Global stock markets have been riding high, particularly with all the excitement around artificial intelligence. However, many investors are now warning that inflation can come back and hurt markets.
2025 saw US stocks posting double-digit gains, with a handful of companies generating most of total market earnings. Falling inflation helped bonds as well, but inflation remains above the Federal Reserve’s average 2% target.
Looking ahead, government stimulus, combined with heavy AI spending, is anticipated to bolster growth. However, a Reuters’ report how money managers now fear if this could reignite inflation, forcing central banks to stop cutting rates, or even raise them again.
“The costs are going up not down in our forecast, because there’s inflation in chip costs and inflation in power costs,” said Morgan Stanley strategist Andrew Sheets said.
“What keeps us awake at night is that inflation risk has resurfaced,” said Julius Bendikas European head of economics and dynamic asset allocation at Mercer
“Inflation is what could start to scare investors and cause markets to show some cracks,” said Asset manager Carmignac investment committee member and portfolio manager Kevin Thozet.
While artificial intelligence is still powering the global growth, rising costs and inflation pose major risks to the rally.
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 Q3 2025.
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10. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 56
Baidu, Inc. (NASDAQ:BIDU) is one of the 10 AI Stocks Gaining Attention on Wall Street. On January 7, Freedom Capital Markets analyst Roman Lukianchikov raised the price target on the stock to $160.00 (from $120.00) while maintaining a “Buy” rating. Firm analysts see positive signs from Baidu’s transformation efforts despite near-term margin pressure.
Analyst Roman Lukianchikov discussed how Baidu delivered quarterly results that generally surpassed expectations. The company’s ongoing transformation, which has had required higher capital expenditures, has begun yielding positive results despite intensifying competition in the company’s core business.
Even though elevated spending continues to pressure margins, the firm is confident that scaling Baidu’s less profitable venture may drive a recovery in profitability over the medium term.
“While margins may face further pressure in the coming quarters, successful scaling of some of the company’s less profitable initiatives could drive a recovery in profitability over the medium term. We issue a ‘Buy’ recommendation and raise our target price from $120 to $160.”
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: 62
CoreWeave, Inc. (NASDAQ:CRWV) is one of the 10 AI Stocks Gaining Attention on Wall Street. On January 6, Truist Securities analyst Arvind Ramnani initiated coverage on the stock with a Hold rating and an $84 price target. Despite the cloud service provider’s revenue gains and high-end clients, the firm believes that CRWV suffers from lofty leverage and high capital expenditure requirements.
CoreWeave, a leading provider of cloud services purpose-built for AI, has a strategic partnership with Nvidia. It also counts several notable names among its customer base, including OpenAI, Microsoft, Meta, and Google.
“The NVIDIA partnership is vital as it ensures access to GPUs – NVDA is a ~7% owner of CRWV and committed to buy up to $6.3B of any unsold capacity by CRWV through April 2032, providing a long-term revenue backstop.”
-Truist analysts, led by Arvind Ramnani.
However, the firm also flagged how only a few revenue sources, tied to one or two customers, creates risks for the company.
“Last year, the company generated 77% of its revenue from its two largest customers, with Microsoft as its largest customer at 62% of revenue,” Ramnani said. “This year, Microsoft has made up ~70% of revenue through 3Q25, though it is expected to fall under 50% of revenue next year after the OpenAI contract begins. While there are significant supply constraints today, we see risks if a comparable alternative to NVIDIA’s GPUs emerges or supply constraints ease.”
Ramnani added that despite these risks, CRWV shares have a potential backstop to protect from share declines. The firm sees potential for NVIDIA or other partners to acquire CRWV if business conditions worsen – “as GPU and compute capacity will likely remain vital to AI models.”
CoreWeave, Inc. (NASDAQ:CRWV) is a cloud platform provider that provides equipment for AI and other computing purposes.
