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.
8. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 106
ServiceNow, Inc. (NYSE:NOW) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 14, UBS lowered its price target on the stock to $1,075.00 from $1,100.00 while maintaining a Buy rating. The rating comes ahead of the company’s third-quarter earnings report.
UBS conducted partner and customer checks to assess ServiceNow’s momentum in 3Q. The firm noted how checks reveal fine/ solid core business performance, which is why it is poised for a normal beat.
One drawback is that feedback on AI adoption has been a little bit disappointing, which aligns with the feedback it has been receiving on other Software-as-a-Service (SaaS) companies.
“Ahead of ServiceNow’s 3Q25 print on Oct 29th, we caught up with a handful of ServiceNow partners and customers to assess how ServiceNow’s momentum tracked in 3Q. Bottom line, the checks on the core business were fine/solid, pointing in our view to a normal beat, but the feedback on AI adoption was somewhat disappointing, in keeping with what we’re hearing in checks on other SaaS firms.
With SaaS/apps sentiment already cautious – frankly, perhaps the worst in years – and the stock trading at just 36x CY26 for ~20% growth, near-term downside could be limited.”
ServiceNow, Inc. (NYSE:NOW) is a technology company that offers a cloud-based software platform for automating business workflows within an enterprise.
7. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 111
Vistra Corp. (NYSE:VST) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 15, TD Cowen analyst Shelby Tucker initiated coverage on the stock with a Buy rating and a price target of $250.00. The firm said that the energy company is a new top pick at the firm.
“We see VST benefiting from structural tailwinds in the power space as electricity demand continues to grow faster than new generation can come online.”
The analyst noted that there is an accelerated demand for electricity from data centers. Along with this demand, there is a need to upgrade utility assets, and together, both of these create a “once in a generation opportunity” for electric utilities.
The firm anticipates power prices to remain elevated in deregulated markets. It further noted that such a level of demand for electricity in the U.S. has not been seen since the end of World War II.
Based on this observation, it projects near double-digit rate base growth, supporting 7%-9% earnings growth for the “foreseeable future.” TD Cowen contended that the greatest opportunity for adding generation assets over time lies with those integrated utilities with “constructive regulation.”
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company.
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 113
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 15, HSBC analyst Frank Lee raised his price target on the stock to $310 from $185 and reaffirmed his Buy rating. The firm believes that AMD’s OpenAI deal is poised to bring massive AI revenue upside potential.
“OpenAI deal implies massive AI revenue upside potential, which is still under-estimated by consensus. We believe this deal gives enhanced visibility into AMD’s AI GPU revenue opportunity till 2030.”
The companies agreed last week that OpenAI will deploy six gigawatts of AMD GPUs over the course of several years. The deployment of the first 1 gigawatt AMD Instinct MI450 GPUs will begin in the second half of 2026.
“Since the deployment is set to begin with the MI450 series, we used the power consumption of MI450 as the base. We believe that the total revenue opportunity for AMD from this OpenAI deal is around USD80bn – more than 10x its 2025e AI GPU revenue of USD7.3bn.”
The analysts lifted their 2026 estimates for AI GPU revenue to $19.8B from $13.9B. This reflects expectations of a 0.5GW deployment for OpenAI in the second half of 2026.
“We believe AMD has also increased its CoWoS allocation to 70k-80k wafers for 2026e. With constant capacity expansion and increased visibility, we believe AMD should be able to continue expanding its CoWoS allocation into 2027e as well.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 115
Tesla, Inc. (NASDAQ:TSLA) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 16, Exane BNP Paribas initiated the stock as “Underperform” and a price target of $307.00. The firm said it can’t justify the stock’s valuation.
Exane BNP Paribas’s valuation model incorporates Tesla’s artificial intelligence ventures, including Robotaxi and Optimus robot businesses. Even though these businesses currently generate no revenue, they are inflating Tesla’s valuation by accounting for an estimated 75% of their $1.02 trillion price target valuation.
Even with ambitious forecasts, Tesla’s risk/reward is unfavorable, it noted. Moreover, the 2026 cash flow is projected $4B below consensus, driven by margin and AI/software pressures.
“We are bullish on Tesla’s AI future, reflected in our quite generous base-case assumptions that see TSLA hitting over half of Elon’s 2035 $1trn comp package targets. But we still can’t justify the stock’s current valuation.”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
4. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 121
Salesforce, Inc. (NYSE:CRM) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 15, RBC Capital reiterated its Sector Perform rating on the stock with a $250.00 price target. The rating affirmation follows the analyst firm’s attendance at Dreamforce 2025 in San Francisco.
At the conference, Salesforce took the opportunity to announce its transition from Customer 360 to Agentforce 360, positioning AI agents and contextual data as the core components within its platform.
Salesforce now positions itself as the AI orchestration layer for enterprises. This shift will move Salesforce into the territory currently occupied by ServiceNow in automation and workflow solutions.
According to the firm, the company is increasingly focused on trust, governance, and extensibility in its narrative. However, the competitive overlap between Salesforce and ServiceNow seems to be intensifying now as they both converge around workflow automation, data context, and AI agent deployment.
Salesforce, Inc. (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 156
Apple Inc. (NASDAQ:AAPL) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 15, BofA Securities maintained its Buy rating and $270.00 price target on the stock.
The firm noted that iPhone shipping dates across Apple’s website and various carrier platforms over the past two weeks demonstrate stable delivery timeframes for iPhone 17 Pro and Pro Max models.
The firm cited “strong capital returns, eventual winner on AI at the edge and optionality from new products/markets” as key factors behind the buy rating.
“Our tracking of iPhone ship dates on Apple’s own website, and various carrier websites, indicates that as of Oct 13th, ship times for the iPhone 17 Pro and Pro Max models have been stable in the past two weeks. Globally, on average, ship time for the iPhone 17 Pro is currently at 13 days while iPhone 17 Pro Max stands at 20 days. In the US, availability at carrier websites is better than Apple’s own website. On Apple’s website, Pro has a lead time of 2–3 weeks (vs carrier average of 6 days) and Pro Max has a lead time of 2–3 weeks (vs carrier average of 13 days). Reiterate Buy on strong capital returns, eventual winner on AI at the edge and optionality from new products/markets.”
Apple is a technology company known for its consumer electronics, software, and services.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 235
NVIDIA Corporation (NASDAQ:NVDA) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 15, HSBC analyst Frank Lee upgraded the stock to Buy from Hold and raised his target price to $320 per share from $200.
The firm believes that the AI GPU total addressable market will keep expanding beyond hyperscalers, driving continuous earnings growth.
Lee cited a potential increase in the total addressable market for GPUs for the fiscal year 2027, following Nvidia’s deals with OpenAI and Stargate. The analyst revised his data center estimates to $351 billion, which is 36% higher than consensus estimates. Lee believes that a recovery in China could also provide a tailwind.
“We also see potential easing of China GPU uncertainties following the potential US-China trade deal that could enable NVIDIA to see a demand recovery in the Chinese market,” the analyst wrote. “With c78% upside, we upgrade our rating to Buy as we expect AI GPU TAM to keep increasing beyond hyperscalers, leading to continuous earnings growth.”
Analysts at the firm raised Nvidia’s fiscal 2027 estimate for Chip on Wafer on Substrate, or CoWoS, allocation to 700K (from 480K). This marks the first significant rebound in CoWoS wafer allocation momentum since the fourth quarter of 2025.
They noted that Nvidia’s aggressive fiscal 2027 estimate for CoWoS wafer forecasts at TSM will trigger an upward revision in fiscal 2027 datacenter revenues and reinforce their view of a rapidly expanding AI GPU market.
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 294
Microsoft Corporation (NASDAQ:MSFT) is one of the 10 AI Stocks Analysts Are Watching Closely. On October 16, Morgan Stanley reiterated the stock as “Overweight” and said that Microsoft is a “core holding.”
According to the firm, the company reported robust Q4 results and strong demand for Azure AI. However, there are concerns about OpenAI’s relationship and whether Azure’s growth can continue long-term.
“Despite strong Q4 results and robust demand for Azure AI, lurking questions on the OpenAI relationship and the durability of Azure growth keep shares off highs.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $630.00 implies a 22.7% upside, however, the Street-high target of $710 implies an upside of 38.3%.
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.
While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than MSFT and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 10 AI Stocks in the Spotlight Today and 10 AI Stocks Analysts Are Tracking Closely.
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