In a recent investor note, Barclays revealed that they anticipate U.S. software stocks to experience short-term gains in the current earnings cycle. This is despite looming questions over artificial intelligence.
“Our checks show solid end demand and valuation levels are much lower, but is this enough to overcome the AI uncertainties? Maybe, not for the long run, but we expect a positive bounce in the short-term nonetheless.”
-Analyst Raimo Lenschow said in a Monday note.
According to Lenschow, investors continue to remain concerned about the impact of generative AI. However, the near-term setup looks better than expected.
“Our checks are solid to slightly better than the on-cycle ones,” he wrote, adding that given the weak performance of most software stocks outside a few AI winners, “we would expect a positive bounce as numbers are holding up and valuation levels are low.”
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 Q1 2025.
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10. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 17
BigBear.ai Holdings, Inc. (NYSE:BBAI) ) is one of the 10 AI Stocks On Wall Street’s Radar. On August 15, the company announced the launch of a next-generation cargo security management solution in partnership with Narval Holding Corp., through Narval’s subsidiary International Shipping Compliance, S.A. (ISC), in Panama.
The AI-powered cargo security management solution will begin in Panama with planned expansion across the region and worldwide. BigBear.ai-developed en route cargo chain-of-custody application will use biometric verification to link drivers and transport vehicles to a cargo container and its corresponding security seal. This will ensure full accountability of the cargo contents from origin to destination.
The solution secures the global supply chain by enabling real-time driver and tracking monitoring with a centralized management platform. Cargo flows can be supervised with better precision, ensuring better detection of anomalies, and generation of actionable insights.
“Securing the global supply chain requires innovation, trust, and the ability to verify each handoff along the way. By partnering with Narval Holding Corp. in Panama – a critical gateway for global trade – we will deliver an AI-driven solution to strengthen cargo security today, while laying the foundation for broader regional adoption and collaborations with the international shipping lines.”
-Kevin McAleenan, CEO of BigBear.ai.
BigBear.ai Holdings, Inc. (NYSE:BBAI) is an artificial intelligence specialist that provides decision intelligence solutions for national security, digital identity, supply chain and logistics, enterprise operations, and manned-unmanned teaming in autonomous systems.
9. Rubrik, Inc. (NYSE:RBRK)
Number of Hedge Fund Holders: 45
Rubrik, Inc. (NYSE:RBRK) is one of the 10 AI Stocks On Wall Street’s Radar. On August 12, the company announced the launch of Agent Rewind, an industry-first agent rewind solution that enables organizations to undo mistakes made by agentic AI. Powered by Predibase AI infrastructure, Agent Rewind provides visibility into agents’ actions and enables enterprises to rewind those changes to applications and data.
While AI agents boast significant potential, they are still prone to mistakes ranging from technical malfunctions and legal issues and even erasing of entire production databases. This is where the Agent Rewind comes into use by making opaque AI actions visible, auditable, and reversible.
The solution creates an audit trail and immutable snapshots that allow safe rollback. Rubirk highlighted that current observability tools only show what happened, but not why or how to reverse high-risk actions.
Agent Rewind is compatible with a wide range of platforms, APIs, and agent builders, including Agentforce, Microsoft Copilot Studio, and Amazon Bedrock Agents, and will be compatible with any custom AI agent.
“As AI agents gain autonomy and optimize for outcomes, unintended errors can lead to business downtime. Agent Rewind integrates Predibase’s advanced AI infrastructure with Rubrik’s recovery capabilities to enable enterprises to embrace agentic AI confidently. Today’s organizations will now have a clear process to trace, audit, and safely rewind undesired AI actions.”
-Anneka Gupta, Chief Product Officer at Rubrik.
Rubrik, Inc. (NYSE:RBRK) provides data security solutions to individuals and businesses worldwide.
8. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 61
Coherent Corp. (NYSE:COHR) is one of the 10 AI Stocks On Wall Street’s Radar. On August 14, Morgan Stanley lowered the firm’s price target on the stock to $89 from $97 and kept an Equal Weight rating on the shares.
According to the analysts, Q4 EPS was better than Street estimates. However, Coherent’s results and outlook were “underwhelming.” This is particularly true considering how the stock jumped 20% the last month and elevated expectations based on other AI-related prints.
Morgan Stanley believes that the stock is likely “to remain in the penalty box for now.”
Coherent Corp. (NYSE:COHR) is an American manufacturer of optical materials and semiconductors.
7. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 62
Fortinet, Inc. (NASDAQ:FTNT) is one of the 10 AI Stocks On Wall Street’s Radar. On August 14, Erste Group analyst Hans Engel downgraded the stock from Buy to Hold. The downgrade comes amid concerns about the company’s operating margins and future growth prospects.
“Revenue this year should be in the range of around USD 6.7 – 6.8 billion. The forecast for service revenue was recently revised slightly downwards. The operating margin will amount to approx. 32% – 33.5%. The operating margin is therefore below that of the peer group. This is not expected to change in the next two years. Sales growth in the coming year will also be lower than this year.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $90 implies a 13.7% upside; however, the Street-high target of $120 implies an upside of 51.7%.
Fortinet, Inc. (NASDAQ:FTNT), a cybersecurity company, provides enterprise-level next-generation firewalls and network security solutions, leveraging artificial intelligence across its cybersecurity products.
6. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 77
Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the 10 AI Stocks On Wall Street’s Radar. On August 15, Cantor Fitzgerald reiterated its “Overweight” rating on the stock with a $223.00 price target. The rating update comes ahead of the company’s fiscal fourth-quarter 2025 results due on August 18.
Cantor anticipates strong execution, large deal activity, and Palo Alto’s platformization to drive the company’s F4Q25 results. However, revenue guidance may come in lower due to short-term platformization impacts.
“We maintain our Overweight rating and reiterate our 12-month PT of $223. We anticipate strong execution, large deal activity, and platformization to drive solid F4Q25 results across KPIs. While bookings trends likely remain robust and supportive of current FY26 expectations for RPO and NGARR, we would not be surprised to see FY26 revenue guidance light of expectations, reflecting the initial revenue recognition headwinds on platformization deals that begins to normalize in FY27 and FY28. Longer term, we believe recent new product initiatives, including Prisma Access Secure Web Browser, Cortex Cloud, DSPM, and AI investments, position Palo Alto for continued wallet share gains and platformization success. And we view the firm’s intent to acquire CyberArk (CYBR, OW) as a strategic move to expand into identity security and strengthen its zero trust offerings.”
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity.
5. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 82
Cisco Systems, Inc. (NASDAQ:CSCO) is one of the 10 AI Stocks On Wall Street’s Radar. On August 14, BofA Securities analyst Tal Liani raised the price target on the stock to $85.00 (from $76.00) while maintaining a Buy rating.
According to the analysts, Cisco’s Q4 results and FY26 guidance “lacked a major spark,” but were slightly better than expectations. It further believes that Cisco’s story is “about a revamped portfolio, a significant infrastructure cycle driven by AI and data growth, and constant improvement in execution.”
“Cisco’s tale is about a revamped portfolio, a significant infrastructure cycle driven by AI and data growth, and constant improvement in execution. The results/guidance lacked a major spark though were slightly better than expectations, with revenue growth of 7.6% YoY vs. Street’s 7.3%, in-line margins, and a 1c beat to consensus EPS estimates of $0.98. However, they reflect steady improvement on most fronts, including 10% order growth, excluding the weak Federal segment, strong networking trends, and recovery in Security growth.”
4. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 84
Datadog, Inc. (NASDAQ:DDOG) is one of the 10 AI Stocks On Wall Street’s Radar. On August 14, Needham analyst Jack Andrews reiterated a Buy rating on the stock with a $175.00 price target.
The firm anticipates Datadog’s Annual Recurring Revenue (ARR) to exceed $3.5 billion for the first time next quarter, “with growth in the Mid-/High-20%’s range.”
Three significant growth drivers continue to work for the company, which are Infrastructure Monitoring, APM Suite & Log Management.
“The company’s 3 core pillars, consisting of Infrastructure Monitoring, APM Suite & Log Management, continue to be more significant drivers of growth – collectively representing ~90% of Total ARR. But we highlight the importance of (1) Security Suite achieving $100 Million in ARR with mid-40%’s growth in 2QCY25; and (2) point investors to monitor new products such as Flex Logs (which we believe is growing materially above 100% yr-yr and likely to become Datadog’s 6th product to achieve the $100 Million ARR milestone following Synthetics and RUM), Database Monitoring, and Cloud Cost Management. We remain Buy-rated.”
Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products.
3. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 85
Workday, Inc. (NASDAQ:WDAY) is one of the 10 AI Stocks On Wall Street’s Radar. On August 15, Evercore ISI analyst Kirk Materne reiterated an Outperform rating on the stock with a $275.00 price target. The rating affirmation comes ahead of Workdays’ earnings report due on August 21.
The firm anticipates Workday to deliver a “small beat” against the subscription revenue guidance of $2.16 billion. This represents 13.5% growth. However, it expects no major changes to the company’s fiscal year 2026 subscription revenue growth forecast of approximately 14%.
“Adjusting for the F1Q leap day headwind, the current F2Q guidance essentially implies a continuation of F1Q trends into F2Q and why we see a ’slight beat’ being reasonable despite mixed partner checks.”
Evercore ISI also believes it would be useful if the management provides commentary around Workday’s AI-related contribution. Overall, the broader takeaway is that Workday is managing well despite the “choppier macro” backdrop. Expectations for the future look reasonable as well.
“In our view, any commentary around the AI-related contribution to growth would be helpful as well as any commentary that provides more confidence in the implied 2H acceleration in guidance. In terms of CRPO, we believe that anything close to 16% (vs. guidance of 15%-16%) would be ‘good enough’ and an outlook for F3Q of ~15.5% at the midpoint would be our base case assumption. In our view, the broader takeaway from the quarter is likely to be that Workday is executing in a choppier macro and the forward expectations seem reasonable, as the ‘terminal risk’ debate is unlikely to get settled in the near-term regardless of the quarterly results.”
Workday, Inc. (NASDAQ:WDAY) provides enterprise cloud applications.
2. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 96
Micron Technology, Inc. (NASDAQ:MU) is one of the 10 AI Stocks On Wall Street’s Radar. On August 14, Erste Group analyst Hans Engel initiates coverage on the stock with a Buy rating after having the stock Under Review.
The analyst stated that Micron’s positive update to Q4 guidance was “a significantly better development than previously expected.”
Engel also believed that the stock is “valued favorably in view of the good growth prospects.”
“Micron Technology announced a positive update to its financial guidance for the fourth quarter of fiscal 2025, indicating a significantly better development than previously expected. The revenue forecast was raised to USD 11.2 billion, as was the forecast for the gross margin. It should be around 44.5%. Earnings per share should also be significantly higher at USD 2.5 (+/- USD). Based on the P/E ratio, the stock is valued favorably in view of the good growth prospects.”
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide.
1. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 97
Oracle Corporation (NYSE:ORCL) is one of the 10 AI Stocks On Wall Street’s Radar. On August 15, Mizuho analyst Siti Panigrahi raised the price target on the stock to $300.00 (from $245.00) while maintaining an Outperform rating. Oracle is one of the top picks for Mizuho.
According to the firm, Oracle is evolving as a structural winner in artificial intelligence. Moreover, Oracle Cloud’s “differentiated” architecture is seeing a surge in demand for AI training workloads, in turn driving a growth inflection.
The firm also believes that analyst day in October may serve as a major catalyst for a re-rating of Oracle shares.
“At the cusp of the enterprise AI revolution, we have increased confidence that Oracle is emerging as a structural AI winner. OCI’s differentiated architecture and surging demand for AI training workloads are driving a clear inflection in growth. With its end-to-end AI stack, spanning vertical and horizontal applications, mission-critical database technology, and infrastructure for AI training/inference, Oracle is well positioned to capture a disproportionate share of AI-driven enterprise spend over time, accelerating revenue growth (~27% 5-year CAGR) and operating income (~24% 5-year CAGR) through FY30E.”
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
While we acknowledge the potential of ORCL 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 ORCL and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 10 AI Stocks in the Spotlight Today and 10 AI Stocks Analysts Are Tracking Closely.
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