In this article, we will take a detailed look at the Top 10 AI Stocks to Watch Right Now.
Tom Hancock, GMO U.S. quality ETF portfolio manager, said in a latest program on CNBC that the NASDAQ has become “risky” bet amid a lot of volatility.
“It’s become not really an index; it’s become a single bet. So it it’s a very risky thing to invest in. It’s not what I think you would want from a sort of diversified investor. It’s probably going to give you more volatile returns next year, and I’d a little bit worry that the AI rally has extended itself. So uh those may be uncomfortably volatile returns.”
Hancock said investors should also pay attention to some of the “old economy” stocks. He thinks AI stocks have become a “hype trade” and any “hiccup” in the economy could result in these stocks crashing. He also urged investors to look for stocks outside the US.
Hancock believes AI gains are now set to broaden out to smaller companies that have not received a lot of attention so far.
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For this article we picked 10 AI stocks currently trending based on latest news. With each stock we have mentioned the number of hedge fund investors. 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. Analog Devices Inc (NASDAQ:ADI)
Number of Hedge Fund Investors: 63
J.P. Morgan has released its latest forecast for the semiconductor industry in 2025. The firm sees significant potential in the application-specific integrated circuit (ASIC) market, largely driven by the rapid growth of artificial intelligence. The research firm highlighted that companies involved in AI compute, networking, and storage benefited in 2024 due to strong infrastructure development, resulting in notable share price outperformance and positive earnings revisions.
Analog Devices Inc (NASDAQ:ADI) is one of JP Morgan’s favorite chip stocks for 2025 as it believes the company is “leveraged to AI and accelerated computing.”
Carillon Eagle Growth & Income Fund stated the following regarding Analog Devices, Inc. (NASDAQ:ADI) in its Q2 2024 investor letter:
“Analog Devices, Inc. (NASDAQ:ADI) rebounded as management teams at several semiconductor companies in the analog space called the bottom, seeing improved conditions ahead. The analog semiconductor industry is a very cyclical business that has underperformed the broader semiconductor industry for several years.”
9. Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Investors: 70
J.P. Morgan has released its latest forecast for the semiconductor industry in 2025. The firm sees significant potential in the application-specific integrated circuit (ASIC) market, largely driven by the rapid growth of artificial intelligence. The research firm highlighted that companies involved in AI compute, networking, and storage benefited in 2024 due to strong infrastructure development, resulting in notable share price outperformance and positive earnings revisions.
Marvell Technology Inc (NASDAQ:MRVL) is one of JP Morgan’s favorite chip stocks for 2025 as it believes the company is “leveraged to AI and accelerated computing.”
Marvell Tech Inc (NASDAQ:MRVL) is rapidly positioning itself as an AI-first company, with its custom silicon business accounting for 73% of Q3 revenues, up from 39% during the same period last year. Marvell has a five-year agreement with Amazon (AMZN) AWS, helping Amazon design its Trainium and Inferentia ASICs, and providing a range of optical interconnect products.
Marvell Tech Inc (NASDAQ:MRVL) is now focusing on the AI opportunity, as evidenced by the recent restructuring charges, and is progressing through the design phase of its 2nm platform.
Artisan Mid Cap Fund stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (GPUs). Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
8. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Dan Crowley from Nightview Capital explained his bull case thesis for Tesla during a program on Schwab Network:
“I mean, you know, the next wave of growth that we’re seeing in Tesla Inc (NASDAQ:TSLA) are in the multi-trillion dollar adjustable market. So that’s autonomy and humanoid robots. And ultimately, those are AI products. I believe that the market itself is doing a bit of a repricing, but you know, ultimately we’re talking about the future of transportation here. And when we look out, ultimately, we believe the dominant automotive platform will be EVs paired with autonomy. The legacy OEMs are either cutting or removing both their EV and autonomy programs. So Tesla is in a basically a one-on-one position to capture that market if things proceed as we expect.
Again, the energy business is growing 50% a year; it’s still a nascent business. So from our perspective, we’re still in very early innings here, and this is a play that we see compounding out throughout the decade.”
Looking beyond the recent spike in Tesla shares amid Donald Trump’s victory, Tesla’s fundamentals are challenged. How? Tesla Inc’s (NASDAQ:TSLA) key robotaxi event was short on details. Notably absent was the discussion of a “more affordable” model that Musk had previously mentioned to boost confidence in Tesla’s vehicle sales growth outlook.
What about the $30,000 price tag claim?
Musk has indicated that the Cybercab will have a production cost of approximately $30,000. Operating within the robotaxi fleet is projected to cost around $0.20 per mile. With a production cost of $30,000, the retail price of the Cybercab is likely to exceed this figure. For instance, if the Cybercab is priced at $30,000 per unit, that translates to $15,000 per seat. In contrast, the average price per passenger seat in Tesla Inc (NASDAQ:TSLA)’s most affordable long-range RWD Model 3—factoring in full self-driving (FSD) licensing—is under $10,000 ($29,990 post-incentive vehicle price plus $8,000 for the FSD license, divided by four passenger seats). Regarding operational costs, while the Cybercab is expected to cost $0.20 per mile, charging the Model 3 is estimated at under $0.10 per mile, leaving a significant margin to cover maintenance and downtime.
There is a lot of hype around Tesla Inc (NASDAQ:TSLA) robo taxis but many believe they will not be enough to fix the company’s long-term challenges.
What are these challenges?
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. Even Rivian’s CEO suggested Tesla Inc (NASDAQ:TSLA) could be nearing market saturation for these 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.
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q3 2024 investor letter:
“The largest relative detractors during the quarter were Apple, Airbnb, and Tesla (not owned). We’ve spoken at length about our rationale for not owning Tesla, Inc. (NASDAQ:TSLA). In short, the market seems to be pricing in a lot of positive optionality for this company in the near-to-intermediate term (and particularly a fully autonomous fleet of electric vehicles in the medium term). What exists today is an automobile manufacturer limited to the higher-income segment that is increasingly challenged to sell vehicles when interest rates are not zero. We continue to question the company’s long-term growth profile and governance.”
7. Advanced Micro Devices Inc (NASDAQ:AMD)
Number of Hedge Fund Investors: 107
In late October, while talking about AMD’s Q3 results on CNBC, Stacy Rasgon, Bernstein Research senior analyst, explained the key issues haunting the company. The analyst said that Advanced Micro Devices Inc (NASDAQ:AMD) product launches are behind Nvidia’s and the stock fell after its latest quarterly results because investors were more interested in AI numbers and guidance.
“You have to be a little careful with these sort of first-party benchmarks, but they believe that they will compete well versus a subset of Nvidia’s parts. But the issue is those parts that they’re competing at with Nvidia are already here, right? Whereas we’re waiting, you know, I don’t know, 6, 9, 12 months for the relevant A and B parts. By then, Nvidia will have their next-generation stuff. And if you sort of look on a timeline, the relative dates of introduction of competing parts, Nvidia’s still got their parts in the market at least a year in advance in many cases. Couple that with the other areas where Nvidia is strong around software and services, hardware and systems, and ecosystem—these are things that AMD is trying their best to construct, but it’s very difficult. So I don’t really see the moat around Nvidia’s parts flagging.
Look, it’s very clear from these results, again I’ve said this before, I don’t want to knock AMD in the sense that you know, like the AI business they have was zero a year ago. So, I mean, it’s growing off of that. But I can clearly see where the dollars are really flowing in the space. It’s not really Advanced Micro Devices Inc (NASDAQ:AMD). It clearly is Nvidia.”
Advanced Micro Devices (NASDAQ:AMD) bulls believe the market should stop comparing the company’s chips with Nvidia and focus on its data-center growth and its competitive edge over other players like Intel. Advanced Micro Devices (NASDAQ:AMD)’s strong growth in the data center segment is indeed impressive, driven by Instinct GPU shipments and strong sales of EPYC CPUs. Advanced Micro Devices (NASDAQ:AMD) will continue to benefit from organic growth catalysts in this segment despite the competition from Nvidia. According to Goldman Sachs Research, global data center demand could surge by 160% by 2030. In the U.S., data centers are projected to use 8% of total power by 2030, up from 3% in 2022. McKinsey estimates that adding the required U.S. capacity will need over $500 billion in infrastructure investment by the decade’s end.
Advanced Micro Devices (NASDAQ:AMD)’s forward-adjusted PEG ratio is about 40% lower than the median for the tech sector (XLK).
6. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 128
Nancy Tengler from Laffer Tengler Investments said in a recent program on Schwab Network that Broadcom is the “poor man’s Nvidia” and called the stock one of her best ideas. Tengler said the guidance given by Broadcom Inc (NASDAQ:AVGO) CEO Hock Tan was “unexpected” and “explosive” and his “enthusiasm” drove the stock price.
Broadcom Inc (NASDAQ:AVGO) continues to be a leader in the AI ASCI and networking chips market. Broadcom Inc (NASDAQ:AVGO) has 3nm AI ASIC chip deals with Alphabet and Meta in addition to many other tech giants aiming massive spending for AI hyperscaling.
However, the stock could face the impact of what Nvidia is facing today: too high expectations.
In the latest quarterly results, Broadcom Inc (NASDAQ:AVGO) revenue was largely in line with estimates. The company has narrowly exceeded revenue expectations by less than 5% in most cases. Some analysts suggest Broadcom’s growth rates will moderate to below 20% CAGR starting the first quarter of 2025. In fiscal Q4, it was +50% topline growth. The market won’t be kind to the stock when the revenue growth rate slows. Broadcom has about $58 billion in net debt, which is relatively high.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“Similar to the earnings results for Nvidia, shares of Broadcom Inc. (NASDAQ:AVGO) initially sold off after the company reported solid earnings that fell light of elevated market expectations, but the stock did recover from its drawdown in the matter of a few weeks. With an enticing combination of custom chip offerings as well as networking assets, Broadcom remains one of the best positioned companies as part of the AI revolution. Broadcom outlined a path to derive a majority of its revenue from the AI end market within a couple of years, and the non-AI part of the business has stabilized after a deep correction. The company’s dominant market position in its end markets, along with durable growth, strong margins and best-in-class capital allocation, presents an opportunity to compound capital over time.”
5. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Investment firm J.P. Morgan recently said that the latest Wave7 Research survey indicates Apple’s (NASDAQ:AAPL) iPhone 16 is lagging in market share compared to the previous cycle, potentially due to limited awareness of Apple Intelligence.
“Recent surveys from Wave7 Research into US sales trends across various carriers in Oct/Nov-24 highlight that average share for iPhone 16 cycle continues to track lower y/y (relative to share for iPhone 15 in the same period) despite better than seasonal trends in the latest month of survey data,” J.P. Morgan analyst Samik Chatterjee wrote in a note to clients. “The survey highlights that the lower momentum, reflected in the lower market share y/y, is likely led by the (still) lower consumer awareness for Apple Inc (NASDAQ:AAPL) Intelligence, despite expectations for the feature set to be a key driver for an upgrade cycle.”
Chatterjee maintains an Overweight rating on Apple shares.
Apple Inc (NASDAQ:AAPL) has been seeing a long-term decline in mobile carrier upgrade rates, especially postpaid, for several years. This suggests that people are holding onto their devices longer, likely due to economic factors, satisfaction with current technology, or a lack of exciting new features in recent models.
In the latest earnings call, Apple Inc (NASDAQ:AAPL) CEO Tim Cook highlighted new features for the iPhone, such as a more comfortable watch band and sleep apnea detection, but none appeared to be major demand drivers for new customers.
Parnassus Growth Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) shares rose during the quarter, making our underweight position a relative detractor. Investors reacted positively to the new iPhone 16 lineup and its advanced features, including generative artificial intelligence, greater durability and increased processing power.”
