Even though enthusiasm around artificial intelligence continues to build, some market watchers are beginning to question what could come next. Take Brad Conger, Chief investment officer at Hirtle Callaghan, for instance, who believes that the buzz around these AI stocks may be running ahead of their underlying business models.
Conger believes that a lot of spending behind AI firms isn’t really self-sustaining. While it is true that the demand for AI compute remains undeniably strong, much of it is being generated by companies that remain heavily dependent on venture capital rather than self-sustaining business models.
Pointing at OpenAI, Conger noted how the AI startup has committed to spending an estimated $1.4 trillion on computing resources over the next five years despite continuing to face losses. This creates a need for external funding, leaving the ecosystem vulnerable.
Besides funding risks, many structural or operational challenges may also create slip-ups for AI stocks, such as constraints around energy supply, limitations in data center availability, and even community resistance, he noted.
Cogner also questioned the viability of Large Language Models, particularly those like ChatGPT and Claude. While there are six or seven models operating at the frontier of capability, 95% of users use them for free. This raises doubts about whether companies can successfully convince consumers to use these products at a charge, even though they have become accustomed to use them for free.
Competitive pressures further complicate the outlook, with Chinese counterparts offering LLMs of almost the same capabilities for as little as $3 a month.
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. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 64
Bloom Energy Corporation (NYSE:BE) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, Jefferies analyst Dushyant Ailani raised the price target on the stock to $92.00 (from $53.00) while maintaining an Underperform rating. The firm raised its 2026 revenue estimates but warned that peak valuations leave no room for error.
Investors are advised to focus on execution risks and high expectations. According to the firm, the raised BE 2026 estimates are driven by Bloom’s AEP and Quanta orders. It anticipates 2026 revenue to reach $2.9 billion, 16% higher than consensus estimates.
The firm believes that expectations remain very high ahead of BE’s quarterly report, with investors hoping on news related to capacity expansions beyond what has already been announced.
Jefferies also noted that even though macroeconomic factors stand strong behind the company, investors should look for confidence in out-year deployments and management clarity. The firm also expects market focus to transition from macro tailwinds to execution.
Bloom Energy’s peak valuations leave little room for error, Jefferies added. This likely explains the maintained Underperform rating despite the higher price target.
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 66
International Business Machines Corporation (NYSE:IBM) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, Evercore ISI analyst Amit Daryanani reiterated an Underperform rating on the stock with a $330.00 price target. The rating affirmation comes ahead of IBM’s fourth-quarter earnings report scheduled for Wednesday, January 28.
Evercore ISI expects IBM to report results in line with or slightly above consensus estimates. This performance is likely to be supported by continued momentum in the Infrastructure segment tied to the mainframe cycle and improvements in Consulting.
The company is expected to report revenue of around $19.2 billion and $4.29 in earnings per share. Its ongoing cost savings initiatives are likely to contribute further to pre-tax income margin expansion and create potential earnings upside for the fourth quarter.
These efficiency initiatives will likely achieve an estimated $4.5 billion in gross run-rate savings by the end of 2025. IBM is likely to provide formal 2026 guidance as part of the earnings report, with Evercore ISI anticipating it to guide growth at the lower end of its mid-single-digit target range, with at least one percentage point of pre-tax income margin expansion and an estimated $15 billion in free cash flow.
Beyond these numbers, investors are also likely to look at other key areas, such as AI bookings, revenue, details on the Confluent integration, and more.
International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products.
8. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 72
Datadog, Inc. (NASDAQ:DDOG) is one of the 10 AI Stocks in Focus on Wall Street. On January 22, Stifel analyst Brad Reback upgraded the stock from Hold to Buy with a price target of $160.00 (from $205.00). The rating upgrade comes ahead Q4 2025 earnings report due on February 10, citing upside surprise potential and attractive long-term valuation.
According to the firm’s recent checks, DDOG is poised to post another larger than typical quarterly beat in Q4, an estimated 4% or more, driven by accelerating core growth, sustained strong gains within the non-OAI genAI cohort, and quarter-over-quarter stability in OpenAI performance.
The net result is we believe DDOG’s 4Q growth rate, excluding OAI, should be >23%.
Looking ahead, Stifel anticipates management to guide calendar year 2026 revenue to an estimated $4.1 billion, implying conservative core growth above 19% excluding OpenAI.
The firm assumed OAI to remain at its current quarterly run rate of about $90 million through 2026, which leads to annual OAI revenue of $360 million compared to an estimated $305 million in 2025.
Stifel also discussed how DDOG has had recent success in S&M efforts and ongoing R&D investments, and that it would be surprised if management guided modestly below current Street expectations (~23%).
Net/net, with shares trading at ~8x CY27E EV/Rev and 30x CY27E EV/FCF, valuation appears relatively attractive for one of the few names we cover with accelerating core growth.
Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products.
7. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 82
ASML Holding N.V. (NASDAQ:ASML) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, Bernstein SocGen Group analyst David Dai reiterated an Outperform rating on the stock with a $1,642.00 price target. The firm anticipates a robust Q4 beat, with revenue and booking strength viewed as key upside drivers.
With ASML set to report earnings on January 28th, the firm has previewed its latest data points and buy side expectations. It believes ASML will likely beat consensus expectations, with order strength bearing more importance.
According to import data, ASML could report EUR 9.7Bn in revenue, compared with consensus estimates of 9.5 billion. Notably, imports from China reached EUR 3.27 billion in Q4, which is the highest level on record.
Bernstein emphasized that attention should be centered around Q4 booking number, as it is the last booking report from ASML. The firm anticipates a very robust quarter as both advanced logic manufacturers (TSMC) and DRAM producers raised their 2026 expectations during the fourth quarter of 2025.
It added how Chinese customers have likely placed major orders to support their leading-edge expansion efforts.
Further, we believe China has also put in a big order to support their leading edge expansion (ASML: Don’t forget DUV). Buy side expectations for booking has gone up to at least €8bn but we think there is upside.
6. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 110
AppLovin Corporation (NASDAQ:APP) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, Needham analyst Bernie McTernan upgraded the stock from Hold to Buy with a price target of $700.00.
The firm sees ecommerce growth inflection in 2026, with potential for further upside along a trajectory similar to TikTok’s. It noted how the upgrade on AppLovin to Buy reflects its additional work on ecommerce, reinforcing confidence in the trajectory of ecommerce revenue growth in ’26E. This comes at the same time the stock pulled back off the highs from a month ago.
Needham has raised its ecommerce estimates reflecting expectations of sequential growth in the first quarter as it now assumes “growth in advertisers from the self-service launch and ramp up in spend more than offsets typical 1Q seasonality.”
Despite the higher estimates, the firm believes there is potential for upside under a bull case scenario.
Despite the increase to our ecommerce estimates, we think there is potential upside to our estimates in our bull case which assumes APP revenue can experience a similar trajectory as TikTok.
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 115
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, Piper Sandler analyst Harsh Kumar raised the price target on the stock to $300.00 (from $280.00) while maintaining an “Overweight” rating.
The firm remains enthusiastic about AMD’s prospects as it heads into the year, highlighting 2026 ramp of Helios and OpenAI contract as major tailwinds.
Expecting Top-Line Upside of ~$200M; Overall, we remain very enthusiastic about AMD’s prospects going into 2026 and into the March quarter guidance.
Piper Sandler pointed to expectations for meaningful revenue and earnings upside for the December 2025 quarter. It anticipates roughly $200 million of revenue upside, and an EPS upside of at least $0.02 relative to the Street.
The firm also sees potential for upside for the March quarter, even though it is likely to be relatively small due to the seasonal aspects of client, gaming, and even enterprise EPYC CPU business.
Beyond these near-term results, it anticipates both stock and company fundamentals to shine through in mid-2026 as the company gears up to ramp its Helios rack and its contract with OpenAI.
Piper Sandler also anticipates several OpenAI partners and customers to make announcements and purchase commitments between now and midyear.
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, Jefferies analyst Edison Lee lowered the price target on the stock to $276.47 (from $283.36) while maintaining a Hold rating. The firm believes AAPL’s long-term growth is capped due to slowing App Store growth and Google ad revenue risk.
According to the firm, Sensor Tower data showed AppStore revenue grew only an estimated 7% in Dec Q, which marks the slowest growth in the last seven quarters.
AAPL has corrected 13% from its peak on Dec 2, driven by signs of slowdown in service rev.
The firm also sees a risk of slowdown in Apple’s Google-related advertising revenue to high single-digits. While the firm has trimmed its service revenue growth estimates, it keeps its hardware forecasts unchanged.
Even so, Jefferies anticipates a slight beat, of around 3%, in upcoming results due on January 29 despite the firm’s fiscal year 2026 and 2027 estimates only in line with consensus.
“At 2.4x PEG we believe the stock will likely be range bound.”
Apple is a technology company known for its consumer electronics, software, and services.
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 219
Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, KeyBanc analyst Justin Patterson raised the price target on the stock to $360.00 (from $330.00) while maintaining an Overweight rating. The firm views AI and Cloud trends structurally favorable for GOOGL, justifying a higher valuation.
According to the firm, the current environment remains favorable for both GOOGL and Meta. It cited several core trends in artificial intelligence emerging that will favor the stock. These trends include compute scale, distribution, and proprietary data matter for AI performance, the acceleration of agentic coding that has accelerated app deployment, as well as user interfaces that are evolving.
KeyBanc believes that Alphabet and Meta are both well-positioned across these dimensions, and that artificial intelligence is contributing to ad revenue growth supported by both volume and price.
The firm has raised its price target to $360 for GOOGL, a reflection of robust Google Cloud growth and profitability.
Raising GOOGL PT to $360 (26.7x 2027E P/E) – This reflects stronger Google Cloud growth and profitability. As shown by our updated sum-of-the-parts (SOTP) analysis, mix shift toward Google Cloud supports a higher P/E.
Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, KeyBanc analyst Justin Patterson lowered the price target on the stock to $835.00 (from $875.00) while maintaining an Overweight rating. The firm anticipates META to benefit from AI product cycles in 2026 alongside Alphabet (GOOGL).
We believe OW-rated Alphabet (raise PT to $360) and OW-rated Meta (lower PT to $835) should benefit from AI product cycles in 2026.
While Alphabet’s AI upside is increasingly reflected in its valuation, KeyBanc noted how Meta’s shares price in investment and ROI concerns. The divergence is evident in Meta’s valuation, currently trading at its widest P/E discount to Alphabet (GOOGL) since 2002.
Looking ahead, the firm anticipates revenue forecasts for both companies to remain ahead of consensus estimates.
With our 2026E/2027E revenue estimates ahead of consensus for both GOOGL (1%/3%) and META (1%/2%), our view is both stocks can work over the year.
As such, the near-term sentiment on Meta remains argumentative due to concerns about spending levels. Investors fear that operating expenses could exceed $160 billion. The firm’s own model projects $157 billion in operating expenses and $120 billion in capital expenditures.
Nevertheless, Keybanc sees product momentum in the spring supporting stronger revenue growth into 2027.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 312
Microsoft Corporation (NASDAQ:MSFT) is one of the 10 AI Stocks in Focus on Wall Street. On January 26, Stifel analyst Brad Reback lowered the price target on the stock to $520.00 (from $640.00) while maintaining a Buy rating. The rating affirmation comes ahead of MSFT’s earnings report, with the firm citing near-term expense pressures limiting margin upside.
Stifel anticipates Microsoft to exceed expectations for Azure cloud services growth by an estimated 200 basis points, reaching 39% growth on a constant currency basis. This is supported by factors such as a solid macro backdrop, continued rapid OpenAI usage growth, and management’s commentary that demand still exceeds Azure supply.
Looking ahead, even though 3Q26 represents a tougher year-over-year comparison for Azure, recent data center capacity expansions should allow Microsoft to post a similar level of incremental sequential adds as 3Q25. This will likely lead to an estimated 38% year-over-year constant currency growth guide, including a degree of conservatism.
The firm anticipates operating margin pressure throughout FY26 as gross margins compress and operating expenses rise for “high-priced AI professionals (salary/compute)”
Net/net, we believe for the stock to effectively re-rate in coming quarters, the company must get to a point where Azure growth meaningfully outpaces Capex growth rates (hopefully FY27).
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.
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