Artificial intelligence models are often criticized for “hallucination”, but they are also being used deliberately to spread misinformation. In recent news, China’s securities watchdog has said that it is going to be working with the police and cyberspace regulators to crack down on those who are disseminating false news. The move comes amid the increasing need for monitoring fake information in the stock market which is made quite easy due to artificial intelligence.
Regulators will “hit early, hit hard, and hit at the heart” of the issue.
– Securities Times.
In a separate article, Shanghai Securities News described how artificial intelligence is being used to create and spread misleading information in an attempt to con investors or manipulate stocks. Investors are being lured by get-rich-quick schemes. However, they should stay wary of such bad actors leveraging the hype around technological advancements to lure them into schemes.
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Any claims of high and guaranteed investment returns with little or no risk are known to be classic warning signs of fraud. Even though the emergence of DeepSeek has been motivating investors and fund managers to embrace AI, their adoption of technology also raises the chances of them being scammed at the hands of it. Anything from cloned voices to altered images and fake videos can be used to spread investment misinformation.
In order to combat the spread of misinformation, the China Securities Regulatory Commission said that it would be proactive in dispelling stock market rumours. They will do this by issuing clarifications and boosting investor education and guidance to “enhance investors’ ability to spot” fake information.
According to the DC Department of Insurance, Securities and Banking (DISB), some warning signs of a fake actor/promoter are their lack of registration status. To avoid falling victim to it, users can use the Investor.gov website to confirm the registration status of investment professionals and check for disciplinary history.
Moreover, it’s reasonable to work with a registered investment professional and on a registered exchange. For added assurance, the authenticity of underlying sources should be checked and multiple sources of information should be reviewed before making investment decisions.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.
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).
A financial trader in a suit and headset in front of a bank of monitors, surrounded by other traders and brokers intently watching the news and markets.
10. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 63
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On March 13, the company announced a strategic partnership with Databricks, the Data and AI Company, to accelerate the production of AI applications and reduce total cost of ownership. The partnership will integrate Palantir’s world-class AI operating system with Databricks’ leading platform for AI, data warehousing, and data engineering to develop a secure, scalable system for real-time AI-driven workflows. The integration of Unity Catalog through Delta Sharing and Palantir’s multimodal security system allows customers to maximize the value of their data, consistently governing and securing their entire data estate so enterprises can build on a trusted foundation, all while maintaining efficiency and keeping TCO low. The collaboration between Palantir and Databricks is already serving customers in the private and public sector such as the Department of Defense, the Department of the Treasury, and others.
“Operational integration of Palantir and Databricks reduces costs and complexity for our customers while providing a foundation to accelerate their operations into the age of AI. Palantir and Databricks are aligned to deliver on our customers’ mission-critical objectives, and this partnership has already proven to accelerate those outcomes. The ‘best of both worlds’ technical approach means the best outcomes for our mutual customers.”
-Ted Mabrey, Palantir’s Global Head of Commercial.
9. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 88
Eaton Corporation plc (NYSE:ETN) is a global power management company offering electrical, aerospace, vehicle, and eMobility solutions. On March 12, Morgan Stanley analyst Christopher Snyder maintained a “Buy” rating on the stock and set a price target of $385.00. The analyst is optimistic on Eaton Corporation plc and its potential for future growth. The company strongly aligns with significant industry trends such as U.S. reshoring, utility expansion, AI data centers, and electrification, which are in turn paving the way for Eaton’s organic growth at a high single-digit rate through the end of the decade. The firm also pointed to Eaton’s strategic acquisitions, like the recent Fibrebond acquisition, as they are expected to enhance earnings per share through revenue synergies and accretive growth.
8. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 95
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On March 13, Citi analyst Jason Bazinet maintained a “Buy” rating on the stock and retained the price target of $600.00. Bazinet is bullish on the stock given its resilience and growth potential, particularly recently after the company was the victim of several bearish reports that questioned its AI advertising platform. It affirmed that AppLovin’s tools are effective, which is proven from its continued client usage despite overlaps with platforms such as Meta.
AppLovin’s eCommerce sector is also demonstrating promising growth, particularly as 600 eCommerce customers have onboarded and 80% of them have scaled their spending. The company is also exploring further expansion avenues, and even though there are challenges such as staffing limitations, proactive measures such as the integration of AI agents for process automation are proving fruitful for the company. In addition, the company’s eCommerce model is also anticipated to catch up with its more mature mobile gaming ad model, paving way for further revenue growth.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops semiconductors, providing processors and graphics technologies for gaming, data centers, and AI-driven high-performance computing. On March 14, Mizuho Securities revised its price target for the stock, reducing it from $140.00 to $120.00, and reaffirmed its “Outperform” rating. The price target revision is to account for lower artificial intelligence peer group multiples. The firm anticipates headwinds impacting AMD’s growth in the artificial intelligence (AI) sector, particularly difficulties in securing Chip-on-Wafer-on-Substrate (CoWoS) share. Regardless of the challenges, the firm is optimistic on AMD’s strong prospects in the server and PC markets.
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On March 13, Wells Fargo analyst Colin Langan reiterated the stock as “Underweight” and trimmed his 12-month price target nearly 4% to $130 from $135, stating that he sees too many negative catalysts for Tesla, particularly in Europe.
“The > 40% YTD decline in TSLA’s Europe sales was likely a key catalyst in the recent correction, as its raises the prospects of another year of no growth. Recent protests & vandalism also add to concerns.”
Tesla has been facing a series of protests labeled as “Tesla Takedowns” characterized by peaceful protests, takedowns, vandalism, and environmental activism; all at once. The motive behind this movement is to develop a strong public front against the tech oligarchy behind the Trump administration’s actions, encouraging Americans to sell their Teslas and dump the company’s stock.
“Despite the 40% YTD decline, we still see > 40% downside. Many investors previously expected weaker profits, but were reluctant to fight positive momentum. If fundamentals matter, the momentum likely turns negative as consensus estimates fall.”
Previously, Trump’s winning of the elections was taken as a positive sign by several Wall Street analysts, particularly Wedbush. The firm had previously stated confidence in the Trump administration, signifying the next four years to be a “total game changer” for the autonomous and artificial intelligence story for Tesla over the coming years.
It estimated the AI and autonomous opportunity to be worth “at least $1 trillion alone” for Tesla. However, the tables have turned and several Wall Street analysts, such as UBS and Redburn Atlantic, have turned their backs on the stock.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
One of the most notable analyst calls on Friday, March 13, was for Apple Inc. Wedbush reiterated the stock as “Outperform” with a $325 price target. The firm said that investors need to see through the “doom and gloom,” and that the company’s next stage of product and AI-driven services growth is still ahead.
“In a nutshell, this is not the time to sell this tech stalwart as in our view the next stage of product and AI driven services growth is still ahead and speaks to our view Apple will make new time highs in 2025 despite the brutal sell-off to start the year.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On March 12, Citi analysts reiterated their Buy rating and $163.00 price target for the stock ahead of the company’s upcoming GPU Technology Conference (GTC).
“Stock specific, risk/reward looks attractive with stock trading below historical P/E trough of 19x and now fully derisking ~28% sales exposure to both China and Singapore on AI diffusion rules per our math. That said, we believe investors are looking for a clearance event on the AI restrictions and tariffs impact to gross margins, which we don’t believe Nvidia is in a position to comment currently.”
Concerning the conference, Malik is anticipating Nvidia to officially unveil its Blackwell ‘Ultra’ (B300) chip, along with the GB300. Investors are likely keen on learning more about the next-generation Rubin chip.
“While no further details on the chip or its architecture were provided, we think that given recent management comments, Vera-Rubin will be a strong step up from Grace-Blackwell, particularly on the inference front.”
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOG) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses. On March 14, TD Cowen lowered the firm’s price target on the stock to $210 from $220 and kept a “Buy” rating on the shares. The firm said that Google Cloud is expected to generate 3.7 times more incremental revenue from GenAI driven by the ramping up of services and a flattening of capex growth in the latter period. It also highlighted Gemini, Google’s initiative, as a key competitive advantage over competitors such as Amazon Web Services (AWS) and Microsoft’s Azure. It expects Gemini to contribute to a higher percentage of GenAI revenue within Google’s total revenue stream. The firm updated its model and raised capex estimates on GenAI infrastructure buildout and also made changes to other estimates.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On March 13, the company announced Copilot for Gaming, the ultimate gaming sidekick that helps players play faster, sharpen skills with expert coaching, and enjoy a more social gaming experience. The AI-driven sidekick will act as a personalized gaming companion, helping users reach their favorite games faster, coach them to improve their skills, and connect them better with their friends and communities. According to the company, Copilot for Gaming is built on three principles: capability, adaptability, and personalization. This Copilot is introduced to enhance the gaming experience for the user, ensuring that the player remains in control.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On March 14, General Dynamics Information Technology (GDIT), a business unit of General Dynamics, announced that it has expanded its technology partnership with Amazon Web Services (AWS). The two companies will be joining hands to develop cutting-edge cybersecurity, artificial intelligence, cloud migration and modernization solutions to boost digital transformation for defense, intelligence and civilian agencies. AWS will be extending its cloud computing environment to GDIT, while GDIT will leverage its research and development labs to work together with AWS on areas such as quantum, edge computing and high-performance computing.
“GDIT’s collaboration with AWS will advance the modernization and efficiency of our U.S. Federal customers at a critical time of government digital transformation. Our new agreement will deliver AWS’s advanced cloud services, including generative AI solutions with Amazon Bedrock, NOVA, and Q, to federal agencies working on some of America’s most important missions. Together, our companies continue to drive secure, scalable, and cost-effective solutions in defense, intelligence, and citizen services that enhance American AI leadership at home and abroad.”
-David Appel, vice president of U.S. Federal at AWS.
While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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