According to Ben Powell, chief investment strategist for APAC at BlackRock, the surge of capital flowing into artificial intelligence infrastructure still has a long runway ahead. That said, the sector’s “picks and shovels” suppliers remain the clearest beneficiaries as hyperscalers compete with one another in the AI arms race.
Powell told CNBC that AI-related capital expenditure isn’t slowing down any time soon. Bank of America also sees global hyperscale spending rising 31% in 2026, with total outlays climbing to $611 billion. These investments are being made on the expectations of enormous future revenues.
“The capex deluge continues. The money is very, very clear,” noted Powell.
He also noted how leading tech firms are only beginning to knock capital markets to fund the next phase of AI expansion. This implies that additional capital is on the way.
“The big companies have only just started dipping their toes into the credit markets… feels like there’s a lot more they can do there,” he said.
This capital will to flow to the companies powering the AI build-out rather than model developers, he said.
“If we’re the recipients of that cash flow, I guess that’s a pretty good place to be, whether you’re making chips, whether you’re making energy all the way down to the copper wiring.”
Overall, the investment wave has already begun reshaping global markets, with hardware, energy, and network providers poised for continued upside in the year ahead.
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.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
A close-up of a laptop displaying the company’s interactive podcasting platform.
10. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 21
C3.ai, Inc. (NYSE:AI) is one of the 10 AI Stocks on the Market’s Radar. On December 4, Citizens analyst Patrick Walravens reiterated a “Market Outperform” rating on the stock with a $24.00 price target. The firm is optimistic on the stock, driven by C3.ai’s long-term capital appreciation potential.
Citizens has highlighted C3.ai’s broad portfolio of industry-specific AI and GenAI applications, particularly in predictive maintenance and supply chain solutions. The company’s robust partnership with Microsoft was also highlighted, having yielded “100 customer agreements across 17 industries” and 24 joint agreements in the fiscal second quarter alone.
Certain challenges also exist for C3.ai, such as substantial business decline in the first fiscal quarter and a leadership transition to CEO Stephen Ehikian after founder Thomas Siebel’s departed due to health-related reasons.
However, the firm remains optimistic about the company’s prospects.
C3.ai has secured an 89% year-over-year increase in federal bookings during the second fiscal quarter, which it achieved despite the government shutdown. Citizens also cited a Reuters report which pointed to the company’s potential as an acquisition target, stating that the company “is exploring a potential sale” though “the sale process is in its early stages and other options are on the table.”
With more cash than debt and a good current ratio, C3AI could make an attractive acquisition target.
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.
9. monday.com Ltd. (NASDAQ:MNDY)
Number of Hedge Fund Holders: 55
monday.com Ltd. (NASDAQ:MNDY) is one of the 10 AI Stocks on the Market’s Radar. On December 4, Guggenheim initiated coverage of the stock with a “Buy” rating and a $250 price target. The firm is bullish on the stock as it sees material upside to new ARR and multi-year growth potential.
The work management software leader, boasting over 250K customers and 2.5M paying users, has transitioned from a “viral, self-serve strategy to a more sales-led, multi-product and upmarket approach.”
The company’s newer products, CRM, Dev, and Service now represent an estimated 10% of Annual Recurring Revenue (ARR) and have grown more than 80% year-over-year in the third quarter of 2025. This is compared to the 22% growth in its core Work Management offering.
The firm particularly highlighted Monday.com’s AI features, including vibe coding, which has led to the creation of more than 60,000 applications to date.
While the firm sees 20% long-term growth potential for the stock, Guggenheim believes that the stock reflects a zero-growth, worst-case AI scenario, which the firm believes is unjustified.
“Despite being on a track to deliver 26%+ revenue growth and 27%+ FCF margin this year, making for a rare, balanced Rule of 50+ company, by our math, MNDY shares are pricing in zero growth and declining FCF into perpetuity in the terminal year.
In our view, valuation already reflects a worst-case scenario of AI-driven productivity inducing seat count decline. This is far from reality. By our analysis, seat growth has stabilized at >15% in 1Q25–3Q25 vs. 22% in FY24, driven by strong momentum in large customer (>$50K ARR) seat growth, while FY26/FY27 consensus estimates are achievable with modest seat growth deceleration, lesser pricing/cross-sell, and no AI contribution.
This translates to modest New ARR growth, to which we see material upside, while customer/partner checks indicate high expansion propensity, supporting 20%+ growth for many years.”
monday.com Ltd. (NASDAQ:MNDY) develops software applications globally, offering a cloud-based Work OS for creating work management tools.
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