Even amidst the DeepSeek frenzy, artificial intelligence remains the most prevalent theme in the market today. Surging enterprise adoption, expanding use cases, and increasing artificial intelligence infrastructure have led to the AI surge. DeepSeek’s claims that its AI models are more efficient and less costly have now been deemed “largely understated” by several analysts and investors in the tech world. More importantly, tech giants continue their AI investment sprees, demonstrating that the global AI arms race is far from over.
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Recent earnings reports signify that the combined capital expenditures for these tech giants are set to exceed $320 billion in 2025. This is despite investors questioning whether such huge AI spending is even justified when AI models can be developed cheaper and more efficiently. These people are worried that the AI arms race may turn into an expensive gamble. Tech executives are not worried, however. According to them, cheaper artificial intelligence is only going to lead to a higher demand for AI products.
Some analyst firms seem to agree. Here is what Dan Ives from Wedbush Securities has to say:
“Huge week for Big Tech earnings as Zuckerberg, Nadella, Cook, and Musk doubled down on their AI visions and what this means for each of these tech stalwarts looking ahead,” he said in an X post last month. “This is an AI arms race and the Temu of AI DeepSeek not changing that…AI Revolution just starting.”
Even Sundar Pichai, Google’s CEO, has been all praises for DeepSeek, stating that it has done good work that showed how global artificial intelligence is. He stated how he previously anticipated that his company would be the leading player in the AI space, but noted that others would be there in that space too.
With AI investments soaring and competition heating up, the market continues to reward companies that demonstrate strong execution in the artificial intelligence sector. These companies are capitalizing on the AI boom through their strategic investments, market leadership, and strong earnings growth. Let’s move on to explore them.
For this article, we compiled an initial list of AI stocks using ETFs and financial media reports. From this pool, we selected the best-performing AI stocks based on their year-to-date (YTD) performance, as of February 14. These stocks are also popular among hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
Stock market data. Photo by Jakub Zerdzicki on Pexels
10. Micron Technology, Inc. (NASDAQ:MU)
Year-to-Date (YTD) Performance: 18.25%
Number of Hedge Fund Holders: 107
Micron Technology, Inc. (NASDAQ:MU) is a US-based innovative memory and storage solutions provider. On February 13, Wells Fargo analyst Aaron Rakers maintained a “Buy” rating on the stock and set a price target of $140.00. Despite Micron lowering its gross margin guidance for the upcoming quarter attributed to lower pricing and a higher mix of consumer products, analyst firms such as Wells Fargo and Citi remain optimistic about the stock.
This is because they are counting on Micron’s operational strategy, particularly its anticipated increase in bit shipments and revenue growth. The company also boasts stable DRAM data center demand and is making considerable progress in the High Bandwidth Memory (HBM) sector. Wells Fargo also highlighted Micron’s plans to ramp up 12H stack production. Moreover, Citi also remains optimistic about Micron due to its artificial intelligence high bandwidth memory opportunity. It strongly believes that the DRAM market will recover during the spring.
9. International Business Machines Corporation (NYSE:IBM)
Year-to-Date (YTD) Performance: 18.86%
Number of Hedge Fund Holders: 56
International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products. IBM shares have gained 19% year-to-date.
Last month, the company posted strong Q4 results with artificial intelligence growth boosting its software business. It posted adjusted earnings of $3.92 per share on $17.55 billion in revenue, while analysts polled by LSEG had expected earnings to come in at $3.75 per share and revenues reaching $17.54 billion.
In particular, the company’s software business grew 10% year-over-year backed by growing artificial intelligence demand and its operating system known as Red Hat Linux. According to CEO Arvind Krishna, IBM posted $5 billion in bookings for its generative AI segment.
“We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat. Clients globally continue to turn to IBM to transform with AI.”
– CEO Arvind Krishna
8. Vistra Corp. (NYSE:VST)
Year-to-Date (YTD) Performance: 21.61%
Number of Hedge Fund Holders: 97
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. Another one of the best-performing AI stocks in 2025 has been Vistra, up 22% year-to-date. Driven by clean energy demand, its valuation has soared to $57 billion this year.
Vistra differs from other utilities due to its operations in unregulated power markets, setting it free from strict price controls. Naturally, this has granted the stock flexibility to capitalize on the energy demand coming from power-hungry AI-driven data centers. On November 15, JP Morgan stated that Vistra Corp. (NYSE:VST) is one of its top picks for 2025 based on its abundant potential for growth on the back of its huge production capacity.
Analyst Jeremy Tonet put an “Overweight” (i.e. Buy) rating on the stock with a $178 price target. The stock did plunge over 20% amid the DeepSeek frenzy but has since rebounded on the news of the Stargate initiative and the prospects of demand for energy for its data centers.
7. Meta Platforms, Inc. (NASDAQ:META)
Year-to-Date (YTD) Performance: 25.82%
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. Meta has been the best performer out of all the Mag-7 stocks, and with good reason. The company has effectively integrated artificial intelligence into its core advertising business.
February 14th marked the tech stock’s record winning streak of 20 consecutive trading days, propelling the stock to a record-high. A key driver for Meta’s momentum has been CEO Mark Zuckerberg’s announcement that the company will be spending $60-$65 billion in AI infrastructure investments for 2025. Zuckerberg has dubbed 2025 to be a “defining year for AI”. The company is also making a push into AI-powered humanoid robots.
6. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Year-to-Date (YTD) Performance: 32.03%
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection. Crowdstrike’s performance has appreciated by 32% year-to-date, making it one of the best-performing AI stocks in 2025.
On February 12, Truist analyst Joel Fishbein raised the firm’s price target on the stock to $460 from $385 and kept a “Buy” rating on the shares. With the effects of the July 19 global IT outage well behind, Crowdstrike has been a real show-stopper. In particular, its solid Q3 results, driven by more customers adopting its AI-native Falcon platform and increased demand for Falcon Flex deals, a flexible licensing agreement offering access to the entire CrowdStrike Falcon portfolio on a flexible basis, has driven the buy rating.
The firm also noted that Crowdstrike has built an adequate cushion in its guidance to account for delayed outbound prospecting which has since fully resumed and is rising to pre-incident levels of response.
5. Constellation Energy Corporation (NASDAQ:CEG)
Year-to-Date (YTD) Performance: 41.84%
Number of Hedge Fund Holders: 78
Constellation Energy Corporation (NASDAQ:CEG) is an energy provider specializing in clean, carbon-free energy solutions. It is a strong long-term investment in energy and artificial intelligence, and its year-to-date performance justifies this optimism.
On January 30, BofA lowered the firm’s price target on the stock to $366 from $380 and kept a “Buy” rating on the shares. The rating followed the broad market sell-off following news of the emergence of DeepSeek and its cheaper and more efficient AI models. Investors were concerned that DeepSeek’s models could drastically reduce the need for electricity to power data centers.
Analysts from BofA noted that the selloff was “an overreaction to this news”. The firm said that data center demand is likely to stay strong over the intermediate term, but there is “a lower probability of the mega growth bull case” over the longer term.
4. Super Micro Computer, Inc. (NASDAQ:SMCI)
Year-to-Date (YTD) Performance: 57.19%
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures modular server and storage solutions for enterprise, cloud, AI, and 5G markets, offering hardware, software, integration, and support services globally. The artificial intelligence server maker has risen 57.19% year-to-date, making it one of the best-performing AI stocks in 2025. On February 12, Northland analyst Nehal Chokshi raised the stock’s price target from $54 to $57 while maintaining an Outperform rating.
The firm highlighted how SMCI’s December quarter results and March quarter guidance were weak. However, it said that there are “multiple indications of SMCI wielding significant differentiation”, and believes that the company’s outlook for $40B in fiscal 2026 sales “is viable”. Moreover, Northland thinks that the company is well positioned for share gains in the generative artificial intelligence multi-trillion dollar opportunity.
3. AppLovin Corporation (NASDAQ:APP)
Year-to-Date (YTD) Performance: 57.53%
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP), provides a leading marketing platform powered by AI technology. AppLovin’s performance has been nothing short of phenomenal, attributed largely to its AI-powered advertising technology. On February 13, Bank of America Securities analyst Omar Dessouky reiterated a “Buy” rating and set a price target of $580.00 for the stock. Applovin’s strong performance and future growth potential, particularly the surprising success in Q4 largely driven by its Advertising segment, has led the firm to reiterate the buy rating.
Applovin’s AI Engine has also been effective in various eCommerce categories which in turn positively impacted the company’s financials. Even though Q1 guidance provided by the management has been conservative, ongoing advancements in self-learning models for eCommerce and gaming reflect optimism. The company also plans to launch a self-service solution by the first half of the year, expanding its reach to over 10 million global eCommerce merchants.
2. Palantir Technologies Inc. (NASDAQ:PLTR)
Year-to-Date (YTD) Performance: 57.56%
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. This AI star recently reported its Q4 earnings, posting a revenue of $828 million—beating expectations of $776 million and marking a 36% year-over-year increase. In particular, its AI platform has gained traction, with the company providing software and technology services largely for defense agencies. On February 11, Bank of America reiterated the stock as “Buy” with a $125 price target. The firm stated that Palantir is well positioned for “DOGE priorities”. Department of Government Efficiency, or DOGE, is a government organization that strives to modernize federal technology and software to improve government efficiency.
“For PLTR , we see the focus on operationalizing data, establishing high-fidelity digital enterprise-twins, and accelerating decision making as a winning formula. AI and data analytics are critical to unlock timely and better informed decision making – from cutting duplicative contracts, to improved logistics, to autonomous systems, to command, control and communications on the battlefield”.
1. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Year-to-Date (YTD) Performance: 102.70%
Number of Hedge Fund Holders: 7
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.
BigBear.ai tops our list of best-performing AI stocks in 2025. The stock has rallied a whopping 102.7% year-to-date. On February 5th, Cantor Fitzgerald analysts more than doubled their price target on the stock to $8 from a previous $3.50 target on the back of an impressive contract win and some board changes.
The stock recently surged after news emerged that DoD’s Chief Digital and Artificial Intelligence Office (CDAO) said it will advance the company’s Virtual Anticipation Network (VANE) prototype to full use. The company has also managed to secure a contract under the U.S. Department of Navy’s SeaPort Next Generation program. According to the firm, even though the fiscal third quarter of 2024 wasn’t impressive, the stock is still appealing due to its contract wins and strategic wins.
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