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.
8. CoreWeave, Inc. (NASDAQ:CRWV)
Number of Hedge Fund Holders: 62
CoreWeave, Inc. (NASDAQ:CRWV) is one of the 10 AI Stocks on the Market’s Radar. On December 4, Freedom Capital Markets initiated coverage on the stock with a “Buy” rating and a price target of $100.00. Firm analysts believe that CoreWeave’s stock plunge is largely fear-driven rather than based on fundamental deterioration.
The firm elaborated how CoreWeave has been down -28% since its F25Q3 results were announced on November 10. This disappointment has been largely due to a 3% cut in prior guidance to full-year 2025 revenues. Management has attributed this cut to a “subcontractor’s construction delay at one of CRWV’s 41 data centers.”
Ever since the earnings report, investor sentiment has turned negative and there are concerns about a potential AI bubble burst that could badly hurt CoreWeave as the largest “neocloud.”
“Conspiracy theories have spread among investors since then, and the overall industry narrative has clearly shifted to fear the AI Bubble will soon burst and CRWV will be a victim as the largest “neocloud.”
However, the firm believes these concerns are overblown and that investors will “regain confidence in the company to deliver its backlog, and with less overall concern that the ‘end is nigh’ for AI infrastructure building,”
“Although CRWV is in investors’ penalty box, we believe the stock significantly overstates the risk that it will not deliver its $56 billion multi-year revenue backlog. We believe its payments from hyperscalers, which support its capital expenditures, are secure for several years. These behemoths have the financial wherewithal to continue spending, and, perhaps more importantly, each of them views early and aggressive AI infrastructure building as a key competitive advantage.”
In the case that the backlogs were to fall, CoreWeave’s backstop from Nvidia could absorb “any extra capacity for seven years, analyst Paul Meeks noted.
CoreWeave, Inc. (NASDAQ:CRWV) is a cloud platform provider that provides equipment for AI and other computing purposes.
7. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 88
Adobe Inc. (NASDAQ:ADBE) is one of the 10 AI Stocks on the Market’s Radar. On December 5, Barclays lowered its price target on the stock to $415 from $465 while maintaining an “Overweight” rating. The price target cut comes ahead of the company’s fourth-quarter fiscal 2025 results, set to report on December 10.
While Barclays remains constructive on the stock driven by ARR momentum and Semrush upside, it remains cautious near-term ahead of clarity on guidance.
Analysts model $571M in the final quarter of NN DM ARR disclosure, with a potential upside case of $600–610M based on decent web traffic.
The company’s total ARR may reach an estimated $25.8 billion by the end of fiscal year 2025, representing year-over-year growth of about 11.5%. This growth exceeds the company’s original guidance of around 11% at the start of the year.
With Semrush set to close in the first half of fiscal 2026, it is unlikely to be included in the company’s FY26 guidance. However, using consensus estimates for Semrush and assuming an April 1 closing means that the deal may potentially add 1-2 points of FY26 revenue growth and be roughly neutral to positive for earnings per share.
Finally, the firm discussed quarter-over-quarter increase in Express mobile app downloads. However, it doesn’t expect the company to offer an update on its artificial intelligence ARR metric following last quarter’s strong performance.
Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions.
6. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 89
Applied Materials, Inc. (NASDAQ:AMAT) is one of the 10 AI Stocks on the Market’s Radar. On December 4, TD Cowen raised its price target on the stock to $315.00 from $260.00 while maintaining a “Buy” rating. Firm analysts have named this chip manufacturing equipment firm their “Top 2026 Idea” driven by structural growth in DRAM and Foundry segments.
AMAT is poised to experience tailwinds from the demand for dynamic random access memory (DRAM) and the leading-edge foundry industry. Both of these segments are witnessing heightened demand driven by artificial intelligence.
*”At Crossroads Of Two Upcycles – DRAM & Leading-Edge Foundry; With ~50% of the semis portfolio exposed to DRAM (non-China) and leading-edge Foundry, and given the potential for positive estimate revisions next year, AMAT is our best idea for 2026.”
The firm anticipates non-China DRAM equipment spending, representing an estimated 30% of AMAT’s semiconductor systems revenue, to grow 17% in calendar year 2026 with potential upside to 20%.
“Of note, when DRAM gross margins for suppliers (MU) were +60% in C18, industry DRAM WFE grew more than 80% before correcting in C19 due to trade/macro uncertainty.”
While we see a scenario where NAND WFE might outgrow DRAM WFE over the next 2 years – since its starting from a much lower base – we think the intermediate-term setup favors DRAM WFE as NAND suppliers remain adamant about not adding any capacity.
On the other hand, we see a line of sight for multiple greenfield projects in DRAM (Samsung’s P4 mid-26, MU’s Idaho & Hynix Yongin in 2027).”
Discussing the leading-edge Foundry segment, the firm modeled 15% growth in C26, weighted toward the second half of the year. While current foundry capacity is at full utilization, there are multiple cleanroom projects coming online at TSM, and Samsung/Tesla deal is also a tailwind.
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.
5. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 119
Salesforce, Inc. (NYSE:CRM) is one of the 10 AI Stocks on the Market’s Radar. On December 4, TD Cowen maintained its Buy rating on the stock with a price target of $305.00. The rating, following Salesforce’s third-quarter earnings report, reflects optimism around momentum in the company’s AgentForce product.
The company reported third-quarter revenue in line with expectations, while growth in current remaining performance obligations (cRPO) exceeded forecasts.
Looking ahead, fourth-quarter organic revenue and cRPO guidance also align with market expectations. The firm has been particularly optimistic about the company’s bookings and pipeline, noting that management reiterated targets for growth re-acceleration.
It also emphasized positive indicators in the company’s AgentForce product line, all of which support the firm’s bullish outlook. TD Cowen has acknowledged growing adoption of AgentForce as exemplified by accelerated new paid customer additions and increasing credits utilization from the existing customer base.
Salesforce’s AI metrics have also been noteworthy, with robust growth in AI annual recurring revenue (ARR) and a rise in net new paid Agentforce deals. All of these factors, coupled with a solid valuation, reinforce the firm’s buy rating.
Salesforce, Inc. (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce.
4. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 122
Oracle Corporation (NYSE:ORCL) is one of the 10 AI Stocks on the Market’s Radar. On December 4, TD Cowen reiterated its “Buy” rating on the stock with a $400.00 price target. The rating affirmation comes ahead of the company’s second-quarter earnings report scheduled for December 10.
TD Cowen believes that there are two key factors that can reverse the recent negative sentiment surrounding the stock. These factors are Oracle Cloud Infrastructure (OCI) growth acceleration and clarification on capital expenditure and financing requirements.
It believes that the Q2 print will likely reset negative investor sentiment and reinforce Oracle’s long-term OCI growth story. Further momentum for growth will continue building in the second half as the Abilene data center comes online. This will address concerns about capacity ramp.
“2Q should be the first quarter of OCI (Oracle Cloud Infrastructure) growth liftoff, with acceleration building in (second-half) as Abilene comes online. And we expect management to give more color around capex/financing needs, which we think is less demanding than consensus thought.”
Oracle is building a “Stargate” data center in collaboration with OpenAI, with firm noting that industry checks show the project is tracking as projected. This will help bring capacity online for the company to meet a massive backlog in its cloud infrastructure business.
“This gives us confidence in our OCI growth forecast moving from roughly 51-54% over the last 4 quarters to roughly 65% in 2Q, roughly 80% in 3Q, roughly 100% in 4Q,”
Moreover, even though capex/debt leverage remains a key item to watch, TD Cowen views current valuations as being at “trough” levels with “ample room for upside.”
“Capex and financing needs has been the biggest investor question over the last the 2 months, weighing on the stock. A lower than expected capex would also result in lower debt needs, and we think a lot of these concerns can be addressed on the call, including a commitment to staying at investment-grade debt levels.”
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 243
Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 AI Stocks on the Market’s Radar. On December 5, Truist Securities raised its price target on the stock to $350.00 from $320.00 while maintaining a “Buy” rating. The price target raise reflects robust holiday momentum and upside from Waymo expansion.
According to the firm, this holiday season will likely lead to a record high US e-commerce and digital Ad spending driven by a robust job market and AI-enhanced advertising.
The firm has raised its price target for Google driven by higher advertising revenues as holiday season e-commerce demand remains robust. A smaller part of the increase reflects improved long-term expectations for Other Bets in the outer years from Waymo’s expansion into more cities across the country.
“As such, we’re raising our FY26 price target to $350 from $320.”
Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.
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 the Market’s Radar. On December 5, Mizuho maintained its “Outperform” rating on the stock with an $815.00 price target.
The rating affirmation follows Meta’s announced restructuring in its Facebook Reality Labs (FRL) segment, an early sign of fiscal restraint which reduces risk sentiment into next earnings.
According to several sources, Meta is reportedly planning to cut its budget by up to 30% in its Reality Labs metaverse division. Job cuts are also going to be a part of the move, leaving employees uncertain.
The firm acknowledged how these cuts have led to mixed feedback from investors. While bears are pushing back with the argument that this isn’t a cut across all of FRL but only a portion of the segment.
They also noted Meta’s recent messaging about continued investments and cited a New York Times article which pointed that the company is shifting spending rather than reducing it outright.
Some investors believe that it will take some time for the management to “rebuild” credibility and trust “after preaching discipline this summer/fall before the big cost guide in 3Q.”
While these concerns exist, the firm believes that narrowing focus at FRL is “an important signal that spending is not unchecked, and a step in right direction.”
On the other hand, bulls now see moderated risk around Meta’s formal 2026 cost guidance heading into the next earnings report.
Meta Platforms has been expanding its advertising capabilities and also invests heavily in artificial intelligence and the metaverse.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 332
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 10 AI Stocks on the Market’s Radar. On December 5, Evercore ISI reiterated its “Outperform” rating on the stock with a $335.00 price target. The rating affirmation follows Amazon’ annual AWS re:Invent conference, pointing to increased confidence in AWS inflection and cloud upside.
*”We reiterate our Outperform rating and $335 PT on AMZN in the wake of our key takes from the annual AWS re:Invent conference.”
Key takes from the conference include that the AWS Unlock has been sustainable, and that its inflection up to 20% is real and not a one-time spike. The firm’s channel checks also reveal that AWS is likely to grow 20% or more in 2026.
The firm further addressed that supply constraints that were previously hindering AWS growth have largely been addressed. Moreover, technology is ramping with Trainium 3 now generally available, and demand for the cloud industry is also accelerating rapidly.
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.
READ NEXT: 10 AI Stocks in Focus This Week and 10 AI Stocks Making Headlines on Wall Street
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
