Due to the Middle East conflict and macro uncertainty, global stock markets remain volatile for the foreseeable future. Nevertheless, tech giants are leaping towards the next big trends in artificial intelligence, with agentic AI being one of them.
Agentic AI tools are more than just chatbots. Rather, they can take actions online without assistance, like making a reservation.
Tech giants are all in for creating these agents, with ChatGPT creator OpenAI having launched Operator earlier this year, followed by Alphabet’s Mariner agent.
“All leading AI tech companies, including Google, Meta, OpenAI, are in an intense competition to be the starting point ‘Agent’ to help consumers navigate their lives.”
-BofA Securities analysts led by Justin Post.
According to Post, Meta is the best-positioned for the start of the AI agent era, with its AI assistant already boasting more than 1 billion users.
“We think (the) Meta AI Assistant represents a meaningful and possibly underappreciated opportunity within Meta’s evolving AI and advertising ecosystem,” Post wrote. “As a general-purpose agent embedded across Meta’s family of apps, Meta AI has the potential to become a central interface for content discovery, commerce, and productivity.”
Similarly, Post noted how agentic AI offerings may also benefit Google, although there is a disruption risk for its search business.
Ultimately, it is quite evident that the AI arms race continues with full force, and that no company wants to get left behind.
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 Q1 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Pegasystems Inc. (NASDAQ:PEGA)
Number of Hedge Fund Holders: 34
Pegasystems Inc. (NASDAQ:PEGA) is one of the 10 AI Stocks in the Spotlight. On June 20, DA Davidson analyst William A. Jellison raised the price target on the stock to $50.00 (from $47.50) while maintaining a “Neutral” rating on the shares.
The analyst told investors in a research note that it is confident in Pega’s recently announced $700M free cash flow goal for 2028 and believes the required performance from Pega Cloud is both ambitious and achievable, which it views “favorably.”,
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 57
International Business Machines Corporation (NYSE:IBM) is one of the 10 AI Stocks in the Spotlight. On June 20, Evercore ISI analyst Amit Daryanani reiterated an “Outperform” rating on the stock with a $315 price target.
The firm expects IBM to maintain mid-to-high single-digit revenue growth as well as double-digit growth in earnings per share and free cash flow in the coming years. This growth would enable the company to potentially generate $16 to $18 in annual EPS within the next three years.
The firm has also noted improvements in market sentiment, along with a recent expansion of the market’s multiple as key reasons for its increased target.
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.
Hedge Fund Resource Center