 15 years. The local equity markets responded with gusto, and for the last week of the quarter the CSI 300 Index (Shanghai and Shenzen listed companies) was up 25.1%. Alibaba Group Holding Limited (NYSE:BABA) was not lost in all this, and returned 26.8% over that one week period. But Alibaba had already performed well so during the whole September quarter it was up a staggering 56.0%. As a result, Alibaba is no longer the cheap stock it once was. It now trades at a premium to our valuation – a valuation which admittedly had been progressively reduced over our holding period as a result of deteriorating business fundamentals. As a result of Alibaba’s significant outperformance, by the end of the quarter it had reached 3.7% of the Fund. We are weighing up our options here, considering the relative risk.”
6. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 126
Jeff Kilburg, KKM Financial CEO and CIO, said in a program on CNBC that he believes Tesla Inc (NASDAQ:TSLA) is still ‘on track’ and he’d buy more of the EV maker’s shares if the stock pulls back to $300.
“What’s fascinating to me is that Tesla is just having a pullback here. We were aggressively writing calls when it was above 400, so it’s always been a volatile stock. I think Tesla is still on track, but the competition, the DeepSeek conversation—this is all going into the input now. What’s fascinating to me is that Nvidia is kind of not involved in this pullback here because they’re still buying chips. So I think we have to wait more here. Tesla is a name that I do own. I’ve owned it for a while. We will be adding when it gets close to 300 because I think it has the ability to be that robo-taxi, to be the autonomous driver that we all hope for.”
Analysts are still trying to look beyond Elon Musk’s claims and find out the specifics on the company’s EV and robo-taxi plans.
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. 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.
Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells electric vehicles, related software and components, and solar and energy storage products. Shares rose on growth in the energy segment, the promise of new model launches in 2025, and increasing investor confidence in Tesla’s AI initiatives. Despite macroeconomic challenges, delivery data in major markets like China have shown considerable improvement. The energy and automotive segments demonstrated stronger-than-expected profitability. Tesla also expanded its advanced computing center in Texas, released improved version of its software-enhanced driving solution, and is set to launch new mass market vehicles years after the initial rollouts of Models 3 and Y. Expectations of deregulation under the incoming administration point to the potential acceleration of new technology rollouts, which could enhance Tesla’s leadership position in real world AI and bolster investor confidence that Tesla will benefit from these large and attractive growth opportunities.”
5. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 161
J.P. Morgan analyst Harlan Sur recently said in a note that Broadcom Inc (NASDAQ:AVGO) is positioned to benefit from ARM’s expansion into chip design. The analyst believes major tech companies are increasingly turning to custom application-specific integrated circuits (ASICs) for AI accelerators to improve power and compute efficiency. Given Broadcom Inc (NASDAQ:AVGO)’s sizable ASIC business, the company is well-positioned to gain from this trend.
“With the stepped-up focus on compute efficiency (thanks to DeepSeek), we can see these AI ASIC programs being accelerated to further augment compute efficiency and drive a more aggressive cost/compute curve,” Sur wrote in a note to clients. He has an Overweight rating on Broadcom Inc (NASDAQ:AVGO) with a $250 price target.
Aristotle Atlantic Core Equity Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q4 2024 investor letter:
Broadcom Inc. (NASDAQ:AVGO) contributed to performance in the fourth quarter as the company’s third quarter results demonstrated continuing strength for its AI networking and custom accelerator semiconductor business. The company also gave long-term guidance for the service addressable market (SAM) opportunity for its AI-related business, indicating a market opportunity of $60 billion to $90 billion, which only includes contributions from its current three customers. This long-term outlook for AI semiconductor content exceeded investor expectations. Broadcom’s quarterly results also showed the company is ahead on its VMware integration timeline to achieve $8.5 billion in EBITDA, which will support long-term gross and operating margin expansion for the company.
