According to a new report by Crunchbase Inc., global venture capital funding climbed sharply in the third quarter, increasing 38% year-over-year to $97 billion. This funding marks the fourth consecutive quarter that global venture funding topped $90 billion, a rebound fueled largely by artificial intelligence companies.
The report noted that 46% of global venture funding for the quarter went towards funding AI companies, with 29% invested solely in Anthropic. Anthropic PBC secured a $13 billion round, followed by xAI Inc. with $5.3 billion and Mistral AI Inc. with $2 billion.
Other companies landing billion-dollar deals included Princeton Digital Group Inc., Cerebras Systems Inc., Nscale Inc., Figure AI Inc., Databricks Inc. and PsiQuantum Corp.
All of these deals underscore the robust investor enthusiasm for AI infrastructure and advanced computing, a narrative that has helped push major stock indexes to record highs.
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 Q2 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Penguin Solutions, Inc. (NASDAQ:PENG)
Number of Hedge Fund Holders: 25
Penguin Solutions, Inc. (NASDAQ:PENG) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Stifel analyst Brian Chin raised the firm’s price target on the stock to $31 from $27 and kept a “Buy” rating on the shares. The firm remains constructive on the stock amid favorable conditions in the memory market.
According to the firm, fiscal Q4 results are anticipated to modestly exceed consensus estimates when the company reports earnings on Tuesday. Not only are memory market conditions favorable both in terms of demand and pricing, but tailwinds are also likely to sustain into the calendar year end.
The company’s memory division, representing 32% of trailing twelve-month sales, is experiencing tailwinds. Moreover, its advanced computing division (49% of TTM sales) is projected to post sequential growth in the fourth quarter due to an improving order pipeline.
The firm projects 8% year-over-year revenue growth overall, which it deems potentially conservative considering favorable memory market conditions and invigorating trends across the broader AI cloud and enterprise markets.
Penguin Solutions, Inc. (NASDAQ:PENG) is a leading AI and HPC computing company engaged in the design and development of enterprise solutions worldwide.
9. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 113
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Reuters reported that AMD will supply artificial intelligence chips to OpenAI in a multi-year deal.
The deal has the potential to generate tens of billions of dollars in annual revenue and includes a warrant-structure that gives OpenAI the option to acquire an estimated 10% of AMD; contingent on deployment, milestones and share price targets.
“We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry.”
-AMD executive vice president Forrest Norrod told Reuters on Sunday.
The agreement will allow the deployment of hundreds of thousands of AMD’s AI chips, or graphics processing units (GPUs) over several years beginning in the second half of 2026. This is equivalent to six gigawatts.
According to AMD, OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips starting next year, at which point revenue will begin to be recognized.
OpenAI CEO Sam Altman noted that the AMD deal will help his startup build enough AI infrastructure to meet its needs.
“We are thrilled to partner with OpenAI to deliver AI compute at massive scale,” said Dr. Lisa Su, chair and CEO, AMD. “This partnership brings the best of AMD and OpenAI together to create a true win-win enabling the world’s most ambitious AI buildout and advancing the entire AI ecosystem.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
8. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 115
Tesla, Inc. (NASDAQ:TSLA) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, UBS reiterated the stock at “Neutral” and raised its price target on the stock to $247 per share from $215
The firm anticipates Tesla’s results to look better post deliveries. Even though the firm does anticipate a tough 4Q25 setup, investors are likely to focus more on future AI commentary rather than the numbers.
“TSLA numbers will move higher post deliveries and while we expect tougher 4Q25, stock will move more on future AI commentary than numbers.”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
7. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 124
Oracle Corporation (NYSE:ORCL) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Mizuho reiterated the stock as “Outperform” with a price target of $350. The firm believes shares of Oracle have more room to run ahead of its financial analyst day on October 16th.
“We remain bullish on ORCL heading into the Financial Analyst Day, viewing it as a key catalyst to refocus attention on Oracle’s long-term AI growth story.”
The firm holds a positive outlook on the stock, particularly around Oracle’s long-term artificial intelligence growth story. It believes that the upcoming analyst day would be a key catalyst to refocus investor attention on the said narrative despite the stock’s recent pullback.
Oracle’s newly appointed co-CEOs are anticipated to showcase a unified strategy across Oracle Cloud Infrastructure (OCI) and applications. This will in turn reinforce its position as a full-stack platform for enterprise AI adoption.
Mizuho also believes that Oracle’s management will increase its long term financial targets and detail a funding plan for AI data center expansion. This is likely to be supported by record remaining performance obligations and burgeoning demand from customers including OpenAI, Meta, and xAI.
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
6. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 156
Broadcom Inc. (NASDAQ:AVGO) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Mizuho analyst Vijay Rakesh reiterated an Outperform rating on the stock with a $410.00 price target. The firm believes that the stock remains well positioned.
“AVGO To Continue Leading AI Custom Silicon with an Expanding Pipeline Driving EPS Upside, and Limited GM Dilution Impact.”
The firm shed light on some key investor concerns that it discussed with the management, one of which was Broadcom’s $10 billion deal with its fourth AI customer. The fourth customer is believed to be OpenAI.
The firm noted that the anticipated $10 billion in revenue is tied to AI Racks, with non-ASIC and networking costs passed through without “margin stacking.”
The firm’s analysis further reveals a limited earnings impact from potential gross margin dilution. It estimates 166 basis points in fiscal 2026, 224 basis points in fiscal 2027, and 286 basis points in fiscal 2028, resulting in a minimal EPS impact of only 3-4%.
Mizuho also noted that OpenAI’s Titan ramp is likely to accelerate in fiscal years 2027 and 2028 because the majority of the XPU team comes from TPU (Tensor Processing Unit) backgrounds. Moreover, there is leverage coming from outsourcing racks to contract manufacturers and original design manufacturers.
The firm considers Broadcom to be the “King of AI Custom Silicon” due to accelerating ASIC revenues and broadening engagement. It encourages investors to buy the stock on its recent pullback.
Broadcom is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 156
Apple Inc. (NASDAQ:AAPL) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, JPMorgan reiterated the stock as “Overweight” stating that its channel checks show lead times are moderating for Apple’s iPhone.
“In Week 4 of our Apple Product Availability Tracker, lead times moderated in what is typical for iPhones a month post launch, even though lead times are still tracking to elevated levels compared to lead times evidenced last year with iPhone 16 series, and pointing to higher demand y/y.”
Apple is a technology company known for its consumer electronics, software, and services.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 235
NVIDIA Corporation (NASDAQ:NVDA) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Melius Research raised its price target on the stock to $275 from $240 while maintaining a Buy rating.
The firm is of the view that Nvidia holds the potential to easily command 40% of the total AI infrastructure market by 2030. It noted how Nvidia is demonstrating strengthening momentum despite not having sales to China. It has dismissed concerns about potential growth deceleration, citing them as “overblown.”
Melius Research also believes that Nvidia’s sales to China will eventually return, highlighting how current Wall Street estimates for calendar years 2026 through 2028 seem too conservative regardless of the China situation.
It also raised its calendar year 2027 growth estimate for the company’s data center revenues to 30% from a previous projection of 22%. This reflects potential for further upside through the end of the decade.
Burgeoning demand for the company’s graphics processing units (GPUs) has been driving its revenue growth in recent quarters. Overall, the firm believes that Nvidia’s AI leadership, expanding partnerships, and sustained infrastructure demand will fuel significant growth.
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 260
Meta Platforms, Inc. (NASDAQ:META) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Citizens analyst Andrew Boone reiterated a Market Outperform rating and $900.00 price target on the stock. Meta’s progress with AI-generated advertising tools has reinforced the firm’s bullish view.
As per the firm, an estimated 2 million advertisers are already using the company’s video generation tools. These tools aren’t just helping to lower creative costs but also paving way for greater personalization that should improve advertising performance.
The firm highlighted how creative elements account for roughly half of overall campaign performance, as previously mentioned by both Meta and Google. This underscores the potential impact of AI-driven tools for them.
Citizens particularly highlighted Meta’s AI business assistant, noting how AI agents can enhance interactive experiences across the platform’s messaging services.
They added how Meta’s Messaging Ads, representing a $10 billion business segment, is likely to continue growing as these AI capabilities expand.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 294
Microsoft Corporation (NASDAQ:MSFT) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Wells Fargo reiterated the stock as “Overweight” and raised its price target on the stock to $675 per share from $650.
According to the firm, investors will be mainly watching out for how much Azure’s cloud business can grow given the incremental capacity in the first quarter.
Since the last two prints already present a high bar, the company faces tough comparisons. Nevertheless, the company is well-positioned to benefit.
“Key debate into FQ1 will be degree of Azure upside given incremental capacity in 1Q, though the last 2 prints (300/400bps Azure beats) present a high bar. With recent demand signals intensifying, expect MSFT broadly set to benefit. Raise PT to $675.”
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 335
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 10 AI Stocks Shaping Wall Street’s Next Big Rally. On October 6, Baird reiterated the stock as “Outperform” stating that “improving [Amazon Web Services] growth should help sentiment.”
“On this ‘Open AI Monday’, we are opportunistic buyers of AMZN with likely acceleration in AWS growth in coming quarters, along with solid ongoing growth in high-margin Advertising and Services.”
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 Every Investor Should Watch and 10 Buzzing AI Stocks on Wall Street.
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