AI-darling Nvidia reported its earnings yesterday, and it’s safe to say that the numbers have been objectively great. Nevertheless, investor sentiment remains rather mixed, implying a “buy the rumor, sell the news” case.
Most of these concerns remain about sustaining the AI-driven market rally. The emergence of less power-hungry rivals such as DeepSeek also suggests uncertainty regarding the future demand for advanced chips.
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Alongside, President Donald Trump noted that the 25% tariffs on Canada and Mexico are set to go into effect on March 4, adding that an additional 10% tax would be imposed on Chinese imports.
Investment firm UBS, without commenting on individual names, said that the earnings print reinforces their view that the broader AI market is big enough for every segment to grow, and that they remain positive on the AI compute industry as well as the broader AI trend. This is despite recent concerns around low-cost models like DeepSeek and recent noise around data centers, they stated.
“We maintain our positive view on AI semiconductors and leading cloud platforms, and recommend investors take advantage of elevated near-term volatility by buying the dip in quality AI stocks or through structured strategies.”
-UBS
Investors were skeptical ahead of the print considering how rival DeepSeek’s less power-hungry nature could imply an overspend by US tech giants on AI infrastructure without sufficient return in that investment. Nonetheless, AI players are continuing to announce plans to funnel tens of billions of dollars into infrastructure.
According to Wedbush analyst Dan Ives, $325 billion in capital expenditures is expected this year from just the “Magnificent Seven” tech companies. Moreover, a majority of this spend is aimed at supporting AI growth.
“We have seen NOT ONE AI enterprise deployment slow down or change due to the DeepSeek situation. No customer wants to ‘lose their place in line’ as it is described to us for Nvidias next gen chips.”
-Dan Ives
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 Q4 2024.
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).
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10. Sterling Infrastructure, Inc. (NASDAQ:STRL)
Number of Hedge Fund Holders: 28
Sterling Infrastructure, Inc. (NASDAQ:STRL) provides e-infrastructure, transportation, and building solutions primarily in the United States. On February 26, DA Davidson analyst Brent Thielman upgraded the stock to “Buy” from Neutral with an unchanged price target of $185. The firm stated that the recent pullback in shares is a good buying opportunity.
Thielman highlighted a potential continuance in southern homebuilding activity as well as strength in Sterling’s e-infrastructure solutions segment, which develops systems for data centers and e-commerce warehouses and distribution centers. He also noted that e-infrastructure earnings potential and profit margins may rise in comparison to last year as demand for data centers, industrial facilities and e-commerce boosts.
“E-Infrastructure growth is expected to be > 10% with EBIT growth of > 25% — it appears STRL largely has what it needs to achieve this target. Overall, our estimates increase for 2025 and 2026 EPS/ EBITDA. We expect strong cash flow albeit we are approaching conversion assumptions below recent years — we still think we could see FCF/sh of ~$12/share-$13/share in each of the next couple of years (2024 was ~$13/share).”
9. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 95
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On February 26, two short sellers, Fuzzy Panda and Culper Research, published short reports against AppLovin Corporation, stating that it is misrepresenting the benefits of its AI advertising platform. In response, AppLovin (APP) CEO Adam Foroughi expressed his disappointment in a company blog, writing how these so-called claims are “false and misleading”, and aim to undermine AppLovin’s success and drive down its stock price for their financial gain.
The company reaffirmed its compliance with app store policies, emphasizing that its ads drive real engagement and revenue. It also said that it does not track children’s data, and that there are no financial improprieties. It also highlighted the success of its e-commerce pilot program, having reached a run rate of roughly $1 billion a year of gross advertiser spend in the e-commerce category alone in December.
“It’s also noteworthy that the short reports emerged after our earnings report, where we would be in a period of being unable to respond with financial performance. We remain focused on executing our strategy, generating strong cash flow, and conducting share buybacks.”
8. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) is an internet giant that offers e-commerce services in China and internationally. On February 25, Bernstein upgraded the stock to “Outperform” from Market Perform with a price target of $165, up from $104. The firm stated that it has “AI optimism and beyond” for the China e-commerce company.
“While last week felt like a local maximum for AI sentiment, the combination of more gainful capital allocation, a better industry structure for AI than legacy cloud, and possible spill-over effects of an AI capex boom in China makes us feel Alibaba’s earnings could now be on a more upwardly-pointing trajectory.”
7. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 111
GE Vernova Inc. (NYSE:GEV) is a global energy company and a soaring AI stock driven by the demand for energy to power artificial intelligence technology. One of the biggest analyst calls on Thursday, February 27, was for GE Vernova Inc.
JPMorgan analyst Mark Strouse added GE Vernova to its focus list, keeping an “Overweight” rating on the shares with a $436 price target. The firm said it sees an attractive entry point for the renewables company, highlighting that its demand and pricing remain solid.
“Despite what we viewed as incrementally positive commentary from GEV last week, the stock has sold off over the last week amidst broader fears around hyperscaler capex plans and associated industrial AI demand.”
6. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 120
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. On February 27, the company reported its fourth quarter and full-year 2024 financial results. The company reported an EPS of $2.38, surpassing analyst estimates by $0.99. Meanwhile, revenue for the quarter reached $17.22 billion, exceeding the consensus estimate of $3.72 billion.
Utilities such as Vistra have surged as demand for power surges and tech giants continue to pour in billions of dollars into AI technologies and their infrastructure. Looking ahead, the company reaffirmed its 2025 guidance for ongoing operations adjusted EBITDA in the range of $5.5 billion to $6.1 billion.
“The talent and dedication of the people who make up Team Vistra resulted not only in a record year but a transformational one for our company. In these 12 months, we closed on a unique acquisition, adding three nuclear sites, approximately one million additional retail customers in the key PJM market and 2,000 new team members, and now proudly operate the second-largest competitive nuclear fleet in the country. Vistra also joined the S&P 500 and the Dow Jones Sustainability indices, acquired the outstanding minority interest in Vistra Vision, secured a 20-year license renewal for Comanche Peak, reached retail performance levels not achieved in the more than two decades competitive markets have been open, brought two solar-plus-storage facilities online, secured two large renewable power purchase agreements, and ended the year outperforming the high-end of our financial guidance.”
-Jim Burke, president and CEO of Vistra.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. One of the biggest analyst calls on Thursday, February 27, was for Tesla Inc. Morgan Stanley reiterated the stock as “Overweight”, stating that it is sticking with the shares of Tesla.
“My conversations with senior auto executives suggests it’s only a matter of time before superior Chinese EV technology is made on US shores. …. .Just our view… but the most likely OEM [original equipment manufacturers] to help ‘transplant’ a Chinese EV maker into the US is Tesla.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $412 implies a 39.5% upside, however, the Street-high target of $1,000 implies an upside of 239%.
4. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 162
Salesforce, Inc. (NYSE:CRM) is a cloud-based CRM company that has gained popularity after the launch of its AI-powered platform called Agentforce. The company reported results for its fourth quarter and full fiscal year ended January 31, 2025 on February 26th. It’s earnings per share (EPS) of $2.78 beat the consensus estimate among analysts of $2.61. However, revenue for the quarter was $10 billion, which slightly missed Wall Street’s forecast of $10.04 billion.
Looking ahead, it also forecast fiscal 2026 revenue below Wall Street expectations, held back by the slower adoption of its Agentforce platform. The company expects its revenue to be between $40.5 billion and $40.9 billion, compared to the average analysts’ estimate of $41.35 billion, according to data compiled by LSEG. This downward forecast reflects on how the spending environment remains pressured, and that enterprises are restraining from new financial commitments amid still-high interest rates and economic uncertainty. Nevertheless, Mark Benioff, Chair and CEO, Salesforce, remains optimistic about the company.
“We had an incredible quarter and year, with strong performance across all our key metrics, including the highest cash flow in our company’s history and more than $60 billion in RPO. No company is better positioned than Salesforce to lead customers through the digital labor revolution. With our deeply unified platform, seamlessly integrating our Customer 360 apps, Data Cloud and Agentforce, we’re already delivering unprecedented levels of productivity, efficiency and cost savings for thousands of companies.”
-Marc Benioff, Chair and CEO, Salesforce.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On February 27, BofA raised the firm’s price target on the stock to $200 from $190 and kept a “Buy” rating on the shares. The rating upgrade comes after Nvidia’s Q4 earnings beat and a 78% year-over-year sales growth despite headwinds such as DeepSeek, the Blackwell transition and China restrictions.
The analysts told investors in a research note that Q4 included almost $11B of Blackwell sales, well above the $4B-$7B expectations. This provides reassurance that the product is on track. The firm has reiterated Nvidia as a “top pick” stating that the company “remains in a dominant position of leading the AI market.”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On February 27, The Wall Street Journal reported that Microsoft will be calling for President Donald Trump’s team to loosen the limits on chips used in data centers for training AI models so they no longer apply to a group of U.S. allies.
According to the report, the proposal will mention allies such as Switzerland, Israel, and India, which is going to be published in Microsoft’s blog post scheduled to release on Thursday. WSJ stated that Microsoft believes that the expanded export restrictions may lead to allies facing limited U.S. chip supply, turning to China.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On February 26, Amazon reached a major milestone where it unveiled the first major overhaul of its Alexa voice assistant since its introduction more than a decade ago. Embedded with generative artificial intelligence, the new service Alexa+ runs on Amazon’s own and Anthropic’s large language models. The service is free for Amazon Prime members and is priced at $19.99 a month for non-Prime users. It will be available in March to some users, rolling out to more people over time.
“Alexa knows almost every instrument in your life, your schedule, your smart home, your preferences, the devices you’re using, the people you’re connected to, the entertainment you love and uses many of the apps you use, a lot of the services you need”.
-Panos Panay, Amazon’s head of devices and services, at a launch event in New York.
Panay revealed that Alexa+ can store customer preferences, and can be used to make dinner reservations and send timed texts or reminders. It can also be connected to Amazon products such as Ring doorbells to show recordings from its cameras, amongst other things.
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