According to hedge fund manager Ray Dalio, the artificial intelligence boom is “now in the early stages of a bubble.” He said this in a post on X, according to a report from Reuters.

US stock markets posted double-digit gains in 2025, with much of the performance driven by robust returns in AI-related companies. However, Dalio noted that despite the gains, US stocks have actually lagged behind stocks in other countries, and even gold.

He highlighted how gold has surged more than 60% in 2025, emerging markets have had a stellar year too, and even Britain’s blue-chip FTSE 100 outperformed major global markets.

“Clearly, investors would have much rather been in non-U.S. stocks than in U.S. stocks, just as they would have preferred to be in non-U.S. bonds than in U.S. bonds and U.S. cash,” he wrote in the post.

For US stocks, Geopolitical tensions in the Middle East, along with uncertainty over the U.S. Federal Reserve’s interest rate path, have further added to investor woes.

“Of course, there are big questions about Fed policy and productivity growth ahead. It appears most likely that the newly appointed Fed chair and the FOMC (Federal Open Market Committee) will be biased to push nominal and real interest rates down, which would be supportive to prices and inflate bubbles.”

Not everyone, however, believes that there is an AI bubble or even if it is, that there’s enough air in the bubble to pop it.

“A bubble likely crashes on a bear market,” said Gene Goldman, chief investment officer at Cetera Financial Group, who doesn’t believe AI stocks are in a bubble. “We just don’t see a bear market anytime soon.”

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. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 33

Baidu, Inc. (NASDAQ:BIDU) is one of the 10 AI Stocks Making Waves on Wall Street. On January 2^nd, Jefferies analyst Thomas Chong raised the firm’s price target on the stock to $181 from $159 and kept a “Buy” rating on the shares. Firm analysts remain constructive on the shares as they view potential value unlock from the recent HK listing while BIDU retains control.

The tech giant recently announced plans to spin off its artificial intelligence chip subsidiary, Kunlunxin, and list it in Hong Kong. The company has already filed a listing application on the Hong Kong Stock Exchange, with the proposed spin-off to include a Hong Kong public offering of Kunlunxin shares for public subscription and a share placement.

“Baidu announced the proposed spin-off of Kunlunxin (KLX) shares and separately listing to Main Board of Stock Exchange of Hong Kong. The proposed spin-off will be effected by way of Global Offering, which comprises (a) HK public offering of Kunlunxin Shares for subscription by public in HK; (b) share placement to institutional and professional investors.”

Analysts noted how after the completion of this proposed spin-off, it is likely that KLX will remain as a subsidiary of Baidu. However, the deal depends on approvals from authorities. This deal marks another update from Baidu on KLX after the previous one from December 2025.

Baidu, Inc. (NASDAQ:BIDU) is a Chinese internet giant and AI pioneer, known for its noteworthy investments in artificial intelligence technology and its position as the dominant search engine within the country.

9. Rivian Automotive, Inc. (NASDAQ:RIVN)

Number of Hedge Fund Holders: 36

Rivian Automotive, Inc. (NASDAQ:RIVN) is one of the 10 AI Stocks Making Waves on Wall Street. On January 2, Morgan Stanley analyst Andrew Percoco reiterated an Underweight rating on the stock with a $12.00 price target. The firm remains cautious on RIVN amid tech transition and policy shifts that are likely to challenge near-term demand.

Morgan Stanley noted how Rivian has delivered 9,745 vehicles in 4Q25, which represents a 31% year-over-year decline. The figure is slightly above the firm’s estimate of 9,525 but below the consensus forecast of 10,100 vehicles.

The company produced and delivered 42,284 and 42,247 vehicles, a 15% and 18 year-over-year decline respectively, which is in line with its guidance. Analysts note how investors will now be focusing on 4Q25 earnings and 2026 guidance, set to report on February 12, 2026. Particular attention is going to be on the production ramp of the R2 model.

Moreover, 2026 demand is seen through a cautious lens due to the expiration of the EV tax credit and the evolving tech hardware roadmap. This includes the introduction of LiDAR in late 2026 for advanced levels of autonomy.

“We maintain our cautious view on demand in 2026 following the expiration of the EV tax credit and the evolving tech hardware roadmap, with the introduction of LiDAR in late 2026 for advanced levels of autonomy, which may yield a demand air-pocket for most of 2026 as customers wait for RIVN’s latest gen tech platform.”

Rivian Automotive, Inc. (NASDAQ:RIVN) is an automaker that creates and manufactures electric vehicles, as well as software and services.