According to sources from The Information, Alibaba and Baidu have begun using internally designed chips to train their AI models. The move reflects a major shift in China’s AI and technology landscape, reducing reliance on the US for powerful processors, particularly those from Nvidia.
The report has revealed that Alibaba begun using its own chips for smaller AI models earlier this year. Meanwhile, Baidu has started experimenting with training new versions of its Ernie AI model using its Kunlun P800 chip.
“The competition has undeniably arrived … We’ll continue to work to earn the trust and support of mainstream developers everywhere.”
-Nvidia spokesperson.
Beijing has been encouraging tech companies to use home-grown technology and reduce dependence on US hardware post the DeepSeek AI boom, aiming to strengthen its supply chain resilience and address national security concerns.
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 Q2 2025.
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10. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 20
BigBear.ai Holdings, Inc. (NYSE:BBAI) ) is one of the 10 AI Stocks in the Spotlight for Investors. On September 11, the company announced deployments of Enhanced Passenger Processing (EPP) at the Nashville International Airport (BNA) International Arrivals Facility, owned and operated by Metropolitan Nashville Airport Authority (MNAA).
With the help of veriScan, BigBear.ai’s biometric technology supporting EPP, US citizens will be able to move through customs without showing their physical passports. This will not only improve their traveler experience but also enhance operational efficiency.
BNA is one of the many major airports and ports of entry implementing EPP to streamline international arrivals. The solution helps to reduce average processing times, ease congestion during peak arrival periods, and improve efficiency and passenger satisfaction.
“BigBear.ai’s advanced identity verification tools streamline passenger processing while giving officers real-time insights to make faster, more informed decisions. We are proud to partner with the Metropolitan Nashville Airport Authority and U.S. Customs and Border Protection (CBP) to deliver AI-driven solutions that both strengthen security and transform the arrival experience for travelers.”
-Kevin McAleenan, CEO of BigBear.ai.
BigBear.ai Holdings, Inc. (NYSE:BBAI) is an artificial intelligence specialist that provides decision intelligence solutions for national security, digital identity, supply chain and logistics, enterprise operations, and manned-unmanned teaming in autonomous systems.
9. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 30
C3.ai, Inc. (NYSE:AI) is one of the 10 AI Stocks in the Spotlight for Investors. On September 12, UBS analyst Radi Sultan raised the price target on the stock to $17.00 (from $16.00) while maintaining a Neutral rating.
The firm said that it “remains on the sidelines” on the AI software provider due to limited visibility into the range of outcomes for FY27 growth. The firm projects an estimated 16.5% growth while investor estimates range from no growth to mid-20s growth.
Discussing the company’s Q1 weakness, the firm noted that it was largely due to execution failures around several large deals instead of broad-based customer weakness.
It further noted that even though the FY26 revs framework of $290-300m incorporates conservatism, it is keeping its estimate unchanged due to uncertainties such as a big Q1 miss, a new CEO, and GTM changes.
The firm’s key concern remains that the new CFO is yet to finalize his overhaul plan which may create disruption over the next few quarters.
“We remain on the sidelines following our conversation as we still don’t have great visibility into the range of outcomes for FY27 growth (we’re at ~16.5% but we’ve heard investors suggesting anywhere from no growth to mid-20s growth). The company acknowledged Q1 weakness but did characterize the significant miss as more a lack of execution around a few large deals vs broad-based weakness across the customer base (with a good mix of deals slipping vs deals that were lost). While the FY26 revs framework of $290-300m does seem to be baking in conservatism, there are enough moving pieces (big Q1 miss, new CEO, GTM changes and new CCO) that we aren’t yet ready to underwrite upside and leave our FY26 revs estimate of $299m unchanged. Our biggest takeaway was that the new CEO hasn’t yet finalized his overhaul plan which could potentially cause significant disruption and last several quarters. In our view this is key in determining where 2H26 and FY27 will ultimately land and even with investor positioning already negative we remain on the sidelines pending additional visibility.”
C3.ai, Inc. (NYSE:AI) is an enterprise artificial intelligence (AI) software company involved in building and operating enterprise-scale AI applications and accelerating digital transformation.
8. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 41
Arm Holdings plc (NASDAQ:ARM) is one of the 10 AI Stocks in the Spotlight for Investors. On September 11, Evercore ISI analyst Mark Lipacis raised the price target on the stock to $178.00 (from $173.00) while maintaining an Outperform rating. The rating affirmation follows meetings between the firm and ARM’s CEO, CFO, and VP of IR.
Analysts came away positive from the meeting stating that ARM has the potential to move from simply exploring to executing a strategy that will allow it to expand its platform into subsystems, chiplets, and full-end solutions.
This would allow Arm’s model to become similar to Nvidia, positioning it as the CPU-ecosystem of choice.
“Last week we met with ARM’s CEO Rene Haas, CFO Jason Child, and VP of IR Jeff Kvaal, and left our meeting thinking that it is a high probability that company will shift from “exploring the possibility” of expanding its platform into subsystems, chiplets and full-end solutions to actually executing on it. This strategy would shift Arm’s model to look more like Nvidia’s, but as the CPU-ecosystem of choice providing the processors, libraries, integration know-how as well as physical ICs into a broad set of end markets. If it does, we calculate a bear/base/bull 2030 EPS power of $5/$8/$13. Raise PT to $178, Reiterate OP. “
Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products.
7. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 81
Applied Materials, Inc. (NASDAQ:AMAT) is one of the 10 AI Stocks in the Spotlight for Investors. On September 11, Mizuho analyst Vijay Rakesh downgraded the stock from Outperform to Neutral with a price target of $175.00 (from $200.00).
The firm cited intensifying competition in China and technology transitions that may erode the company’s market share. It noted that AMAT is losing market share in Sputtering/PCVD where it is heavily exposed. Meanwhile, China’s domestic suppliers are gaining share and putting pressure on AMAT’s position.
“AMAT exposed to PVD/Sputtering, Plasma CVD, and 28nm+ Conductor Etch (~60% of Revs for AMAT, but only 40% of Revs for LAM), losing share. We believe the largest share shifts are happening in Sputtering/PCVD where AMAT’s revenue share is ~47% while LRCX less exposed at ~15%. China Domestic OEMs like Naura and AMEC are gaining Share in PVD (Naura gaining ~2-5pts/yr as AMAT loses 2-4pts), legacy 28nm etch nodes (Naura/AMEC gaining ~2ppt from AMAT/LRCX), and Plasma CVD as AMAT is potentially losing share as customers SMIC/YMTC ramp domestic CN WFE suppliers.”
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. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 103
Datadog, Inc. (NASDAQ:DDOG) is one of the 10 AI Stocks in the Spotlight for Investors. On September 12, Stifel analyst Brad Reback reiterated a Hold rating on the stock with a $135.00 price target. The rating follows Datadog’s mid-quarter check in on Thursday.
Consistent with previous meetings, the check in did not provide an intra-quarter consumption update but highlighted CEO Olivier Pomel’s comments on how genAI is changing the way Datadog is researching and productizing new capabilities.
The call also discussed hyperscaler acceleration on Datadog along with AI workload trends monitoring. While Datadog does face certain positives such as core stability and rising hyperscaler commitments, uncertainty regarding OpenAI’s renewal deal demands investor patience and therefore the firm has a hold rating on the stock.
“On Thursday (9/11), Datadog hosted a mid-quarter checkin, and consistent with prior meetings, management did not provide an intraquarter consumption update.That said, the session covered a recent interview with CEO Olivier Pomel, where he discussed how the pace of product development brought by genAI has changed the way Datadog has gone about researching and productizing new capabilities, shifting from a traditional customer led product development motion to a faster paced and slightly more speculative product development strategy.Additional areas discussed on the call included the impact of recent hyperscaler acceleration on Datadog’s growth, as well as trends that Datadog is seeing in monitoring AI workloads.Net/net, while we view the core stability as encouraging and view ramping hyperscaler commitments from genAI vendors as a positive, given the uncertainty on the stock from the OAI renewal, we encourage patience and maintain our Hold rating.”
Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products.
5. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 104
Adobe Inc. (NASDAQ:ADBE) is one of the 10 AI Stocks in the Spotlight for Investors. On September 12, Citizens JMP analyst Patrick Walravens reiterated a Market Perform rating on the stock following better-than-expected F3 Q25 results.
Its Digital Media segment demonstrated accelerating revenue growth, while the Digital Experience segment saw a slight decline. The company also reported better-than-expected net new Digital Media ARR, strong RPO, and healthy cash flow.
“We maintain our Market Perform rating on Adobe Systems, Inc. after the company announced generally better-than-expected F3Q25 results, with non-GAAP EPS of $5.31 (consensus $5.18), an 89% gross margin (consensus 90%) and 46.3% operating margin (consensus 45.6%) on revenue of $5.99B (consensus $5.91B), up 11% y/y (10% in cc), flat with 11% last quarter (11% in cc), Digital Media segment revenue growth of 12%, up from 11% last quarter; Digital Experience segment revenue growth of 9%, down from 10% last quarter; better-than-expected net new Digital Media ARR of $5.00M (consensus $4.69M); RPO of $20.44B (consensus $20.00B), up 13% y/y, up from 10% last quarter and up 4% sequentially; and free cash flow of $2.13B (consensus $2.07B).”
Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions.
4. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 109
AppLovin Corporation (NASDAQ:APP) is one of the 10 AI Stocks in the Spotlight for Investors. On September 12, Wedbush analyst Alicia Reese raised the price target on the stock to $725.00 (from $620.00) while maintaining an Outperform rating.
According to the firm, AppLovin has proven overtime that its phenomenal growth will continue for the foreseeable future and that too, at a staggering profit margin.
Ongoing momentum in gaming will be beneficial for the current year in terms of more players and increased spending on user acquisition and layering in ecommerce. The user acquisition pie is anticipated to keep growing due to the impact of the Apple vs. Epic case.
This will potentially become a tailwind for AppLovin next year. The firm believes that its current estimates are conservative and that both ecommerce success and web store migration should enable significant growth for the next few years.
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology.
3. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 113
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 10 AI Stocks in the Spotlight for Investors. On September 11, Erste Group analyst Hans Engel downgraded the stock from Buy to Hold due to concerns about the company’s operating margins and valuations.
The analysts noted that even though AMD anticipates further growth due to accelerating demand for CPUs and GPUs in data center environments, its operating margin has been lower than the sector average in the recent quarters.
Due to the lack of improvement in operating margins and weak return on equity, the firm cites the current valuation as expensive.
“For 2025, AMD sees further growth based on the increasing demand for high-performance CPUs and GPUs in data center environments. The operating margin in recent quarters is lower than the sector average. The EBIT margin was even slightly negative in the last quarter. In view of the fact that the operating margin has not yet improved and the Group’s below-average return on equity, we rate the current P/E ratio as high.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 115
Tesla, Inc. (NASDAQ:TSLA) is one of the 10 AI Stocks in the Spotlight for Investors. On September 12, TD Cowen analyst Itay Michaeli reiterated a Buy rating on the stock with a $374.00 price target.
The rating affirmation follows a special sell-side call with the Special Committee of the Board to discuss the recent CEO compensation proposal in the proxy filing.
The firm said it now has a clearer understanding of those proposals and that Tesla’s product milestones are well-aligned with the company’s thesis.
Analysts believe that the early milestones are achievable by 2030, while the remaining milestones will reflect Tesla’s bold long-term growth ambitions.
“The four Product Goals outlined in the proxy provide a good read on Tesla’s LT strategic priorities. By our estimation, the initial achievement of the four product goals would seem to align with the first two EBITDA milestones of $50/$80bln (our 2030E EBITDA = $53bln). Thus, our working assumption is that these product goals are possibly contemplated for achievement around ~2030 (give/take) within the 10yr plan, with remaining EBITDA milestones (up to $400bln) reflecting scalability ambitions.”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 219
Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 AI Stocks in the Spotlight for Investors. On September 11, Citizens JMP analyst Andrew Boone reiterated a Market Outperform rating on the stock with a $250.00 price target.
Based on conversations with third-party checkout providers FastSpring and Paddle, the analysts have come to the conclusion that web checkout systems are enhancing profitability across the mobile ecosystem.
They further noted that even though the conversion rates dip slightly, it is still better than Apple’s higher fee structure. The trend benefits game developers and their advertising partners, as well as digital app companies such as Duolingo.
“Web checkout is set to improve profitability across the mobile ecosystem. We spoke with two third-party providers of website checkout (FastSpring and Paddle) and they both are seeing clients on average benefit by moving to website checkout as the ~10% reduction in conversion is more than made up for by reducing Apple’s 30% take rate to 5% (their elevated fee over Stripe pricing). We believe this is positive for game developers (and their downstream advertising partners including Meta (META, MO, PT $900), Google (GOOGL, MO, PT $250), and Unity (U, MO, PT $35) and for digital app businesses including Duolingo, Life360, Grindr, and Peloton (PTON, MP).”
Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.
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