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 2nd, 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.
8. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 66
International Business Machines Corporation (NYSE:IBM) is one of the 10 AI Stocks Making Waves on Wall Street. On January 6, Jefferies upgrades the stock to “Buy” from Hold, stating that IBM is a beneficiary of software growth in 2026 driven by Red Hat momentum and hybrid cloud acquisitions.
“We are upgrading IBM from Hold to buy as we see a clearer path to software acceleration heading into 2026, driven by Red Hat momentum and synergy capture from recent strategic acquisitions like HCP and the pending CFLT deal.”
As per the analysts, these moves allow IBM to strengthen its hybrid cloud and data platform capabilities, boost cross-sell opportunities, and also expand its open-source monetization pathways.
The company’s Mainframe business also continues to perform well, adding what the firm deems as “another layer of stability and recurring revenue.” This in turn supports confidence in near-term execution.
“IBM trades at 26x CY27 P/E but still has upside on software reacceleration execution (vs. large cap software peer average of 35x).”
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.
7. 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 Making Waves on Wall Street. On January 3rd, Aletheia Capital analyst Warren Lau raised his rating on ASML to Buy from Sell and raised his price target to $1,500 from $750. The double upgrade is a reflection of potential upside from surging EUV demand, DRAM and China DUV orders, and expansion potential from TSM.
“We upgrade ASML to Buy with a revised target price of €1,250/$1,500 ADR on 30x FY27E PER from Sell (TP: €640/$750) as we raised FY26E/27E EPS estimates significantly to factor in a new wave of investment expansions and capacity upgrades.”
Firm analyst see upside for ASML due to stronger EUV demand from DRAM suppliers, robust DUV orders from China in FY26E, and also a likely surge in TSMC demand in FY27E. They believe that TSM alone can install 40-45 EUV tools because it may expand advanced capacity by 40-50% in 2027E. This could potentially lift total EUV units to 75-80, which is near ASML’s full capacity.
The firm further forecast ASML’s Low-NA EUV revenue to increase by one-third in fiscal year 2026, accelerating by 50-60% in fiscal year 2027. This increase will likely be driven by higher volumes and an improved product mix.
“Hence, we forecast ASML’s overall sales growth in the mid-teens for FY26E, accelerating to the mid-twenties in FY27E—both are well ahead of its guidance and consensus forecasts.”
ASML Holding N.V. (NASDAQ:ASML) develops and sells advanced semiconductor equipment, including lithography, metrology, and inspection systems for chip manufacturing.
6. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 85
Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the 10 AI Stocks Making Waves on Wall Street. On January 4, Guggenheim analyst John DiFucci upgraded the stock from Sell to “Neutral,” noting that the stock’s underperformance, recent deal activity, and industry leadership in Free Cash Flow margins have reset valuation and improved PANW’s risk-reward profile.
“We are upgrading the shares of Palo Alto Networks to Neutral from Sell, as the stock has significantly underperformed the major indices, the company announced two acquisitions, at least one of which we see as a positive move, and reiterated best in class FCF margins through FY28. We simply believe it will be more difficult to make money shorting PANW at this time.”
Since January 2025, Palo Alto has underperformed the S&P 500 by 1,753 basis points and the NASDAQ by 2,054 basis points since early January 2025. It has also underperformed the Security ETF (HACK) by 732 bps, and the IGV by 325 bps, while outperforming another Security ETF (BUG by 632 bps) over the same period.
The firm believes that PANW’s recent acquisitions, at least one of which is deemed positive, along with its commitment to maintain best-in-class free cash flow margins through fiscal year 2028, diminishes the case for shorting the stock.
The company is also poised to benefit from its position as the largest pure-play vendor in the Security space, a category it views as somewhat insulated, and potentially even boosted, by rising AI-related threats. PANW also has the best FCF margins in the Software sector, noted the analysts, which may likely persist for at least the next three years.
Palo Alto has also experienced a recent reversal in operational performance, with analysts noting that while it had been among the worst performers in their coverage universe over the past two years as measured by Total New ARR growth, the trend has been improving.
“On the flip side, it has been one of the worst operationally performing stocks in our coverage universe over the last two years (as measured by Total New ARR growth), though that has reversed recently (against very easy comps) and we think this positive trend will continue, which should help future revenue growth.”
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity.
5. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 102
Vertiv Holdings Co (NYSE:VRT) is one of the 10 AI Stocks Making Waves on Wall Street. On January 2nd, Barclays upgraded the stock to “Overweight” from “Equal Weight” and raised the price target to $200. Firm analysts believe that VRT is poised to benefit from the AI theme, noting how improved EPS outlook and AI alignment is improving its risk/reward.
According to the firm, the rating change is a reflection of revised earnings expectations for years 2026 and 2027. For 2026, its earnings share estimates are 8% above consensus, and for 2027, 12% above consensus. These are driven largely by revenue assumptions.
The firm notes how VRT’s revenue exposure comes from data centers, noting how 80% of company sales are derived from the end market. Its organic sales growth has tracked closely with U.S. data center physical infrastructure trends, noted the firm, exceeding multi-industry average in recent years.
“We upgrade our rating on VRT to OW from EW. We raise our EPS estimates, and our Price Target moves to $200 from $181. While we have not been among the Datacenter capex theme’s biggest cheerleaders (they are legion), we think the recent volatility in the stock has created an attractive entry point (down from an ATH of ~$200).”
Analyst Julian Mitchell further noted that the company is poised to rake in gains in 2026, catching up with other Overweight-rated AI names like GE Vernova and nVent Electric in the new year despite previous underperformance.
“With VRT having underperformed our OW-rated AI names such as GEV and NVT YTD, we think the time is ripe for some catch-up in VRT’s performance in 2026, as its PEG ratio now is at parity with them.”
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.
4. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 105
Micron Technology, Inc. (NASDAQ:MU) is one of the 10 AI Stocks Making Waves on Wall Street. On January 2, Bernstein SocGen Group analyst Mark Li raised the price target on the stock to $330.00 (from $270.00) while maintaining an “Outperform” rating. Analysts view sustained pricing strength for MU through 2026 driven by a structural supply lag and accelerating AI demand.
The DRAM and flash memory producer surged on Friday after Bernstein raised its price target on the stock, implying how there is still considerable interest in working memory essential for AI. While analysts did acknowledge how MU’s report implies an upside risk to 2026 forecast, they believe that prices will normalize in 2027.
“We expect DRAM prices to continue rising from the start of 2026, as AI makes data center demand balloon but supply expansion takes time.”
Firm analysts anticipate a 20-25% quarter-over-quarter DRAM ASP growth backed by rising conventional DRAM prices. However, recent data suggests an upside risk, they noted.
“For example Micron’s FQ2 guidance suggests even stronger price increase in the near term (see earnings takeaway). And we believe price will very likely continue rising past 1Q26, as capacity addition takes time and likely is constrained by cleanroom space as well.”
Analysts further added how Micron’s revision for FY26 capex involved a modest increase, likely due to lack of space available. This is why it models Q0Q ASP increase to continue throughout 2026.
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide.
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 120
Tesla, Inc. (NASDAQ:TSLA) is one of the 10 AI Stocks Making Waves on Wall Street. On January 4, HSBC analyst Michael Tyndall reiterated a Reduce rating on the stock with a $131.00 price target. The rating affirmation follows Tesla’s fourth-quarter delivery results, with analysts flagging Q4 deliveries across key regions.
Firm analysts noted how Tesla’s delivery of 418,000 vehicles in the fourth quarter were below Visible Alpha consensus by 3.7% and 5.2% below their own projections. The figures represent an estimated decrease of 16% year-over-year and quarter-over-quarter.
This shortfall has been attributed to several factors, including end of EV credits in the US as well as weak volume in both Europe and China.
“The end of EV credits in the US will have been a factor and it seems the more affordable Standard models failed to fill the gap. The issues don’t appear to be purely US, as high-frequency data for Europe and China suggest volumes were weak in both these regions too.”
Meanwhile, energy storage business showed resilience, with 14.2 GWh deployed, exceeding Visible Alpha consensus by 4.7% and the firm’s estimate by 7.5%. Production of 434k imply how Tesla anticipates growth to pick up pace in Q1 2026.
The firm has, however, expressed skepticism about growth drivers amid intensifying competitive pressures and market regionalization.
“The global BEV market is becoming more regionalised, with US adoption stalling and competition increasing in both Europe and China. Anti-involution measures in China and the extension of trade-in subsidies should be supportive for demand, but in Europe rising competition (both domestic and imported) is likely to see Tesla continue to lose share.”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is one of the 10 AI Stocks Making Waves on Wall Street. On January 2, Raymond James analyst Srini Pajjuri resumed coverage on the stock with a Market Perform rating and no price target. The rating marks a step down from the Outperform rating that the stock held prior to coverage suspension.
The firm remains neutral on the stock, noting Apple’s strong fundamentals already reflects in the stock price.
“We are resuming coverage of Apple with a Market Perform rating. Despite strong fundamentals and improving product cycles, we believe Apple’s current valuation appropriately reflects these strengths, limiting near-term upside.”
Firm analysts acknowledged how Apple flaunts leadership in consumer hardware, ecosystem, and services, with a “highly sticky value proposition.” However, they believe that much of this value is already understood by investors.
Moreover, the tech giant’s installed base, now standing at an estimated 2.4 billion, will make incremental gains from tech upgrade cycles harder to attain.
“The relative success of the iPhone 17 refresh cycle has likely driven much of the recent share gains, and while we don’t discount the value generated by this growth (likely exceeding $217 billion in CY25), with a valuation several turns above the 5-year average P/E, we remain on the sidelines at this time.”
Analysts also noted how services are an important revenue contributor, but that Apple’s overall performance remains closely tied to hardware sales, especially the iPhone. Meanwhile, near-term catalyst don’t seem robust enough to drive outperformance in their coverage universe.
Overall, Apple’s current valuation is an appropriate estimation of its business profile, noted the analysts.
Apple is a technology company known for its consumer electronics, software, and services.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 234
NVIDIA Corporation (NASDAQ:NVDA) is one of the 10 AI Stocks Making Waves on Wall Street. One of the biggest analyst calls on Monday, January 5, was for Nvidia Corporation. UBS reiterated the AI chipmaker as “Buy,” stating that it’s sticking with the stock heading into the Consumer Electronics Show.
“NVDA is hosting a keynote on Monday night, where we expect it may give a little more information about Rubin and the QuantumX/SpectrumX silicon photonics switches, and perhaps further outline how the new Groq technology licensing deal fits into its AI factory vision…”
CES is the annual consumer technology conference happening in Las Vegas, with CEO Huang having scheduled to speak at a “special presentation” at 4 p.m. Besides UBS, Mizuho is also bullish on the stock, stating how semis may have more upside to go particularly considering the CES newsflow and keynote addresses.
“With the bullish headlines and sell side updates out today, my sense is that semis have more upside to go and if CES newsflow and keynotes addresses this week are construed as bullish ‘buy the news’ type events, long only and relative managers will have to react and follow this retail, quant semi chase or fear falling behind benchmark.”
-Mizuho analyst Jordan Klein.
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
While we acknowledge the potential of NVDA 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 NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.
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