In this article, we will take a detailed look at the Top 10 Buzzing AI Stocks to Watch Now.
Doug Clinton, Deepwater Asset Management co-founder, said in a latest program on CNBC that the AI trade is still intact but the market is going through a period of “doubt” and many major AI stocks have lost their momentum.
“The vibe has shifted, and I think investors, more broadly, almost want to believe the AI trade is over. They’re looking for evidence, reasons to doubt. That’s the hard part for this trade right now—momentum has lost its momentum. From our perspective, the AI trade is still real. I don’t think this boom is over; I still see two to four years ahead. But in every technology-driven boom, we go through periods of doubt. That’s a healthy part of the cycle, and we just need to work through it.”
When asked about high valuations, the analyst said many of the AI stocks have “reasonable” valuations and upside.
“If you look at the hyperscalers, I think their valuations are still largely reasonable, even though they make up a big share of the market, which concerns some investors. We’re talking about mid-20s PEs for them. Some of the more growth-driven momentum names still have upside. Their multiples look expensive now, but as they continue to grow—and that’s the key question—those multiples will actually appear higher now than they will in the future.”
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 the market is talking about these days. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Antonio Guillem/Shutterstock.com
10. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Investors: 63
Dell Technologies (NYSE:DELL) recently came into the spotlight after a Bloomberg report said Elon Musk’s startup xAI was planning to buy AI servers from the company for about $5 billion. Jim Cramer talked about the report in a latest program on CNBC and said he likes the stock.
“These guys are ahead of the game. I like it. I like Michael Dell very much.”
9. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Investors: 83
Srini Pajjuri, Raymond James senior semiconductor analyst, said in a latest program on CNBC that Intel Corp (NASDAQ:INTC)’s foundry business is the “problem child” and losing money. He also mentioned his expected stock price for Intel following a potential split:
“They have two major segments. One is Intel products, which is in pretty good shape. They do about $50 billion in revenue at a 25% operating margin. That business is not growing as fast as it used to, but it’s very stable. The problem child for them is the foundry, the manufacturing side of things, where they’re losing money. Last year, they lost $13 billion, and this year they’re probably going to lose at least $5 billion or so. That has been the issue and the reason for the stock underperforming. If there’s a split, we think the product business alone could be worth around $32 a share. They have other assets as well. They own Altera, which is probably worth about $15 billion, and they also own about 85% of Mobileye. So all in, excluding the manufacturing, we think the stock could be worth in the high 30s or so.”
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.”
8. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Investors: 83
Jim Cramer in a latest program talked about Palo Alto bears and called the negative reaction from some after Palo Alto Networks (NASDAQ:PANW)’s latest quarterly results “outrageous.”
“Last week reported PNW and there was a great miscarriage of justice. This was a monster quarter. Really great. Everything good. But there were a couple of bearish analysts and some bearish. Some short sellers got to the media. Really said it was a bad quarter. It was nonsense. Stock was down really big at one point. Then it finished down a dollar and now it’s going up. It should have been it was rated. People have to know at home if that stuff happens. Still it’s outrageous.”
In the fiscal second quarter, Palo Alto Networks (NASDAQ:PANW)’s Next-Gen Security ARR jumped 37% year-over-year to $4.78 billion.
Palo Alto Networks (NASDAQ:PANW)’s platformization strategy is working. What was this strategy?
Palo Alto Networks (NASDAQ:PANW)’s leadership has rolled out an “Accelerated Platformization and Consolidation” strategy, offering its platforms for free for a limited time in exchange for long-term commitments. With about 75 “Net New Platformizations” in the second quarter of fiscal 2025, customers are taking the deal and standardizing on its platforms.
In the latest earnings call, the management talked about the fruits of this strategy so far:
“We’re seeing some interesting behavior that reinforces our conviction that the future state of cybersecurity will have to be AI-enabled platforms that can markedly improve the speed of response. We delivered approximately 75 new platformizations in Q2, up from approximately 45 in the year ago. We now have a total of over 1,150 platformizations within our top 5,000 customers. As you might expect, many of our platformizations start with network security, and are from customers that have platformized in one area. However, our number of two-platform customers grew over 50% in Q2, and we’re seeing a number of three-platform customers up three times year over year. Also, the number of customers platformized in Cortex is up more than three times reflecting a strong excitement.
We’re excited to see the number of parts we have had success driving strategy so far, and our Q2 performance keeps us on track. To achieve our stated target of 2,500 to 3,500 platformizations by fiscal year 2030. Investors have always asked me what platformization deals look like. I want to provide a few examples based on deals we signed this quarter.”
Read the full earnings call transcript here.
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Investors: 84
Dan Niles, Niles Investment Management founder, explained on CNBC why Cisco Systems (NASDAQ:CSCO) is one of his top picks this year.
“Cisco is one of my top five picks entering this year, and what I said was, look, the last two years have been about spending on AI infrastructure. This year, I think, is going to be more about companies getting access to all of that data being created and moving it around, which is why Cisco and Adtran, which is more on the telecom side, were two of my top five picks. Both stocks have been given up for dead, much like Oracle was several years ago when I made that one of my top five picks. It’s gone from, you know, “who cares about Oracle,” to maybe it’s a viable competitor in cloud data centers, and I think that’s how Cisco is going to transform. At a 17 times PE with the S&P trading at 26 times, if they’ve actually gotten their act together — which I think they have because of some of the acquisitions they’ve made several years ago that are now helping them to produce very competitive products — you’re seeing that in the order growth. Why can’t a 17 times PE go to a market multiple or above, which is where Oracle is trading? That’s how I think about Cisco.”
GreensKeeper Asset Management stated the following regarding Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2024 investor letter:
“In the third quarter, we decided to exit our investment in Cisco Systems, Inc. (NASDAQ:CSCO), as we believed the stock had become fully valued and reallocated the capital to one of our international positions. We also initiated a new position in a Canadian company shortly after the quarter ended. As we may still accumulate shares, we will defer discussing this new holding for the time being. Our top ten positions are detailed in the table below. Further portfolio disclosures, including performance statistics, are available on the pages immediately following this letter.”
6. Tesla, Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 126
George Gianarikas, Canaccord Genuity analyst, said in a latest program on CNBC that trends for Tesla Inc (NASDAQ:TSLA) in China have not been great. However, he’s still keeping his buy rating on the stock as he waits for more clarity on the performance and impact of the company’s new models.
“The trends in the US and Europe last year weren’t great; they were saved by a remarkably strong year in China. So far this year, just the little data points that we have suggest that the trends aren’t great in 2025, but the stock is really hinging upon the new vehicles they’re introducing, first the new Model Y, which looks like a remarkably nice vehicle, and the promise of additional vehicles throughout the rest of the year. Obviously, they’re going to start ramping Optimus production, so we’ll have to wait and see. We kept our buy rating because usually, in technology or in vehicles, when you have new products coming out and the company’s done a really good job of introducing new products that people like, those tend to really move the P&L and reinvigorate growth. So that’s what we’re hoping for, and we’ll see. We’ll find out how compelling the new vehicles are. So far, so good with the new Model Y.”
Analysts are still trying to look beyond Elon Musk’s claims and find out the specifics of 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
Glen Kacher, Lights Street Capital founder, said in a latest program on CNBC that he is still bullish on the top “AI 5” semiconductor companies which include Broadcom Inc (NASDAQ:AVGO). Here is how he made his case for these companies:
“There’s nothing in the technology pipeline right now that can match the innovation of generative AI. Generative AI creates a customized answer for the user based on underlying data, and this is a brand new method of computing. It’s created a massive investment cycle, over $200 billion a year of capital expenditures, and it’s growing in order to deliver on what is just an incredible technology, unlike anything else we’ve seen in my lifetime, certainly. If you look back to the DeepSeek scare, a month or two earlier we were worried that things weren’t scaling, and then we saw a big scaling event. Now, everyone’s scared that we’re scaling too much.”
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.
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.
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.