Elon Musk and OpenAI have jointly proposed to fast-track their trial over OpenAI’s transition to a for-profit company in December. According to OpenAI, the transition toward a for-profit company is crucial to staying ahead in the AI race and raising more capital in the process. Regardless of the shift, Bloomberg News has reported that the company is not expecting its cash flow to turn positive until 2029.
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The report has confirmed that the company expects revenue to triple to $12.7 billion in 2025. However, it is struggling with significant costs from chips, data centers, and talent needed to develop cutting-edge AI systems, which is why cash flow may not turn positive until after a few years. The company expects its revenue to surpass $125 billion by this time. As of 2025, the company said its revenue will triple due to the strength of its paid AI software.
Reuters further noted that the company must transition to a for-profit company by the end of the year to secure the full $40 billion funding led by SoftBank, which is in the final stages of raising. If OpenAI fails to restructure into a for-profit company by the end of the year, the bank may invest only $20 billion instead. The ChatGPT maker was originally given a two-year deadline, with the news marking an accelerated deadline.
Provided it successfully completes its $40 billion funding round, it would be the largest of all time, according to data compiled by research firm PitchBook. The deal would set to value the company at $300 billion, including dollars raised. This is more than double the ChatGPT maker’s previous valuation of $157 billion back in October. A part of this funding is anticipated to be used for OpenAI’s commitment to Stargate, an AI infrastructure project announced by President Donald Trump.
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 Q4 2024.
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).
A computer screen showcasing Artificial Intelligence and Machine Learning algorithms at work.
10. Spectral AI Inc. (NASDAQ:MDAI)
Number of Hedge Fund Followers: 7
Spectral AI Inc. (NASDAQ:MDAI) is an artificial intelligence company focusing on medical diagnostics, predictive analytics, and healing predictions. On March 28, BTIG maintained a “Buy” rating on the stock with a price target of $3.00. The firm’s optimism for Spectral AI stems from its strong performance in the fourth quarter of 2024. The company is also on track to submit its DeepView system for FDA approval by the second quarter of 2025.
DeepView system is a predictive medical device that leverages multispectral imaging and AI algorithms to assess burn wound healing potential. Commercialization efforts are further boosted by gathering clinical feedback from its systems deployed in the UK and Australia. The company is also developing a miniaturized version of DeepView for military and similar applications. All of these factors have contributed to a positive outlook toward the stock.
9. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 77
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection. On March 28, TipRanks reported that J.P. Morgan analyst Brian Essex maintained their bullish stance on the stock, giving a Buy rating on March 25. Essex is bullish given Crowdstrike’s reacceleration in annual recurring revenue (ARR) backed by lower-than-anticipated cost containment initiatives. The shift is anticipated to boost Cloud and Identity segment growth.
Moreover, Falcon’s Flex platform, a flexible licensing agreement providing access to the entire AI-powered CrowdStrike portfolio, is proving to be a significant driver for platform adoption. The larger deals and increased customer commitments are expected to further boost ARR growth. The company’s strategic approach to mergers and acquisitions and positive outlook for federal business further support Essex’s buy rating. The Wiz transaction is also seen as beneficial for the company, boosting its cloud security offerings.
8. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 85
Constellation Energy Corporation (NASDAQ:CEG) is an energy provider specializing in clean, carbon-free energy solutions. On March 28, JPMorgan lowered the firm’s price target on the stock to $311 from $358 and kept an “Overweight” rating on the shares. Even though the general independent power producer sentiment appears “very bearish,” JPMorgan remains constructive on the shares.
While JPMorgan is bullish on Constellation, BVS maintains a “Hold” rating on the stock with an associated price target of $225.00. The analyst said that the rich valuation of its stock suggests limited upside potential. Moreover, even though the company is poised to benefit from increasing electricity demand, particularly from data centers, there are certain headwinds as well. These include the possible removal of power auctions in key markets and uncertainties surrounding policy changes.
7. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 95
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On March 28, FBN Securities initiated coverage on the stock with an “Outperform” rating and set a price target of $385.00. According to the firm’s research, the company is doing well in the mobile gaming market, and is also boosting its reach into direct-to-consumer (DTC) and e-commerce with Audience+, an AI-powered performance marketing platform.
The firm is also confident in AppLovin’s growth strategy. Even though there are competitive challenges in its ad network economic model and the competitive landscape for AI talent and models, the company holds several advantages as well. These advantages include AppLovin’s scale, its sophisticated marketer clientele, and a successful record of mergers and acquisitions.
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
On March 27, HSBC analyst Michael Tyndall reiterated the stock as “Reduce” and lowered his price target on the shares by $35 to $130. According to Tyndall, there are “no quick fixes.” Due to the company’s aging products with limited driving assistance technology, the company is being pressured in the China market.
“Tesla eschews many of the industry norms (holding list prices firm, making regular facelifts and model renewals) and has to date seen only minimal impact, but tougher competition and brand erosion is likely to see the impact of its strategy hurt more.”
The company’s Robotaxi opportunity is too far away in the future, he noted.
“Delays have been a constant theme at Tesla, whereas the competitive threats continue to grow. We see a longer and less certain timeline than the current valuation reflects.”
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. One of the most notable analyst calls on Thursday, March 28, was for Nvidia Corporation. Bank of America reiterated the stock as “Buy”, stating that its shares are “compelling.” The firm, which has a price target of $200 a share, is optimistic on the stock despite the US government’s “AI Diffusion Rules” introduced to control the distribution of AI chips outside a core group of countries.
“Once the geopolitical concerns are sized and priced, we expect NVDA to recover, much like the relative recovery we have seen in semicap stocks this year once China exposure was reflected in wafer fab equipment spending…Meanwhile, we believe the stock is providing a particularly attractive opportunity for one of the most unique, high-quality tech franchises leading the largest and fastest growing secular trends.”
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOG) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses. On March 27, Google Public Sector, a division of Google that aims to assist US public sector institutions, announced its intent to integrate Google’s advanced generative artificial intelligence (genAI) into Lockheed Martin’s AI Factory ecosystem. The collaboration will enable Lockheed Martin to enhance its critical areas such as national security, aerospace, and scientific applications. Google Cloud’s Vertex AI platform will be used to train, deploy, and customize large language models securely at scale.
“Using Google Cloud’s AI technologies allows us to explore a wide range of powerful capabilities to deliver innovative, reliable solutions that stay ahead of the curve. Lockheed Martin and Google Cloud share a vision to bring new innovation to the industry with AI,” highlighting the companies’ shared commitment to driving progress in the field.”
-John Clark, senior vice president, Lockheed Martin Technology & Strategic Innovation.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On March 28, Evercore ISI reiterated the stock as “Buy,” stating that it sees an attractive entry point for the stock.
“Recent government-driven volatility has created several very intriguing entry/adding points among Tech/Internet stocks. We believe that META @ $603 or 20X 2026 P/E is absolutely one of those.”
The rating follows news from the company, having launched a new “Friends” tab on Facebook. The old-school tab shows users only the latest posts from their friends instead of the usual “recommended content” from the company’s algorithms. The company has been increasingly employing artificial intelligence (AI) to recommend content tailored to individual interests.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On March 24, the company announced that its Security Copilot agents will be available across the Microsoft end-to-end security platform. The Security Copilot with AI agents is designed to autonomously assist with phishing, data security, identity management, and more.
The phishing triage agent takes care of common attacks and phishing alerts so that human defenders can focus on more complex tasks. Microsoft further elaborated how today’s threat landscape requires improving cyber defences through AI, which is why it is expanding its Security Copilot with six security agents built by Microsoft and five security agents built by its partners.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Amazon.com, Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On March 27, JMP Securities analyst Nicholas Jones upheld a “Market Outperform” rating on the stock with a steadfast $285.00 price target.
The firm’s rating reflects Amazon’s optimism in its advertising initiatives and their contribution to the company’s growth. According to Jones, Amazon’s expansion into retail media advertising is a natural progression, anticipating it to draw new advertisers and boost the share of retail media ad spending in advertising budgets. He further lauded Amazon’s continuous efforts to add value for its advertising customers.
Amazon has been introducing artificial intelligence (AI) powered features for its customers. Some of its notable AI-tools include AI creative studio and Audio generator, generative AI tools that aim to lower creative barriers and expand opportunities for advertisers to expand their reach. Other tools, such as AI-powered Video Generator and Image generator, further help advertisers feature their products effectively.
While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some 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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