In an interview with CNBC’s Sara Eisen, veteran investor and Oaktree Capital Management co-founder Howard Marks said that the artificial intelligence boom isn’t a bubble — at least not yet.
“My response to date has been that the valuations are … high but not crazy. Expensive and going down tomorrow are not synonymous.”
Marks believes that the enthusiasm for AI stocks is indisputable, but it hasn’t entered the area that defines a true bubble.
“To me, the main ingredient in bubbles is psychological excess … some kind of temporary mania. For a company in this sector or industry, there’s no such thing as a price too high. And I don’t detect that level of mania at this time, so I have not put the bubble label on this incident … it just hasn’t reached that critical mass of mania.”
Drawing comparisons to the 1990s dot-com bubble, Marks noted that even though the internet transformed the world, most companies from the boom went bankrupt.
He said that the same psychological patterns often reappear in bubbles, with investors backing all kinds of companies tied to the new big trend.
“I think people are counting on AI for a lot. I think that it’s probably going to deliver a lot. We have no idea what it’s going to deliver, when, or in what form. And I’ve made the judgment that it’s not manic behavior.”
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.
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10. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 78
Palantir Technologies Inc. (NASDAQ:PLTR) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 14, Piper Sandler raised the price target on the stock to $210 from $182, while maintaining its Overweight rating. The firm sees continued upside potential in the AI stock.
According to analyst Clarke Jeffries, there is no argument that Palantir’s valuation leaves no margin for error. This is particularly true in the event of a slowdown in growth. However, the firm asserted that it doesn’t spot any catalyst that will halt the company’s momentum, noting that Palantir “has not reached peak growth.”
Jeffries is of such a view because of the tremendous visibility on future revenue (more than $7B of defined contract value, along with an estimated nearly $4B of IDIQ contract value).
Other factors include Palantir’s accelerating triple-digit growth in Commercial bookings year-to-date, and its exceptional wallet share opportunity across $1T of U.S. Defense Spending.
The firm believes that the Defense sector is transitioning, moving toward cheaper and flexible sources that are grounded in software and unmanned systems.
“We pose this scenario to investors – if 0.5% of Defense spending moved in the favor of Palantir, the company’s overall gov. business could increase 5x & still be 7x smaller than Lockheed Martin,” said Jeffries.
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems.
9. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 94
Micron Technology, Inc. (NASDAQ:MU) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 16, UBS reiterated the stock as “Buy” and raised its price target on shares of Micron from $225 to $245.
The firm believes that memory shortages are acute and worsening, particularly in DRAM. It now sees 2026 EPS close to $30.
“Our latest round of industry checks points to a very robust demand environment being met by acute and worsening DRAM supply shortages – we are increasing pricing once again, now see C2026E EPS power approaching $30, and raising PT from $225 to $245.”
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide.
