Robust second-quarter earnings have eased investor concerns about the health of the US economy. Based on these positive events, Jefferies have raised its year-end target for the S&P 500 index to 6,600, stating that corporate America is holding up much better than anticipated.

This means good news for investors, reflecting how the rally still has a lot of room to run. Previously, Jefferies was the only firm projecting the benchmark index below the 6,000 mark at 5,600. Some of the leading brokerages who boosted their index target earlier were UBS, Citigroup, and HSBC.

According to Jefferies analyst Desh Peramunetilleke, AI-related companies and the “Magnificent Seven” have led these market gains. Meanwhile, robust financials demonstrate a resilient macroeconomic backdrop.

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 Q2 2025.

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).

10. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 33

Baidu, Inc. (NASDAQ:BIDU) is one of the 10 AI Stocks Analysts Are Tracking Closely. On August 21, Benchmark analyst Fawne Jiang lowered the price target on Baidu (NASDAQ: BIDU) to $115.00 (from $120.00) while maintaining a Buy rating.

The price target cut reflects the challenges Baidu is facing in its core advertising business, witnessing a 15% year-over-year revenue decline in the second quarter of 2025. With GenAI search monetization still in early stages, the second-quarter ad outlook was “muted”.

On the other hand, the company’s non-advertising revenue continues to gain traction, accounting for an estimated 40% Baidu Core. This is driven by strong AI Cloud growth, which expanded 34% year-over-year in the first half of 2025, as well as subscription-based revenue for improved stability.

The firm also talked about the company’s autonomous driving service, Apollo Go, which is demonstrating strong performance.

“Apollo Go adds further depth, with fully driverless rides up 148% y/y and global expansion gaining pace through partnerships with Uber and Lyft. While the combination of soft ad trends and continued AI investment may weigh on margins near term, management’s focus on cost efficiency and disciplined execution should help to mitigate the impacts. We believe that the upcoming launch of ERNIE 5.0 and rising engagement with AI-powered search reinforce Baidu’s pivot toward a more diversified, innovation-led model, though execution remains key in this evolving landscape.”

Baidu, Inc. (NASDAQ:BIDU) is a Chinese internet giant and AI pioneer, known for its noteworthy investments in artificial intelligence technology and its position as the dominant search engine within the country.

9. CoreWeave, Inc. (NASDAQ:CRWV)

Number of Hedge Fund Holders: 36

CoreWeave, Inc. (NASDAQ:CRWV) is one of the 10 AI Stocks Analysts Are Tracking Closely. On August 21, H.C. Wainwright analyst Kevin Dede upgraded the stock from Neutral to Buy with a price target of $180.00.

The stock has been facing selling pressure due to likely early investor liquidation following lockup expiration, instead of worries regarding the company’s fundamentals.

“Stock pressure flouting the long game. We saw the uptick in guidance offered on CoreWeave’s earnings call as a positive, some of which was discussed August 13 here, but it appears to have been ignored within the context of investor thinking. Or, perhaps, it is that early investors, having stayed long enough, seek liquidity on the lockup expiration? Specifically, looking at the company’s public issuance of revenue expectations, at the time of the March quarter call, May 14, FY25 labeled the range of $4.9–5.1B, but by Aug. 12 on the 2Q25 call, the range was raised to $5.15–5.35B, up 5% at the midpoint.”

Referring to CoreWeave’s position in the neocloud space, the firm believes the company is “a leader in perhaps one of the most influential technology adoption cycles of our time.”

“On that basis, we are raising our investment rating on CoreWeave to Buy from Neutral, noting that when we interrogated the Magic 8-Ball last night, it couldn’t commit to a rising CRWV share price in the near-term. We volunteer this point jokingly in emphasizing the longer-term perspective where the inherent value CoreWeave brings its customers becomes luminous, though it should be now. We are not adjusting estimates here, just recognizing the stock’s valuation has sunk deep enough, we believe, to suggest investors could enjoy healthy returns to previous stock levels on the back of a leader in the neocloud space. With our new Buy rating, we are offering a $180 price target, the recent June-end high where the stock enjoyed a cup of coffee and immediately retreated.”