A severe global shortage of memory chips is forcing artificial intelligence and electronic companies into a quiet competition for diminishing supplies. In a report, Reuters has revealed how tech giants including Microsoft, Google, and ByteDance are rushing to secure supplies from companies such as Micron, Samsung Electronics, and SK Hynix.
The findings indicate how the supply crunch is impacting almost every type of memory, from flash chips used in USB drives to advanced high-bandwidth memory (HBM) used in AI data centers.
Prices for certain segments have more than doubled since February, with economists and executives warning of a potential macroeconomic threat rather than a mere tech sector imbalance.
“The memory shortage has now graduated from a component-level concern to a macroeconomic risk.” The AI build-out “is colliding with a supply chain that cannot meet its physical requirements.”
– Sanchit Vir Gogia, CEO of Greyhound Research, a technology advisory firm.
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.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 72
Hewlett-Packard Enterprise Company (NYSE:HPE) is one of the 10 AI Stocks in Focus This Week. On December 1, Evercore ISI analyst Amit Daryanani reiterated an Outperform rating on the stock with a $28.00 price target.
The firm is positive on the stock following the sale of its remaining 9% stake in H3C, seeing the divesture as strategically aligned with HPE’s financial goals and integration roadmap.
Analysts discussed that the sale will be split amongst three buyers, including majority owner Unisplendour (UNIS). HPE will fully exit its stake through two sales totaling $1.3B, strengthening its balance sheet.
“In a filing this morning, HPE announced the sale of its remaining ~9% stake in H3C for ~$643M. The sale will be split among three buyers, including majority owner Unisplendour (UNIS), and is expected to close within the next 180 days pending regulatory and UNIS shareholder approval. The current transaction follows the announced sale of HPE’s ~10% stake of H3C two weeks ago and in aggregate, the two transactions will fully divest HPE from H3C and result in net proceeds of ~$1.3B to HPE’s balance sheet.”
Evercore ISI believes that the divesture is strategically positive, supporting its Juniper integration.
“Cash received from this transaction reflects the same valuation as the prior 10% sale and HPE’s original put agreement. This aligns with HPE’s broader strategy of deleveraging the business post Juniper close and allows management to further focus on integrating the two businesses.”
Hewlett Packard Enterprise Company (NYSE:HPE), an American multinational technology company, provides high-performance computing systems, AI software, and data storage solutions for running complex AI workloads.
9. Reddit, Inc. (NYSE:RDDT)
Number of Hedge Fund Holders: 80
Reddit, Inc. (NYSE:RDDT) is one of the 10 AI Stocks in Focus This Week. On December 1, Piper Sandler reiterated an “Overweight” rating on the stock with a price target of $290.00. The firm views Reddit as a strategic AI asset supported by licensing potential and ad revenue momentum.
Reddit has two primary Data Licensing (DL) agreements in place with Google and OpenAI. These DL agreements drive a significant portion of segment revenue, and are on track to reach an estimated $400million in revenue by 2027, surpassing both consensus & PSC expectations.
The firm likes the setup for Reddit heading into 2026, noting how the growing demand for training data in the AI landscape positions the company as a strategic asset.
The company’s advertising business, which the firm expects to grow an estimated 70% year-over-year in 2025 and mid-40% in 2026, also possesses “differentiated growth” compared to peers.
“Reiterate OW. We like the set-up for RDDT stock into ’26. The growth in AI continues to fuel the need for training surfaces, and we see RDDT as a strategic asset in this context. Similarly, we see RDDT’s ads businesses possessing differentiated growth (we project ~70% y/y growth for ads in ’25, mid-40% percent growth in ’26). Last, RDDT is coming out of difficult y/y user growth compares, and we expect stabilization in 4Q with potential upside to our 2026 forecasts.”
Reddit, Inc. (NYSE:RDDT) is a social media platform that leverages AI to strengthen search functionality and improve user engagement.
8. 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 This Week. On December 1, Morgan Stanley reiterated an Overweight rating on the stock with a €1,000.00 price target. The firm is optimistic on the stock driven by positive momentum for lithography demand.
Analysts have labeled ASML as its Top Pick in European semiconductors as demand strengthens across memory and logic, and new EUV tool cycles and DRAM transitions signal healthier margins heading into 2026.
DRAM cycle and foundry spending are anticipated to support ASML’s order book and sales through fiscal years 2026 and 2027. A recent Asia trip by the firm has further reinforced its belief regarding a memory supercycle and likely near-term upside for ASML’s orders.
Analysts have also highlighted “unprecedented memory demand” with limited DDR5 inventory visibility and DDR4 tightness. ASML is well-positioned to benefit from continued DRAM demand, including commodity DRAM, strong memory pricing, and DRAM technology transitions to HBM4.
It has also been confirmed that TSMC will add 3nm capacity in Taiwan instead of Japan. This implies increased foundry spending and is likely to translate into more 3600d shipments in fiscal year 2026 and provide near-term EUV sales upside for ASML.
ASML Holding N.V. (NASDAQ:ASML) develops and sells advanced semiconductor equipment, including lithography, metrology, and inspection systems for chip manufacturing.
7. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 89
Applied Materials, Inc. (NASDAQ:AMAT) is one of the 10 AI Stocks in Focus This Week. On December 2, KeyBanc Capital Markets raised its price target on the stock to $285 from $240 while maintaining an “Overweight” rating. Analysts view AMAT as well-positioned ahead of key technology shifts, supported by long-term tailwinds from AI-driven demand and advanced node transitions.
“Increasing PT on Favorable Relative Positioning Ahead of Several Tech Transitions; Following internal review & analysis, we’re adjusting AMAT estimates, introducing 2028, and raising our PT to $285 from $240.”
AMAT is attractively valued than its peers, with competitors having higher embedded expectations in their current valuations. As such, the firm believes that the company will benefit from multi-year demand tailwinds “driven by power/performance hungry AI uses & devices.”
These AI demands are pushing the industry towards new technologies such as N2/GAA, HBM, Advanced packaging; all of which will benefit AMAT and similar equipment makers.
Applied Materials, Inc. (NASDAQ:AMAT) is a leader in materials engineering solutions engaged in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries.
6. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 102
Vertiv Holdings Co (NYSE:VRT) is one of the 10 AI Stocks in Focus This Week. On December 1, TD Cowen raised its price target on the stock to $211.00 from $210.00 while maintaining a “Buy” rating. The firm is optimistic on the stock driven by accelerating US data center demand, upside in orders, and margin tailwinds.
Vertiv has been named TD Cowen’s “Best Ideas 2026”; anticipating upside orders and margin upside as demand accelerates for AI data centers. Latest checks indicate that US data center demand continues to accelerate, with an estimated 11GW leasing pipeline and solid quarter-to-date leasing.
The firm also had equipment checks which revealed price/cost tailwinds that should support margins in the second half of 2026 and beyond. All in all, Vertiv is a picks and shovels way to invest in the AI Data Center thematic.
“As a derivative of the recent hyperscale data center demand acceleration, we see Vertiv as well positioned to benefit from the ~11.3GW of YTD data center leasing that we have tracked via our channel checks through 3Q25.”
Vertiv Holdings Co (NYSE:VRT) is a global provider of digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities.
5. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 105
Micron Technology, Inc. (NASDAQ:MU) is one of the 10 AI Stocks in Focus This Week. On December 2nd, Wolfe Research raised its price target on the stock to $300 from $200 while maintaining an “Outperform” rating. The firm sees Micron on path to higher earnings price through 2027 and continued stock upside.
Micron is experiencing better-than-expected pricing trends, supported by improved server demand and stability in the handset and PC segments. Therefore, the firm has increased its estimates for the November and February quarters, along with out-year forecasts.
Analysts see an upside case to $30 earnings power as HBM demand ramps sharply in 2027, leading to further upside.
“Reiterate Outperform rating and increasing price target to $300. Our $300 price target is based on ~10× our CY27 upside case EPS of ~$30. We raise our MU estimates for NovQ/FebQ and out years, to reflect better than expected pricing trends, driven by better server demand and stability in handset/PC. While the stock has continued to move higher, following pricing trends, we see an upside case to $30 earnings power driven by a strong HBM ramp in CY27, creating a path for continued upside in the stock.”
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide.
4. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 122
Oracle Corporation (NYSE:ORCL) is one of the 10 AI Stocks in Focus This Week. On December 1, Deutsche Bank reiterated its Buy rating on the stock with a $375.00 price target. The firm is confident about Oracle’s long-term AI growth and sees favorable risk/reward.
Oracle shares are trading at 27x consensus CY26 EPS, reflecting upfront costs in scaling its AI business. Due to this, investor appetite for growth seems limited until there are more visible results.
Even though Deutsche Bank acknowledges these risks, it believes that they are offset by the very real opportunity presented by OpenAI. OpenAI backlog represents solid ROI business and “validates Oracle’s leadership in deploying AI cloud infrastructure at scale.”
As such, the recent pullback serves as a good opportunity which skews to the upside.
“This exercise intends to help frame the risk/reward currently embedded in shares, which we’d argue skews strongly to the upside and amidst the pullback presents an attractive entry point for investors when looking at Oracle’s business in totality. We reiterate our Buy rating and DCF derived target price of $375, which implies ~38× our CY27E non-GAAP EPS.”
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is one of the 10 AI Stocks in Focus This Week. On December 2nd, Loop Capital analyst Gary Mobley raised the price target on the stock to $325.00 (from $315.00) while maintaining a “Buy” rating. The price target raise follows updated iPhone estimates that reflect unit and ASP adjustments based on supply chain research.
“We are reiterating our Buy and raising our PT to $325 from $315, while updating our iPhone estimates to reflect unit and ASP adjustments as per the work of Loop Capital Supply Chain Analyst John Donovan (AAPL: Post Holidays Letting Out Some Air, Shoring Up the Base; 2026 Unfolding).”
Based on their work, the firm noted that Apple is experiencing a “material increase” in iPhone 17 base model units. This is an estimated 22 million more units from December quarter through June quarter than what it saw previously.
Meanwhile, there has been a corresponding decrease in iPhone 16 Pro/Pro Max models (now discontinued) and iPhone 17 Air. The firm noted that it is also incorporating iPhone 18 models into its estimates and lowering ASPs across all models for a better reflection of Apple’s subsidy absorption with carrier partners.
Apple is a technology company known for its consumer electronics, software, and services.
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 183
Broadcom Inc. (NASDAQ:AVGO) is one of the 10 AI Stocks in Focus This Week. On December 1, BofA analyst Vivek Arya raised the firm’s price target on the stock to $460 from $400 and kept a “Buy” rating on the shares. The firm is optimistic on the stock driven by the company’s expanding presence in Google’s TPU (Tensor Processing Unit) ecosystem.
Discussing the successful launch of Gemini 3 trained 100% on the TPU as well as the potential external rental of TPUs through Google Cloud, analysts view rising TPU leverage as a positive for key design partner Broadcom.
Analysts led by Vivek Arya noted that Broadcom’s current average selling prices (ASPs) of about $5,000–6,000 and roughly 2 million expected units in 2025 could climb significantly as the next generation ramps.
These figures may increase to around $12,000–15,000 per unit and more than 3 million units in 2026, with upside to 3.6-3.8 million “if demand continues to expand.”
The firm has modestly trimmed gross margin expectations based on a higher compute and ASIC mix but overall earnings are largely unchanged.
Broadcom is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 332
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 10 AI Stocks in Focus This Week. On December 1, Oppenheimer raised its price target on the stock to $305.00 from $290.00 while maintaining an “Outperform” rating. The firm sees significant upside for AMZN through 2027 driven by structural AWS growth.
AWS is planning to double its capacity through 2027 after having it doubled since 2022, with at least 1 GW to be added in Q4. Their analysis suggests an estimated $3 billion in historical revenue per incremental GW.
“Applying this to the forward GW forecast with pricing discounts suggests 14%/22% upside to Street 2026/2027 AWS revenue, including 3% upside in 4Q.”
Oppenheimer further acknowledged how AWS re:Invent could bring in additional announcements, even though they have been less impactful in recent years.
It also discussed Adobe forecasts for holiday sales.
“On retail, Adobe forecasting holiday sales +5% y/y vs. 2024’s +9%, implying investor expectations are already muted. Target assumes 10× 2027 AWS revenue / 5× E-commerce gross profit, with AWS upside suggesting mid-$300s.”
Amazon.com Inc. (AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions.
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 have limited downside risk. If you are looking for an AI stock that is more promising than AMZN and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 10 AI Stocks on the Market’s Radar and 10 AI Stocks Making Headlines on Wall Street
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
