On Tuesday, October 21, Lauren Taylor Wolfe, co-founder of the activist investment firm Impactive Capital, appeared on CNBC’s “Squawk on the Street” to talk about the excitement around artificial intelligence (AI). She said this surge in enthusiasm around AI has all the signs of a bubble that is eventually going to burst.

Taylor Wolfe said:

“I don’t know when, I don’t know the order of magnitude. A lot of people are going to lose money.”

She pointed out that a lot of money is being spent by major technology companies, but investors might be underestimating the risks that come with this surge in AI-related spending. Taylor Wolfe said that trillions of dollars are being set aside for AI investments and this compares to hundreds of billions of dollars in free cash flow generated by the “Mag 7,” which are the large technology stocks that dominate the S&P 500. She noted that these companies are “going to have to borrow to invest in all this CapEx, and we have yet to see the returns on investment.”

Taylor Wolfe said:

“Show me the trillions of dollars of profits that are going to be generated in the next five years. And you just can’t. The math doesn’t work.”

She believes the current market environment can be compared to the late 1990s dotcom bubble, when investors invested in any company associated with the internet without taking into account their value or business model.

On the other hand, some experts do not completely agree with her. Joseph Briggs, an economist at Goldman Sachs, said in a note on October 16 that the surge in investments in AI infrastructure in the US is sustainable. He believes that the overall macroeconomic case for AI investment is still strong. However, Briggs also warned that it is not very clear which companies will be the ultimate winners since technology is changing fast.

With this background in mind, let’s take a look at the 10 best American AI stocks to buy according to analysts.

Our Methodology

To compile our list of the 10 best American AI stocks to buy according to analysts, we looked for the largest and most popular AI companies. We reviewed Insider Monkey’s database of prominent AI stocks and various online resources to compile a list of the best American stocks in the AI market. Next, we focused on the top 10 stocks that analysts believe have the most potential for growth. Finally, we ranked the 10 best American AI stocks to buy based on their average price target upside potential according to analysts as of October 22, 2025.

Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s Q2 2025 database of 983 elite hedge funds.

Why do we care about what hedge funds do? 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).

10 Best American AI Stocks to Buy According to Analysts

10. AppLovin Corporation (NASDAQ:APP)

Average Price Target Upside Potential According to Analysts: 22.43%

Number of Hedge Fund Holders: 109

AppLovin Corporation (NASDAQ:APP) is one of the best American stocks to buy in the AI market according to analysts. On October 7, Oppenheimer reaffirmed its Outperform rating on AppLovin Corporation (NASDAQ:APP) with a price target of $740.

This decision comes after reports of the Securities and Exchange Commission (SEC) probing AppLovin Corporation (NASDAQ:APP) over its data-collection practices.

The SEC is investigating allegations that AppLovin Corporation (NASDAQ:APP) violated service agreements on pushing targeted ads to consumers, according to an October 6 report by Bloomberg that cites people familiar with the matter.

While acknowledging that AppLovin Corporation (NASDAQ:APP) has not been accused of wrongdoing, the report said that the SEC is responding to a whistleblower complaint filed this year and short-seller reports.

Oppenheimer also pointed out that a review of SEC Freedom of Information Act (FOIA) logs showed four more open requests on AppLovin Corporation (NASDAQ:APP) made by Bloomberg.

The research firm noted that this news could cause increased near-term volatility for AppLovin Corporation (NASDAQ:APP). However, Oppenheimer reiterated its long-term bullish thesis while stating that the firm’s outlook for the company is still intact.

AppLovin Corporation (NASDAQ:APP) is an American technology company that offers end-to-end software and AI solutions for businesses of all sizes to reach, monetize, and grow their audiences.

9. Astera Labs, Inc. (NASDAQ:ALAB)

Average Price Target Upside Potential According to Analysts: 23.91%

Number of Hedge Fund Holders: 56

Astera Labs, Inc. (NASDAQ:ALAB) is one of the best American stocks to buy in the AI market according to analysts. On October 17, Stifel increased its price target on Astera Labs, Inc. (NASDAQ:ALAB) from $174 to $185 while keeping a Buy rating.

Stifel expects Astera Labs, Inc. (NASDAQ:ALAB) to give a higher outlook for the December quarter and set another record in quarterly revenues.

The research firm believes that Astera Labs, Inc.’s (NASDAQ:ALAB) product mix will shift significantly for the calendar year 2025. The Aries PCIe retimers, which made up more than 90% of revenue in 2024, will account for about 72% to 77% of the company’s total revenue in 2025. Stifel expects new product lines such as the Scorpio Smart Switch Fabric and the Taurus Ethernet smart cable modules to make up more than 10% of the company’s revenue.

The firm expects Leo CXL smart controllers to account for less than 5% of Astera Labs, Inc.’s (NASDAQ:ALAB) revenue in 2025, which is higher than less than 1% in 2024. This shows the company’s expanding product portfolio.

Astera Labs, Inc. (NASDAQ: ALAB) is a semiconductor technology company that provides rack-scale AI infrastructure through purpose-built connectivity solutions.