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).
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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.
4. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 174
Jim Cramer in a latest program on CNBC said he’s been selling Alphabet Inc (NASDAQ:GOOG) shares at his investing club and mentioned some reasons for his bearish outlook:
“I mean, people know members of my club, they know I’ve been selling it down and selling it down and selling it down. Would it be the first one that I leave of the mag? Yeah, except for it does sell only for 20 times earnings. But I think they really got to rethink what their game plan is here because I feel like Gemini competes with Google search, and the thing is, the ads are endless, and they don’t know how to monitor YouTube.”
Alphabet shares slipped following the company’s latest quarterly results. The market was spooked by the massive $75 billion Capex guidance for 2025. However, GOOG bulls believe these investments will pay off. The company needs to spend to maintain its dominance in search. Its Gemini model has an edge over competitors because of the huge ecosystem Alphabet already has. For the end user, it’s easier to switch from traditional search to Geminin instead of moving to a completely new app like ChatGPT or Perplexity. So far AI competition hasn’t dented the company’s search revenue.
In the fourth quarter, Alphabet’s operating margin rose 32%. YouTube ad revenue jumped 14% and Cloud revenue skyrocketed by 30.1%. Google raked in $12.8 billion in FCF, marking a roughly 215% growth compared to the same period last year, despite heavy investments in AI. The stock has a forward (2026) P/E ratio of 20.8x, which makes it about 22% cheaper than the average company in its sector.
Bretton Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) was the major contributor for the quarter, adding 1.3%. Alphabet’s stock followed up a strong 2023 with another strong year, adding 2.7% to the fund as our top contributor.
Alphabet’s revenue in 2024 was $350 billion, which was $43 billion more than the previous year. That’s the equivalent of adding the entire revenue of a company like Coca-Cola, Oracle, Starbucks, or our very own Visa in a single year. Users’ demand for more internet video and information—and the demand for advertisers to get in front of them is massive and still growing fast. YouTube is the world’s most-watched streaming video platform and accounts for 10% of Americans’ time in front of a TV, more than any traditional TV channel.
Despite growing much faster than the average company, Alphabet continues to trade at roughly the same price-to-earnings multiple as the rest of the market. Earnings per share grew 39% last year, and we expect it will grow in the mid-teens for the next few years. If it comes anywhere close to that, the shares today are a bargain…”(Click here to read the full text)
3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Investors: 186
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 Taiwan Semiconductor (NYSE:TSM). 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.”
Wedgewood Partners stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was another top contributor to performance during the quarter and for the year. The Company’s earnings growth dramatically accelerated compared to last year as the Company’s wafer fabrication and packaging volumes soared in 2024. In addition, the Company customer prices rebounded in the face of more normalized capital expenditures. The Company maintains a near-monopoly in the fabrication of nearly every new AI accelerator brought to market over the past two years. They continue investing tens of billions to build and 7ill future capacity with orders for what seems to be insatiable hyperscale demand for accelerated computing. The stock ended the year trading at a consensus forward earnings multiple that is several points lower than large cap growth benchmarks, despite the Company’s dominant position in the most important industry that is driving one of the largest technological shifts in a generation.”
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 262
Doug Clinton, Co-Founder and Partner at Deep Water Asset Management, said in a latest program on CNBC that Mark Zuckerberg is perhaps the strongest CEO among the Mag. 7 companies.
“If you put it all together, Zuckerberg might be the strongest CEO of the Mag 7, and I know that might be a controversial statement. That might say a lot when your competition is Jensen Huang and Elon Musk. But you look at what Zucker has, right? He’s young, he’s only 40 years old, he’s going to be at the helm for a while. Now, he’s been very decisive. I think that they’ve made changes in terms of how they’ve pushed urgency at the company. And then on top of all that, he’s only focused on one company, unlike Elon Musk, who is doing so many things, and many of them quite well. But Mark Zuckerberg’s focused on just Meta. I think you put all those things together, it’s great for the company. And I think you have to think about the multiple, right? When you have a young CEO who will be around, and I think for years on end, it’s good for duration for the business, and it should be good for the multiple.”
Meta crushed expectations with the latest quarterly results but yet again pointed to higher expenses in the future. In 2025, it sees total operating expenses in a range of $114-$119 billion, with 19-25% y/y growth. Capex is expected to rise 61-74% y/y to $60-$65 billion, compared to just $37.3 billion in FY24. Advertising rose strongly but analysts believe it should be seen in the context of higher political ad spend and holiday quarter perspective. In 2025, the company might not be able to keep reporting double-digit growth in ad pricing amid weaker consumer spending and a cautious macroeconomic backdrop.
In the long term, Meta shares are expected to grow because of AI. How?
Meta Platforms (NASDAQ:META) is driving usage and ads revenue by improving its algorithms and user experience thanks to AI. Meta Platforms (NASDAQ:META)’s advancements in Reels and WhatsApp are helping manage CapEx growth as the company strives to stay competitive in AI. Meta Platforms (NASDAQ:META)’s substantial user base of 3.3 billion provides a data and distribution edge that could capture a significant share of the GenAI market.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Investment Initiated: April 2018: Internal Rate of Return (IRR*): 22% *IRR represents the annualized rate of return on an investment, accounting for the timing and magnitude of cash flows over the holding period.
For META, our 22% IRR aligns closely with the company’s compounded growth in earnings per share (EPS) and free cash flow per share during the 6 years holding period.
Looking ahead, Meta is expected to grow its revenues, earnings, and free cash flow per share at mid-teens rates over the next two years. There’s a good possibility that it could exceed these estimates, considering the breadth of growth initiatives currently in place, such as advancements in Al, monetization of Reels, expansion into business messaging, and the ongoing development of the metaverse…” (Click here to read the full text)
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 338
Jim Cramer in a recent program on CNBC recommended investors to buy Amazon.com (NASDAQ:AMZN) shares on a pullback.
“Amazon is what I call money side up, and I think you ought to understand this about it. This thing can go down, and when it goes down, what do you do? You buy it. That’s what I’m going to tell club members. I regard this stock going down as a gift—you wouldn’t be able to get it otherwise. This thing is amazing, and it’s like people who order from Amazon are selling the stock. I mean, think about that. That makes no sense to me.”
Alger Spectra Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a renowned online retailer and leader in cloud computing. The company’s Amazon Web Services (AWS) division offers utility-scale cloud solutions that support corporate America’s digital transition. During the quarter, Amazon’s shares contributed to performance as the company reported better-than-expected fiscal third-quarter results, with revenues and earnings beating analyst estimates. Operating margins expanded to 11%, driven by efficiency gains in logistics and robust AWS performance. Notably, AWS revenue growth accelerated during the quarter, along with recording its highest-ever operating margin of 38.1%, driven by easing cloud cost optimizations, renewed workload migrations, and an increasing contribution from AI workloads. On their earnings call, management highlighted plans to increase capital expenditures to enhance their technology infrastructure, catering to the surging demand for AI-driven computing.”
While we acknowledge the potential of Amazon.com Inc (NASDAQ:AMZN), our conviction lies in the belief that under the radar 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.
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