On January 27th, US and European tech stocks witnessed a $1 trillion sell-off, with most of the “magnificent seven” stocks trading in red as China’s new DeepSeek AI model rattled investors. The AI model was supposedly built for less than $6 million, which is a stark contrast to the billions spent by rivals. The DeepSeek app, launched late last week, has become the top-rated free app on the Apple App Store in the US and the UK.
As investors question America’s dominance in AI, the sector continues to drive innovation and rapidly achieve milestones across diverse industries. The Global Artificial Intelligence Industry Forecast revealed that the global AI market was worth almost $62.35 billion in 2020 and will grow at a 40% CAGR between 2021 and 2026. Most importantly, AI is helping the world achieve the net-zero emissions goal, playing a key role in the global energy transition through greater operational efficiency.
“Academia needs to be a player here, as a neutral ground to recognize some of these issues and develop systems in a different way,” said Stanford HAI Vice Director James Landay during the 2025 WEF in Davos. “Academia is also an interdisciplinary player—we have experts in law, medicine, history, social sciences, computer science, art, and design, coming together to ask questions, rather than tech companies focused primarily on a profit motive. We need academia and non-government organizations to have a say and play in this game and question this power dynamic.”
This article focuses on the latest stock ratings and analyst calls on AI companies involved in digital advertising, drone technology, and cloud providers to cybersecurity, telecom, defense, and energy generation.
We selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.
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).
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10. Palladyne AI Corp. (NASDAQ:PDYN)
Number of Hedge Fund Holders: N/A
Palladyne AI Corp. (NASDAQ:PDYN) is a robotics developer known for its advanced AI and ML software platform that is transforming the observation, learning, reasoning, and acting capabilities of robots with reduced data sets, minimal power requirements, and faster training time. The AI software can be integrated with most commercial robots to boost their real-time environmental awareness and enable swift adaptability to task variances without reprogramming, fostering high levels of autonomy and safety.
On January 27th, Alliance Global Partners started coverage of Palladyne AI Corp. (NASDAQ:PDYN) with a $15 target price per share and a “Buy” rating. The brokerage pointed out how the company’s AI software is leveraged to train mobile and static robotic systems, enabling them to adapt to dynamic situations. The brokerage stressed that the Palladyne AI Corp.’s (NASDAQ:PDYN) contract to provide AI-based training for Red Cat Holdings’ (NASDAQ:RCAT) drones is “providing validation” and that a “solid pipeline will lead to further adoption in a variety of industries.” The analyst noted that the firm forecasts revenue of $6.1 million this year and $12.3 million in 2026.
9. Viant Technology Inc. (NASDAQ:DSP)
Number of Hedge Fund Holders: 11
Viant Technology Inc. (NASDAQ:DSP) is a top AI-backed programmatic advertising company transforming campaign management. Their omnichannel platform is designed for Connected TV (CTV) advertising. It enables marketers to optimize spending to lower CPM costs, leverage AI recommendations to improve campaigns and streamline campaign setup for actionable insights about target audiences.
On January 27th, JMP Securities lifted Viant Technology Inc.’s (NASDAQ:DSP) price target to $25 from $17 while maintaining an “Outperform” stock rating. The brokerage is “broadly positive” into Q4 digital advertising earnings, as the advertising company forecasts a healthy advertising environment, driven by strong consumer spending over the holiday period, the contribution of political ad spend, and improving business sentiment.
8. DigitalOcean Holdings Inc. (NYSE:DOCN)
Number of Hedge Fund Holders: 22
DigitalOcean Holdings Inc. (NYSE:DOCN) is a cloud service provider with data centers globally. It offers an infrastructure as a service (IaaS) platform, equipping software developers with powerful virtual machines to run their AI/ML workloads and seamlessly create and deploy AI agents with enhanced customization features to deliver context-aware responses for diverse use cases.
On Monday, January 27th, JMP Securities analyst Patrick Walravens increased DigitalOcean Holdings Inc.’s (NYSE:DOCN) stock target price to $55 from $47 and maintained an “Outperform” rating on the company shares. The brokerage recently attended DigitalOcean Deploy, the company’s annual user conference, and found that most of the cloud provider’s clients expect their spending to increase over the next 12-18 months. Analysts see DigitalOcean Holdings Inc. (NYSE:DOCN) as an opportunity for long-term capital appreciation.
7. BlackLine Inc. (NASDAQ:BL)
Number of Hedge Fund Holders: 23
BlackLine Inc. (NASDAQ:BL) is a leading cloud software provider that helps clients automate financial accounting processes facilitated by AI, data unification, and transparency. The company is heavily tapping into AI, launching GenAI-powered products like the Financial Statement Summarizer and ML-based AR Payment Forecasting tool alongside the Intercompany Predictive Guidance and the Variance Automation software. These tools improve data accuracy, accelerate the transactional data review cycle, and offer predictive insights to significantly boost operational efficiency.
On January 27th, Citi placed a “90-day positive catalyst watch” on BlackLine (NASDAQ:BL) and retained a “Buy” rating with a price target of $73 per share. Citi highlighted that investor sentiment on BlackLine (NASDAQ:BL) is “overly negative,” with concerns of a potential guide down for 2025 versus consensus. However, the brokerage pointed out the AI company’s improved fundamentals in Q4, attributable to an expanded relationship with SAP, new product launches, and recent go-to-market changes that should help improve retention in 2025. Citi analysts expect the upcoming Q4 earnings to support its view with limited risk, as the company has already preannounced positively.
6. Qorvo Inc. (NASDAQ:QRVO)
Number of Hedge Fund Holders: 40
Qorvo Inc. (NASDAQ:QRVO) supplies cutting-edge semiconductor solutions, including active antenna systems, amplifiers, discrete transistors, filters, switches, power technologies, and frequency converters alongside the largest portfolio of Gallium Nitride/Gallium Arsenide foundry processes to mobile, infrastructure, the IoT, and defense/aerospace markets. Qorvo Inc. (NASDAQ:QRVO) has partnered with AI firms to enhance product functionality. For instance, the company collaborates with Bondzai to leverage the latter’s DavinSy deep learning system and AI-powered signal processing techniques to offer complete AI+DSP solutions for ultra-wideband products.
On January 27th, Piper Sandler upgraded Qorvo Inc.’s (NASDAQ:QRVO) rating to “Overweight” from “Neutral” with a stock price target of $110, up from $85, citing the company’s potential for improving fundamentals and activist investor Starboard’s stake acquisition in the company. The brokerage noted that Qorvo Inc.’s (NASDAQ:QRVO) current setup is “ripe for this activist to come in and derive operational and capital efficiencies.” Analysts predicted between $250 million and $300 million in operating efficiencies for the company if it were run with a similar operation expense structure as its closest rival, Skyworks Solutions Inc. (NASDAQ:SWKS).
5. Cloudflare Inc. (NYSE:NET)
Number of Hedge Fund Holders: 44
Cloudflare Inc. (NYSE:NET) is founded on an intelligent and high-speed global network to offer content delivery and wide area network services, cloud cybersecurity and DDoS mitigation features, Domain Name Service, and reverse proxies, among other services. The platform can securely connect workers, networks, and apps through Zero Trust security for a smooth journey to a unified SASE. Furthermore, users can also deploy and build full-stack AI apps using the company’s Workers AI platform, which runs ML workloads via the Cloudflare API while minimizing risks with built-in threat intelligence. Elsewhere, Cloudflare Inc.’s (NYSE:NET) AI Gateway offers total visibility and control over all AI apps on the platform and shows how people are using them to provide insights into how apps can be scaled.
On January 27th, Wells Fargo announced raising Cloudflare Inc.’s (NYSE:NET) target price to $150 from $135. The brokerage retained an “Overweight” stock rating. Wells Fargo analysts highlighted that the company is a “Top Pick” for 2025, adding that company shares have jumped 16% YTD to secure the top performer spot across the entire software industry despite shares now trading at about 16-turns EV/2026 Sales. While highlighting that checks for Q4 were strong, the analysts said that if the company could exit Q4 at a 26% YoY growth rate, they would expect the initial 2025 guidance to be in the 25%-plus YoY range, almost in line with the Wall Street consensus.
4. CyberArk Software Ltd. (NASDAQ:CYBR)
Number of Hedge Fund Holders: 51
CyberArk Software Ltd. (NASDAQ:CYBR) is a cybersecurity firm that builds comprehensive identity security solutions for global clients. Its CORA AI ensures users secure privileged access in all environments with real-time support and insights. The AI-powered tool can proactively analyze risky behavior across enterprises, unravel hidden risks, make threat-response recommendations, and take automated action as required using the company’s Identity Security Platform. In 2024, the firm acquired Venafi from Thoma Bravo to build end-to-end identity security solutions to enhance security and minimize costly outages.
On January 27th, Wells Fargo analyst Andrew Nowinski hiked raised CyberArk Software Ltd.’s (NASDAQ:CYBR) target price per share to $425 from $410 and retained an “Overweight” stock rating. The brokerage highlighted that the cybersecurity firm is its top Tactical Q1 2025 idea, considering that the upcoming Analyst Day on February 24th will serve as a catalyst, where management could divulge more insight into growth expectations for Venafi and the core organic business. Wells Fargo forecast management to guide to 2025 ARR of at least $1.38 billion, as it will take a few quarters for Venafi to ramp up.
3. Reddit Inc. (NYSE:RDDT)
Number of Hedge Fund Holders: 52
Reddit Inc. (NYSE:RDDT) is a social news aggregation, content rating, and forum social network that gained massive popularity in the new decade, prompting the company to go public in early 2024. The social media firm has data-licensing deals with both OpenAI and Google, where companies pay Reddit Inc. (NYSE:RDDT) for access to its data they use to enhance respective AI models. The social media platform is testing and implementing several AI-powered features, including the new AI Answers feature built on the firm’s existing search architecture to help users swiftly find answers sourced from posts across subreds.
On January 27th, JMP Securities increased Reddit Inc.’s (NYSE:RDDT) price target to $190 from $160 and maintained an “Outperform” stock rating. The brokerage is “broadly positive” about the company’s Q4 digital advertising earnings based on expectations that the advertising environment is healthy due to positive consumer spending over the holiday period, the contribution of political ad spend, and improved business sentiment. Meanwhile, the uncertainty around and disruption to TikTok also likely aided the coverage universe. Analysts expect operational momentum to continue for the social media platform.
2. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is a global telecommunications leader that offers wireless and wireline communication products and services like corporate networking services, data center and cloud services, broadband services, security and management network solutions, as well as local and long-distance voice services. The company strives to build its AI ecosystem via multiple partnerships and product launches. The company recently launched Verizon AI Connect for hyperscalers, cloud providers, and global enterprises to deploy AI resource-intensive workloads at scale. Earlier, Verizon Communications Inc. (NYSE:VZ) also announced a partnership with Nvidia Corp. (NASDAQ:NVDA) to transform the integration of GPU-based edge platforms with the telco’s 5G private networks.
However, Bernstein marginally trimmed Verizon Communications Inc.’s (NYSE:VZ) price target to $46 from $48 on January 27th while retaining a “Market Perform” stock rating. The brokerage wrote that the telco ended 2024 with robust postpaid and FWA net adds growth, driven by a strong Q4 as the management guides to a more solid 2025.
1. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 89
GE Vernova Inc. (NYSE:GEV) is an energy equipment manufacturing firm that offers products and services essential for the generation, transmission, and storage of electricity worldwide. The company is rapidly transitioning to AI with the launch of its ML-powered Autonomous Inspection computer vision software to automate manual inspection and ensure complete oversight of industry assets. The company also announced the AI-powered SmartSignal predictive analytics solution to help maintenance engineers identify potential equipment failures. Recently, GE Vernova (NYSE:GEV) was chosen by the US Department of Energy to build an AI Assistant for safe handling, permitting, and training for hydrogen deployment.
On January 24th, Argus analyst John Eade hiked GE Vernova Inc.’s (NYSE:GEV) price target to $500 from $330 while maintaining a “Buy” rating following its Q4 results. The brokerage mentioned that GE Vernova Inc. (NYSE:GEV) is a well-run, financially robust company that is positioned to capitalize on megatrends such as energy transition, global electrification, and global decarbonization. Although its recent profit record has been spotty, analysts foresee a turnaround on a promising near-term growth outlook.
While we acknowledge the potential of GE Vernova Inc. (NYSE:GEV) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
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