Users are adopting artificial intelligence tools at an unprecedented pace. As reported by Reuters, OpenAI weekly active users surged past 400 million in February, reinforcing the observation. The artificial intelligence startup had 300 million weekly active users in December 2024, signifying an increase of 100 million users. Furthermore, the company’s paying business users also crossed 2 million in February, a figure that has more than doubled from its last update in September 2024.
READ NOW: 10 Buzzing AI Stocks Dominating Headlines and 15 AI Stocks Every Investor Should Be Watching
With OpenAI boasting its successes despite DeepSeek’s emergence, other tech companies are also joining in the parade. xAI, led by Musk, has recently revealed Grok3, the latest iteration of its chatbot. This innovation is in direct competition with AI models by companies such as OpenAI and DeepSeek. It is being rolled out immediately to Premium+ subscribers on X. xAI is also launching a new subscription tier, SuperGrok. This would be for users accessing the chatbot via its mobile app and Grok.com website.
“Grok-3 across the board is in a league of its own”.
-Musk said during a livestream alongside three xAI engineers.
Analysts are also pouring in their comments about xAI’s latest innovation.
“The introduction of Grok-3 puts xAI back in the race for leadership in open-source LLMs. It outperforms the current state-of-the-art models on some benchmarks, which makes xAI relevant again”.
– Gil Luria, managing director at D.A. Davidson.
While Luria did point out xAI’s relevancy in the leadership in open-source LLMs, it was also noted that improvements over the Grok-2 model appear to be too small to justify the enormous resources used to train it.
Meanwhile, Anthropic, another AI startup, is doing its best to catch up with firms such as OpenAI. More than a week ago, the company projected that its revenue could reach as high as $34.5 billion in 2027. The report revealed that in a base case scenario, Anthropic’s revenue would reach $12 billion in 2027, up from $2.2 billion in 2025. Back in January, Reuters also reported how Anthropic is nearing a deal to raise $2 billion at a price that values the company at $60 billion.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A crowded Wall Street plaza, bustling with people carrying briefcases.
10. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 42
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On February 20, Roth MKM analyst Chip Moore maintained a “Hold” rating on the stock and set a price target of $25.00.
A day prior, it was revealed that Bloom Energy’s CCO Aman Joshi sold 13,971 shares of the stock, amounting to a total transaction value of $353,466.
The company was also recently in the news after it announced a carbon capture partnership with equipment manufacturer Chart Industries. The collaboration will allow easily deployable power solutions that meet emission targets for customers such as data centers and manufacturers.
9. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 63
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. One of the biggest analyst’s calls for Thursday, February 20, was for Palantir Technologies Inc. Loop Capital initiated the stock as “Buy” with a $141 price target, stating that Palantir is a “game-changing software play.” Even though the stock is expensive, analyst Mark Schappel remains bullish on its longer-term outlook.
“Palantir is leveraged to the AI (and GenAI) themes sweeping through the tech sector, which are enormous market opportunities likely to create several multi-billion dollar revenue companies.”
Schappel also said investors should use pullbacks as buying opportunities.
“It’s hard to put a price on the opportunity, so we believe the best strategy is to hold your nose on valuation and just get involved”.
The company’s leadership in enterprise AI is a major growth catalyst for Palantir. Moreover, its Ontology platform, a software solution by Palantir, is its “secret sauce, said the firm. Oncology presents data to users in their terms instead of technical database terms, allowing the successful deployment of AI-driven decision-making.
The investment “picture consists of being exposed to the largest and fastest growing TAM in enterprise software”.
8. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 77
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection. On February 19, Stifel raised the firm’s price target on the stock to $475 from $400 and kept a “Buy” rating on the shares. The rating has been issued ahead of the company’s fiscal Q4 report due after market close on March 4. According to the firm’s 28-respondent survey of resellers, results have improved nicely for Crowdstrike.
The AI-driven cybersecurity leader has been demonstrating year-over-year growth and outperformance levels improving sequentially. Indeed, Crowdstrike’s Q3 results were solid on the back of strong adoption of its AI-powered platform. Besides its outperformance levels, the firm said that faulty updates now have minimal impact on deal delays, competitive losses, and pricing concessions. The firm further said that resellers now anticipate Crowdstrike to emerge stronger from the event.
7. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 85
Constellation Energy Corporation (NASDAQ:CEG) is an energy provider specializing in clean, carbon-free energy solutions. On February 19, Citi raised the firm’s price target on the stock to $334 from $284 and kept a “Neutral” rating on the shares. While the firm did acknowledge Constellation’s Q4 print beating expectations, it said that it is more focused on the Federal Energy Regulatory Commission meeting on Thursday. While the analyst doesn’t anticipate major policy changes, it did note that any movement supporting co-location or constructive comments from Chair Christie would be deemed positive for the company.
Indeed, the FERC held its meeting today, February 20. It has voted unanimously to launch a review of issues associated with the co-location of large loads such as AI-enabled data centers at generating facilities in PJM.
“Co-location arrangements are a fairly new phenomenon that entail huge ramifications for grid reliability and consumer costs. Given these ramifications, the Commission truly needs to ‘get it right’ when it comes to evaluating co-location issues.”
-Chairman Christie.
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. Dan Ives from Wedbush has been bullish on Tesla, particularly as political shifts, such as Donald Trump’s return to power, have created a more favorable environment for the company.
On February 20, Wedbush analyst Daniel Ives maintained a Buy rating on the stock and set a price target of $550.00. Ives is bullish on Tesla today due to its potential for an increase in the stock’s valuation driven by federal deregulatory policies in the autonomous vehicle sector.
Moreover, even though Musk is focusing on other ventures such as DOGE, Ives highlighted how Tesla is on the brink of launching a new mass-market vehicle and advancing its autonomous and robotics capabilities. This will serve as a major growth catalyst for Tesla, along with the expected release of Tesla’s Austin unsupervised Full Self-Driving feature. The analyst also predicts Tesla’s production and innovation milestones to remain robust, reflecting his confidence in the company.
5. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 162
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that has gained traction after the launch of its AI-powered platform called Agentforce. On February 20, The Information reported that Salesforce’s President and chief engineering officer, Srini Tallapragada, has revealed how the company is engaged in negotiations with several cloud providers including Microsoft, Google, and Oracle, about a new cloud deal. As reported by The Information’s Kevin McLaughlin, the deal is likely going to be worth more than $1B over several years. The report further noted that Salesforce’s primary cloud provider is now AWS.
UPDATE: Salesforce CEO Marc Benioff has called out the above report that claimed the company was negotiating a $1 billion-plus cloud deal with major tech firms to support its AI workload, stating that the story in @TheInformation is incorrect.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. One of the biggest analyst calls for Wednesday, February 20, was for Apple Inc. Goldman Sachs kept a “Buy” rating and a $294 price target on the stock. The firm noted that the company’s iPhone 16e announcement has been largely in line with expectations. The iPhone 16e features an agile A18 chip, Apple Intelligence, an extraordinary battery life, and a 48MP 2-in-1 camera system, promising powerful capabilities at an affordable price point.
However, the entry average selling price of $599 has been higher than expected when compared to the expected price relative to price reports, which was under $500. Despite the slightly higher price point, the firm said that the iPhone 16e is a positive development for Apple which is anticipated to support the demand for iPhone upgrades. Moreover, it will also likely lead to growth within the Apple base, particularly in price-sensitive markets.
3. 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 February 20, Robert W. Baird analyst Tristan Gerra maintained a “Buy” rating on the stock with an associated price target of $195.00.
Gerra’s buy rating is based on Nvidia’s strong market positioning and future growth potential. The firm noted that as initial delays about data center availability are resolved, Nvidia’s GB200 products are poised to accelerate throughout 2025.
This product is anticipated to be one of its top offerings well into 2026, with promising products such as B300 and Rubin also in the pipeline. Advancements in AI data centers and big enterprise customers like Ali and Tencent are further driving a surge in Nvidia’s orders. Nvidia is also advancing its support for emerging technologies like CPOs and LPOs, the firm added.
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 February 19, the company unveiled an artificial intelligence model of a videogame. The AI model, known as Muse, will allow the generation of visuals and actions. The model has been made in collaboration with Ninja Theory, which is a developer under Xbox Game Studios, Microsoft’s gaming division.
With video game development costs continuing to rise, the push toward artificial intelligence is likely a step forward to mitigating them. New gaming spend has also been weak since customers are sticking to proven titles due to economic uncertainty.
“We are already using Muse to develop a real-time playable AI model trained on other first-party games, and we see potential for this work to one day benefit both players and game creators”.
-Fatima Kardar, corporate vice president for gaming AI.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 338
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 February 20, JPMorgan reiterated Amazon as its “Best Idea”, stating that it is sticking with the stock despite survey checks that showed e-commerce demand is decreasing for the company.
“We estimate AMZN’s share of US e-commerce decreased -58bps Y/Y to 46.1% in 4Q, though we believe Amazon remains well- positioned as the leader in e-commerce, benefitting from its fast delivery speeds, expansive selection, & competitive pricing.”
Even though Amazon has given lower-than-expected sales guidance with its fourth-quarter results, investors are still particularly optimistic about the company’s expansive e-commerce and cloud-computing operations. Chief Executive Andy Jassy said AI represents “the biggest technology shift and opportunity in business since the internet”. The company plans to spend $100 billion on capital expenditures this year, featuring notable investments in artificial intelligence and spending on its stores business. The company’s warehouses run on nearly full autonomy with robotic technology, improving delivery speed and efficiency.
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 timeframe. 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 Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
