According to Microsoft CEO Satya Nadella, the race to dominate artificial intelligence is no longer a game of algorithms. Rather, energy costs will be playing a decisive role in determining how successful countries are.
As discussed on CNBC, Nadella told the World Economic Forum (WEF) that GDP growth, regardless of location, will be directly correlated with the cost of energy needed to harness AI. He also warned that high costs could undermine national competitiveness.
Nadella described AI computing as driven by a new global commodity: tokens. These are basic units of processing that users of artificial intelligence models buy to run computational tasks.
The job of every economy and every firm in the economy is to translate these tokens into economic growth, then if you have a cheaper commodity, it’s better.
These comments come as hyperscalers spend billions of dollars building out data centers to power AI. Take Microsoft, for example, which stated earlier in 2025 that it expects to spend $80 billion on the construction of AI data centers.
Nadella, however, has cautioned that growing energy demands may face resistance.
I would say we will quickly lose even the social permission to actually take something like energy, which is a scarce resource, and use it to generate these tokens, if these tokens are not improving health outcomes, education outcomes, public sector efficiency, private sector competitiveness across all sectors.
-Nadella said.
Overall, Nadella’s remarks suggest that the AI race will eventually be decided by the extent to which countries can secure affordable energy and scale infrastructure.
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. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 53
NXP Semiconductors N.V. (NASDAQ:NXPI) is one of the 10 AI Stocks on Market Radar. On January 16, TD Cowen raised the price target on the stock to $285.00 from $260.00 while maintaining a “Buy” rating. The firm is positive on NXPI owing to its conservative setup and attractive valuation.
The firm said NXPI’s cautious first-quarter outlook leaves room for upside, while other semiconductor companies may see muted growth. The company is one of TD Cowen’s top three picks heading into earnings alongside IFX and ADI.
Our top three names into earnings are NXPI, IFX, and ADI as we continue to favor names that are either industrial-heavy and/or have set conservative bars with lean inventory.
From a growth standpoint, NXPI has been lagging its peers, but recent demand commentary has appeared to be stronger than that of other companies in the group. This, the firm believes, leaves room for upside even if broader industry growth remains muted, given the conservative Q1 2026 bar.
The firm added that gross margin linearity could perform better than peers if channel inventory is replenished to the middle of the target range. This was indicated during the company’s September quarter earnings call. However, NXPI’s lower internal leverage compared to peers may limit upside.
We are constructive given favorable valuation and growing capital return story.
NXP Semiconductors N.V. (NASDAQ:NXPI) is a Dutch semiconductor manufacturing and design company.
9. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 66
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is one of the 10 AI Stocks on Market Radar. On January 20, Citizens analyst reiterated a Market Outperform rating on the stock with a $550.00 price target.
According to the firm, CrowdStrike’s recent acquisitions in identity governance and secure browser space help the company close potential functional gaps and limit competitors’ ability to claim broader coverage, particularly Palo Alto Networks.
Security executives continue to favor larger platforms, highlighting how this sentiment works in favor of CrowdStrike. As Founder & CEO George Kurtz has noted, CrowdStrike is the “first hyperscaler of cybersecurity.”
As such, the rapid growth of artificial intelligence presents opportunities for cyber vendors to increase sales of current offerings while developing or acquiring tools tailored to AI security needs.
Based on Citizens’ Cyber 66 survey data, CrowdStrike is in a prominent position to capitalize on the AI security market.
Analysts on Wall Street have a consensus “Buy” rating on the stock. The average price target of $564 implies a 24.26% upside; the Street-high target of $706 implies a 55.55% upside.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection.
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 on Market Radar. On January 20, Evercore ISI analyst Amit Daryanani raised the price target on the stock to $330 from $315 and kept an Outperform rating. The firm also added IBM to its “Tactical Outperform list” ahead of IBM’s December-end quarterly results due on Wednesday, January 28.
Evercore ISI expects IBM to deliver in-line to slightly better-than-expected Q4 results, driven by Infrastructure strength and improvement in Consulting. Meanwhile, the outlook for Software appears de-risked even though Red Hat’s growth has been moderating.
The firm believes IBM’s ongoing cost-saving initiatives, which are anticipated to reach $4.5 billion in gross run-rate savings by 2025, support margin expansion and EPS upside in Q4.
Looking ahead, it also expects IBM to provide formal guidance for CY26, a key area of focus for investors. It forecasts that the company will initially guide to growth at the lower end of its mid-single-digit target range and to about $15 billion in free cash flow.
Besides guidance, investors will also be looking for updates on AI bookings, CFLT acquisition, quantum computing, and the trajectory of Software and Consulting growth.
Aside from guidance, investors will also look for updates on: 1) AI: Bookings/revenue disclosures + expectations for contribution to growth for 2026, 2) CFLT details: Overall strategy/integration with IBM’s software portfolio, initial dilution (should be mostly mitigated by ongoing cost savings) revenue/cost synergy opportunities, & accretion, 3) Quantum Computing: Progress on achieving the next milestones (quantum advantage by 2026, error corrected computer by 2028) and potential revenue opportunity, 4) Software growth trajectory for 2026, 5) Consulting signings + drivers of inflection in 2026, and 6) Updates on cost savings initiatives. Maintain OP and raising target to $330 to reflect favorable earnings setup.
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. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 81
Intel Corporation (NASDAQ:INTC) is one of the 10 AI Stocks on Market Radar. On January 16, Jefferies analyst Blayne Curtis raised the price target on the stock to $45.00 (from $40.00) while maintaining a Hold rating. The firm is cautiously negative on INTC despite strong server demand, due to structural constraints.
The firm noted that Intel appears to benefit from robust server demand heading into 2026, but also faces capacity constraints that limit its ability to fully capitalize on it.
Intel has indicated its plans to shift Intel 7/10 capacity away from low-end PCs to legacy server products. Jefferies anticipates market weakness to begin in March, with PCs likely to be down by at least mid-single digits next year.
This decline is fueled by rising memory costs, which are likely to result in lower specifications and higher ASPs. This aligns with broader market expectations for a roughly 8% decline in PC volumes beginning in March.
Jefferies anticipates margins coming under pressure, particularly as Lunar Lake ramps and the early production ramp of the 18A process for Granite Rapids begins. Together, these two factors will likely dampen margins below 36%, slightly below current consensus expectations.
Altogether, we expect commentary on the full year to be relatively disappointing as tightness in capacity prevents fully monetizing GP servers, while PCs are weak and margins remain pressured throughout the balance of the year. Expect Capex to remain flattish to even up slightly with GR ramping and INTC working on competing in the packaging portion of the market.
Intel Corporation (NASDAQ:INTC) designs, manufactures, and sells advanced semiconductors, computer products, and technologies, delivering data storage, computer, networking, and communications platforms.
6. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 89
MongoDB, Inc. (NASDAQ:MDB) is one of the 10 AI Stocks on Market Radar. On January 16, Truist Securities analyst Miller Jump reiterated a Buy rating on the stock with a $500.00 price target. Analysts struck a positive tone following MongoDB’s .local San Francisco event, citing expanding enterprise and AI-native positioning as supportive of top-line momentum.
Truist particularly praised MongoDB’s go-to-market trajectory following the event, the primary focus of which was the startup community. Comments from the CEO, CJ Desai, indicated robust customer focus and engagement with enterprise customers, which it believes is critical to sustain top-line momentum in the business.
Based on the firm’s analysis of the proceedings, the day featured programming heavily inclined toward the AI-native community.
The day featured programming strongly geared towards the AI-native community, and our sense is that MongoDB continues to expand their footprint on the back of their developer-friendly setup, flexibility, and scalability.
The company continues to expand, driven by its developer-friendly setup, flexibility, and scalability advantages in the database market.
MongoDB, Inc. (NASDAQ:MDB) provides a general-purpose database platform worldwide that integrates operational, unstructured, and AI-related data to streamline building applications.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 89
Applied Materials, Inc. (NASDAQ:AMAT) is one of the 10 AI Stocks on Market Radar. On January 16, KeyBanc raised the price target on the stock to $380.00 (from $285.00) while maintaining an “Overweight” rating. The firm sees AMAT well-positioned for vertical scaling and DRAM-driven capacity growth.
KeyBanc noted that AMAT’s valuation is reasonable even though it has lagged peers such as KLA and Lam Research in multiple expansions. It attributed this underperformance to the company’s higher exposure to trailing-edge nodes for both China and ROW customers.
AMAT, the firm noted, remains well positioned to benefit from rising disposition and etch intensity as chip architectures become more complex. It also highlighted AMAT’s exposure to conventional DRAM, which is “arguably the AI-related device facing the most scarcity.” This is a potential driver of capacity expansion opportunities for the company.
Meanwhile, AMAT’s Global Services segment is likely to post low double-digit revenue growth in fiscal years 2027-2028. This is due to customers running their installed equipment base at high utilization levels.
While we acknowledge the front-end names generally perform as ‘one trade’, we think AMAT should screen better for new money given its relative valuation and integral position in enabling semiconductor manufacturing.
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.
4. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 104
ServiceNow, Inc. (NYSE:NOW) is one of the 10 AI Stocks on Market Radar. On January 20, RBC Capital analyst Matthew Hedberg reiterated an Outperform rating on the stock with a $195.00 price target. The rating affirmation follows news that NOW has signed a three-year deal with OpenAI to use its AI models, giving businesses access to AI agents.
ServiceNow will be integrating GPT-5.2 into its enterprise workflow platform and creating AI voice technology. OpenAI models will be powering ServiceNow agents for customers, with NOW’s AI Control Tower offering governance and orchestration.
RBC views this announcement favorably, noting how it demonstrates the importance of ServiceNow in organizational workflows, while also fulfilling OpenAI’s need for access to enterprise-grade customers.
“We believe that this integration could help drive more ServiceNow consumption,” noted the firm.
More details about the partnership are expected during ServiceNow’s fourth-quarter earnings call, due on January 28.
ServiceNow is helping enterprises bring agentic AI into workflows that are secure, scalable, and designed to deliver measurable outcomes. With OpenAI frontier models and multimodal capabilities in ServiceNow, enterprises across every industry will benefit from intelligence that handles work end to end in even the most complex environments.
– Brad Lightcap, chief operating officer at OpenAI.
ServiceNow, Inc. (NYSE:NOW) provides an AI-native orchestration platform that integrates workflows, data, and AI to enable autonomous business operations.
3. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 105
Micron Technology, Inc. (NASDAQ:MU) is one of the 10 AI Stocks on Market Radar. On January 20, Stifel raised the stock’s price target to $360.00 (from $300.00) while maintaining a “Buy” rating. The firm believes AI cloud demand and strategic fab acquisition are key margin/ supply levers for Micron.
According to Stifel, Micron has gained flexibility in its supply roadmap, easing near-term pressure. It noted how the rapid growth in AI cloud infrastructure is absorbing global DRAM output, leading to a supply shortage.
Micron has strategically de-emphasized bit shipments to China. More recently, it has also done the same for retail consumer segments through its Crucial brand to redirect more supply to cloud and enterprise customers.
In the near term, the company’s revenue and margin expansion depend on successful node transitions, including the 1-gamma, as well as on the optimization of its bit supply.
Longer term, MU’s acquisition of PSMC fab and site in Taiwan provides a “structural outlet for more sustained supply growth.”
In the interim, Micron is dependent on node transitions (to 1-gamma) and optimization of its bit supply to drive revenue/margin expansion. However, the acquisition of PSMC fab/site in Taiwan provides a structural outlet for more sustained supply growth from ~18months, onward.
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the 10 AI Stocks on Market Radar. On January 14, Truist Securities reiterated a Buy rating on the stock with an $875.00 price target. While META has underperformed peers since Q3 earnings, the firm believes investor fears are already priced in.
In an investor note, the firm noted how Meta has underperformed its peers since the third-quarter earnings due to concerns about capital and operating expenditure plans for 2026. Moreover, Llama 4’s disappointing performance has fueled perceptions that the company is lagging behind other major tech firms in artificial intelligence.
Truist Securities believes that Meta’s valuation already reflects many of these fears. However, it fails to reflect on the potential to grow faster for longer and catch up in AI development.
Meta’s valuation at 20x P/E vs. GOOGL and AMZN at 30x+ already reflects much of those fear but fails to reflect its potential to grow faster for longer and ability to catch up in AI, in our view.
The research firm remains constructive heading into earnings, anticipating META’s results to be at the higher end of expectations, driven by robust user engagement and higher monetization stemming from better ranking and recommendations.
For 1Q, we expect both the revenue and Capex/Opex guides to bracket consensus ests.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 312
Microsoft Corporation (NASDAQ:MSFT) is one of the 10 AI Stocks on Market Radar. On January 20, TD Cowen lowered its price target on the stock to $625 from $655 and maintained a Buy rating. The price target cut comes ahead of Microsoft’s Q2 results, with the firm flagging capacity constraints as a limiting factor for growth acceleration.
The firm previewed its results, stating that checks suggest demand for GPU and CPU infrastructure is stable or strengthening. It anticipates about 2 points of upside to their 37% cc Azure estimates.
TD Cowen also suspects that a lack of growth acceleration, primarily stemming from capacity constraints, will keep shares range-bound in the near-term. However, it remains constructive for the company’s position to serve AI workloads.
We suspect lack of growth acceleration due to capacity constraints will keep shares range-bound NT, but we remain constructive on MSFT’s position to serve AI workloads & see a potential for acceleration in 2HCY26. Reiterate Buy. PT to $625.
Microsoft reports its earnings on January 28. TD Cowen believes Microsoft is poised for AI growth with possible reacceleration in the second half of 2026.
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.
While we acknowledge the potential of MSFT 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 MSFT and that has 100x upside potential, check out our report about this cheapest AI stock.
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