The Bank of England has warned that global financial markets may tumble if investors lose confidence in the prospects of artificial intelligence, or even the independence of the US Federal Reserve, Reuters reported on Wednesday.
BoE has cautioned how the share price valuations on U.S. stock markets are now almost as high as seen near the peak of the dotcom bubble on some measures. It further noted that US government bonds may fall in the case of weakened Fed credibility.
“The risk of a sharp market correction has increased.”
-BoE’s Financial Policy Committee said in a quarterly update, its sharpest warning yet about the dangers of an AI-triggered market slump.
With 30% of the U.S. S&P 500’s valuation made up by a mere five large companies who have heavily bet in AI, AI has now become a prime driver of US stock prices.
“This, when combined with increasing concentration within market indices, leaves markets particularly exposed should expectations around the impact of AI become less optimistic,” the BoE said.
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. Penguin Solutions, Inc. (NASDAQ:PENG)
Number of Hedge Fund Holders: 25
Penguin Solutions, Inc. (NASDAQ:PENG) is one of the 10 AI Stocks In The Spotlight For Investors. On October 8, Rosenblatt lowered its price target on the stock to $30.00 from $36.00 while maintaining a “Buy” rating. The firm noted how Penguin’s fourth quarter fiscal 2025 revenue was slightly below consensus, despite its Non-GAAP EPS exceeding forecasts.
The company’s management guided for 6% year-over-year revenue growth for fiscal 2026, which is less than the 10% growth analysts had predicted.
Rosenblatt stated how the lower guidance includes only software and services revenue from Meta. This is because the company doesn’t yet have clear visibility into new Meta hardware deployments, which is mostly a timing issue related to Meta’s ongoing RSC buildout and Penguin’s own fiscal calendar.
With the addition of a tier-1 financial institution and a major consumer products company, Penguin has increasingly been diversifying its customer base beyond hyperscalers. Its advanced Computing segment reported 75% year-over-year revenue growth for fiscal 2025. Meanwhile, its Integrated Memory business is anticipated to grow 10-20% year-over-year in fiscal 2026.
The firm believes that Penguin’s HPC/AI software and services have strong potential, particularly as enterprise AI adoption scales. This is why it recommends investors to buy PENG shares on the current weakness tied to Meta’s hardware order timing.
Penguin Solutions, Inc. (NASDAQ:PENG) is a leading AI and HPC computing company engaged in the design and development of enterprise solutions worldwide.
9. CoreWeave, Inc. (NASDAQ:CRWV)
Number of Hedge Fund Holders: 29
CoreWeave, Inc. (NASDAQ:CRWV) is one of the 10 AI Stocks In The Spotlight For Investors. On October 6, the company announced an agreement to acquire Monolith AI Limited, a software company known for its expertise in applying AI and machine learning to complex physics and engineering problems.
The agreement leverages both Monolith’s simulation and test-driven machine learning capabilities and CoreWeave’s purpose-built AI cloud to create a full-stack platform for industrial and manufacturing enterprises.
The move will allow enterprises to significant shorten their R&D cycles, accelerate product development and design, and help leverage competitive advantage through AI-driven innovation.
“Every leader we meet across the industrial and manufacturing sectors knows AI can transform their business. What they need are the right tools to use the technology to solve intractable physics and engineering problems. Those challenges have historically slowed industrial innovation, and Monolith has closed that gap. Together we will help these enterprises better harness AI to accelerate breakthroughs and bring better products to market faster.”
-Brian Venturo, Co-founder and Chief Strategy Officer at CoreWeave.
CoreWeave, Inc. (NASDAQ:CRWV) is a cloud platform provider that provides equipment for AI and other computing purposes.
8. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 54
Dell Technologies Inc. (NYSE:DELL) is one of the 10 AI Stocks In The Spotlight For Investors. On October 8, Mizuho raised its price target on the stock to $170 from $160 while maintaining an Outperform rating. The rating affirmation follows Dell’s Analyst Day in New York City.
According to the firm, Dell boasts robust artificial intelligence momentum in Enterprise AI and sovereign AI segments with strong demand signals over the next 12-18 months.
The company has raised its financial targets for fiscal years 2026-2030. It now projects a 7-9% revenue compound annual growth rate (CAGR), with EPS increasing 15% year-over-year and an estimated 80% free cash flow return.
Dell’s Infrastructure Solutions Group (ISG) is poised to grow at an 11-14% CAGR, driven primarily by AI Servers leading at 20-25% CAGR. However, the firm believes that this forecast may be conservative owing to Dell’s involvement in at-scale AI deployments and its leads in Enterprise. An estimated 85% of customers deploy generative AI on-premises within two years.
Meanwhile, the company’s Client Solutions Group (CSG) revenue is projected to expand at a 2-3% annual rate, with Dell focusing on premium Commercial PC share gains.
Dell Technologies Inc. (NYSE:DELL) provides IT solutions, including servers, storage, networking, and personal computing devices, to businesses and consumers worldwide.
7. Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 56
Astera Labs, Inc. (NASDAQ:ALAB) is one of the 10 AI Stocks In The Spotlight For Investors. On October 7, Citi set a Street-high $275 price target on the stock and reiterated a “Buy” recommendation.
The firm believes that ALAB is poised to soar after Monday’s landmark multibillion-dollar AI infrastructure deal between Advanced Micro Devices and OpenAI.
The semiconductor maker provides hardware and software for AI and cloud infrastructure applications, and will be supplying critical networking infrastructure for AMD’s Helios platform, set to debut in 2026.
Citi analyst Atif Malik noted how ALAB’s relationship with AMD will allow it to take advantage from OpenAl’s agreement to deploy up to 6 gigawatts of AMD Instinct GPUs.
“We see the news positively for ALAB as it is a leader in open AI networking ecosystems including UALink AMD is able to leverage in its Helios platform coming in 2026.”
ALAB may also benefit from the wider adoption of open rack-scale systems. This will in turn put it on the track to pull in $1,000 per accelerator.
Astera Labs, Inc. (NASDAQ:ALAB) is engaged in the design, manufacture, and selling of semiconductor-based connectivity solutions for cloud and AI infrastructure.
6. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 78
ASML Holding N.V. (NASDAQ:ASML) is one of the 10 AI Stocks In The Spotlight For Investors. On October 6, New Street downgraded the stock to “Neutral” from Buy with a EUR 790 price target. The firm highlighted concerns about ASML’s growth prospects beyond 2026.
The firm warns that growth prospects look weak despite robust near-term AI-driven demand. Robust AI spending outlook in recent months has led to a rally in semiconductor capital equipment stocks, with artificial intelligence capital expenditures likely to triple by 2030. This will require an estimated $130B cumulative wafer fab equipment spending.
However, the firm anticipates “peak acceleration this year and peak spending next year,” leading to a “weak” outlook beyond 2026. “Near-term uncertainty, limited upside to 2026 forecasts, and valuations 2-12 turns above historic averages” creates a “risky setup” for ASML stock.
Therefore, New Street has downgraded the stock and kept a cautious view on the sector.
ASML Holding N.V. (NASDAQ:ASML) develops and sells advanced semiconductor equipment, including lithography, metrology, and inspection systems for chip manufacturing.
5. 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 October 6, Barclays raised its price target on the stock to $300 from $200 while maintaining an Overweight rating.
The rating follows AMD’s partnership with OpenAI, which it believes is “designed to be mutually beneficial to OpenAI and AMD, and more pointedly drive the stock higher.”
The firm’s analysis reveals how the partnership deal includes a structured warrant agreement issued at one-gigawatt intervals, with the last portion activated once AMD’s stock reaches $600.
Barclays’ estimates further reveal how the deal will add an estimated $4.5 billion per quarter, up from the $3 billion the firm was expecting by late 2026 as well as lift earnings per share by an estimated $1.30 per quarter.
The firm believes that an estimated one gigawatt of new capacity will be deployed starting in the second half of 2026. This will likely add around $15 billion in revenue by 2027 if there is sustained growth through 2030.
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
4. 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 October 8, Stifel analyst Stephen Gengaro raised the firm’s price target on the stock to $483 from $440 and kept a “Buy” rating on the shares.
Analyst at Stifel are of the view that Tesla in making considerable progress in its line of work. From modest advancements in its Robotaxi network to its full self-driving software, the firm raised its price target to reflect on its optimism in both FSD and Robotaxi.
While it is unlikely that unsupervised FSD available for personal use in the United States is available by year-end 2025, it still “seems more likely in the medium term.”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 156
Apple Inc. (NASDAQ:AAPL) is one of the 10 AI Stocks In The Spotlight For Investors. On October 8, UBS analyst David Vogt maintained a Neutral rating on the stock with a $220.00 price target. The firm noted that iPhone demand appears to have peaked.
According to the firm’s “Evidence Lab” that tracks iPhone availability across 30 geographies, wait times for the iPhone 17 Base model remain elevated year over year across geographies. However, the wait times appear flattish to down for the second consecutive week.
In particular, wait times in China decreased week-over-week by an estimated 5 days for the Base model and 2 days for the Pro model. This implies that some demand caused due to Air model unavailability has begun to ease.
Moreover, the demand for the Air model seems to be week despite its new design, while wait times for Pro and Pro Max models are mostly unchanged year-over-year and week-over-week outside of China.
Overall, the firm expects this year’s iPhone lineup to imitate last year’s pattern of flattening or declining wait times across key markets at this point in the cycle. This is, unless Apple introduces new promotions to boost demand.
Apple is a technology company known for its consumer electronics, software, and services.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 260
Meta Platforms, Inc. (NASDAQ:META) is one of the 10 AI Stocks In The Spotlight For Investors. On October 7, Wells Fargo analyst Ken Gawrelski raised the firm’s price target on the stock to $837 from $811 and kept an Overweight rating on the shares.
The firm is raising estimates driven by continued ads strength, in turn supported by a stable economy and investments that drive impression growth and conversion improvement.
It also expects Q4 guide ahead, seeing above 20% growth crucial to ease concerns about emerging competition for engagement.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 335
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 10 AI Stocks In The Spotlight For Investors. On October 7, TD Cowen analyst John Blackledge reiterated a Buy rating on the stock and retained the price target of $255.00.
Blackledge’s bullish outlook stems from the revenue growth anticipated in Amazon’s key business segments such as AWS, advertising, and eCommerce.
Besides revenue growth, he also believes in the continued expansion in these areas, enabling Amazon’s third-quarter results to surpass consensus estimates. A strong fourth-quarter guidance also seems likely, with accelerating AWS growth and strong performance in advertising.
Blackledge has also acknowledged how AWS has been lagging behind its cloud peers. However, he believes that the increasing demand for GenAI workloads will lead it on the path toward revenue growth acceleration in the latter half of 2025 and beyond.
Moreover, Amazon’s robust AI infrastructure investments will likely ease supply constraints and drive sustained growth. The contribution from partnerships such as that of Anthropic will likely enhance AWS’s year-over-year growth.
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.
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