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.”
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 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.
4. Uber Technolgies Inc (NYSE:UBER)
Number of Hedge Fund Investors: 166
Andrew Arons, Founder and Managing Partner at Synergy Advisory Management Group, said in a latest program on Schwab Network that he believes Uber Technologies (NYSE:UBER) shares will hit their all-time high within the next six months.
“I think Uber stock is going to hit all-time highs. I would say probably within the next six months, we’ll see it reach all-time highs. I wouldn’t be surprised if it hits 100 this year. So yeah, I think they’re moving in the right direction. They are one of those stocks attracting a lot of money, and a lot of money is starting to flow into Uber. They’re also making some really nice partnerships, and I think that’s going to propel the stock.”
Ariel Appreciation Fund stated the following regarding Uber Technologies, Inc. (NYSE:UBER) in its Q4 2024 investor letter:
“During the quarter, we initiated three new investments, each in companies we have followed closely for a considerable time. At various points, we viewed them as missed opportunities; however, our experience with Mr. Market has taught us that patience often creates inevitable entry points. This quarter, some exciting opportunities presented themselves. The three investments are Amazon (NASDAQ: AMZN), Diageo (NYSE:DEO), and Uber Technologies, Inc. (NYSE:UBER). We will discuss each in detail below
At the halfway point of the year, Uber was one of the top-performing stocks in the S&P, and we couldn’t help but kick ourselves for having spent considerable time researching the company—demonstrating gen[1]uine interest—only to never invest a dime. By year-end, however, Uber’s stock had not only surrendered all its gains but had fallen even further. So, what changed? Hype, plain and simple. Specifically, hype surrounding fully autonomous vehicles (AVs).
While we are excited by the advancements toward full autonomy and have friends who rave about their experiences with Waymo, the narrative (there’s that word again!) surrounding the inevitability of AVs has become so pervasive that it’s taken on a life of its own in markets…” (Click here to read the full text)
3. Nvidia Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 223
Joshua Brown, the CEO and Co-founder of Ritholtz Wealth Management, said while talking to CNBC following the DeepSeek-triggered selloff that the Chinese breakthrough will increase the usage of AI. However, he believes the chances of major companies using the Chinese model for their Cloud operations are thin. Overall, Brown believes the hype around the potential impact of DeepSeek on Nvidia Corp (NASDAQ:NVDA) was overdone.
“Most of this conversation about the impact of deep seek is happening on Twitter. If you know anything about Twitter—X—if you know anything about X, you know it’s loaded with hedge fund managers and asset managers who absolutely loathe the Mag 7. They’ve been waiting for this moment for two years. These stocks, Nvidia in particular, have been making them look bad for 24 straight months, and they’re dying for this moment where small caps are up, Europe is flat, value stocks are outperforming growth. They view this as comeuppance for the people who have been riding these giant tech stocks to huge gains. I think because there’s that desire to see these investors get beaten up a little bit, maybe that’s why some of the rhetoric about this being the end of Nvidia is getting so overdone.”
Mairs & Power Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2024 investor letter:
“We prefer to invest in our backyard, as Minnesota and the Upper Midwest are blessed with a rich and diverse business community. As such, seven out of our 10 largest relative bets are based in our region (MN, WI, IA, SD, ND, IL). That said, we are unafraid to look beyond our geographic area if we find exceptional opportunities. In 2019, we found such an opportunity in a graphics processing technology company called NVIDIA Corporation (NASDAQ:NVDA). At the time, we felt NVIDIA would be a good way to leverage the growing interest in video games, as most of its chips were popular amongst “gamers” to enhance graphics. But what really grabbed our interest was its smaller, albeit faster-growing, data center business that was positioned to benefit from the emergence of high-performance computing, such as deep learning and machine learning, and the related field of AI. The rest, as they say, is history. NVIDIA is one of a number of Technology holdings that we have added over the past decade, which has raised eyebrows since our Firm was well-known for avoiding the Tech Bubble in the late 1990s. Unlike the dot-com companies that operated at the turn-of-the-century, many of today’s technology companies are established businesses with significant cash flows. We have argued, and continue to argue, that many of these investments are perfectly aligned with our investments process in that they embody durable competitive advantages, above-average growth prospects, and excellent management teams.”
2. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 262
Tim Seymour of Seymour Asset Management said in a latest program on CNBC that Meta Platforms Inc (NASDAQ:META) is not a cheap stock anymore following the latest bull run.
“The monetization dynamics here around robots are less clear than the monetization around the core business, which had 21% fourth-quarter revenue growth FX-neutral. The question for investors really has to be the age-old—this is no longer, with Google, the cheap of the mega-cap seven or eight. This is actually 30 times trailing, it’s about 26 times if you think they’re going to do 28 bucks a share in ’25. This isn’t a cheap stock anymore, and this is a stock that I think at this point, after this run, is the beneficiary of relative performance versus its peers.”
Meta crushed expectations with the latest quarterly results but yet again pointed to higher expenses in the future. In 2025, it sees total operating expenses in a range of $114-$119 billion, with 19-25% y/y growth. Capex is expected to rise 61-74% y/y to $60-$65 billion, compared to just $37.3 billion in FY24. Advertising rose strongly but analysts believe it should be seen in the context of higher political ad spend and holiday quarter perspective. In 2025, the company might not be able to keep reporting double-digit growth in ad pricing amid weaker consumer spending and a cautious macroeconomic backdrop.
In the long term, Meta shares are expected to grow because of AI. How?
Meta Platforms (NASDAQ:META) is driving usage and ads revenue by improving its algorithms and user experience thanks to AI. Meta Platforms (NASDAQ:META)’s advancements in Reels and WhatsApp are helping manage CapEx growth as the company strives to stay competitive in AI. Meta Platforms (NASDAQ:META)’s substantial user base of 3.3 billion provides a data and distribution edge that could capture a significant share of the GenAI market.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on an investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6 years holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
1. Amazon.com (NASDAQ:AMZN)
Number of Hedge Fund Investors: 338
Hightower’s Stephanie Link said in a latest program on CNBC that she would prefer buying Amazon.com (NASDAQ:AMZN) shares over Meta. Here is how she explained her reasons:
“I actually today would be buying Amazon over Meta because I do think that those results last week were quite good. Expectations were super high, but when you have U.S. retail, you got a lot of ways to win in Amazon. You can win on the retail side—they had 10% U.S. retail growth, margins were the best since 2004 in the U.S. retail piece. Margins also expanded internationally by about 400 basis points. And of course, AWS growing 19%. I know the guidance was lower, but that was really FX and a leap year, difficult compares. So to me, I think at about 14–15 times IA, when it trades at about 18 times historically, that’s the one I want to be putting more money into, and I will.”
Alger Spectra Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a renowned online retailer and leader in cloud computing. The company’s Amazon Web Services (AWS) division offers utility-scale cloud solutions that support corporate America’s digital transition. During the quarter, Amazon’s shares contributed to performance as the company reported better-than-expected fiscal third-quarter results, with revenues and earnings beating analyst estimates. Operating margins expanded to 11%, driven by efficiency gains in logistics and robust AWS performance. Notably, AWS revenue growth accelerated during the quarter, along with recording its highest-ever operating margin of 38.1%, driven by easing cloud cost optimizations, renewed workload migrations, and an increasing contribution from AI workloads. On their earnings call, management highlighted plans to increase capital expenditures to enhance their technology infrastructure, catering to the surging demand for AI-driven computing.”
While we acknowledge the potential of Amazon.com Inc (NASDAQ:AMZN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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