Software stocks experienced a major selloff on Tuesday amid fears that the rapid advances in artificial intelligence will soon challenge the demand for traditional software licenses and workflows.
We are not yet at the point where AI agents will destroy software companies, especially given concerns around security, data ownership and use, but this market rout suggests the potential disruption that is on the cards for markets in the coming days, weeks and months. There is a lot of uncertainty around exactly what AI agents can do, and as such investors are choosing to shun the software market altogether, leaving nowhere to hide.
Ben Barringer, head of technology research at wealth manager Quilter Cheviot
Nvidia CEO Jensen Huang has dismissed these fears that AI will replace software and related tools, calling the idea “illogical.” Huang believes that worries related to AI making software companies less relevant are misguided and that the technology will continue to rely on existing software rather than rebuild basic tools from scratch.
There’s this notion that the tool in the software industry is in decline, and will be replaced by AI … It is the most illogical thing in the world, and time will prove itself, Huang said.
Huang asked if someone was a human or robot, would they rather use tools or reinvent them. The answer, Huang noted, is to use tools. This is why the latest breakthroughs in AI are about tool use, since the tools are designed to be explicit.
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 Q3 2025.
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10. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 76
Marvell Technology, Inc. (NASDAQ:MRVL) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Benchmark analyst Cody Acree reiterated a Hold rating on the stock, maintaining its forecast with no FY27 change.
Bechmark’s rating follows Marvell’s Monday announcement that it has completed its previously announced acquisition of Celestial AI, an optical interconnect technology supplier for scale-up connectivity.
The firm noted that its FY27 expectations remain unchanged as previously announced, with Marvell anticipating initial revenue from Celestial AI to begin in the second half of fiscal 2028.
The revenue will begin with a relatively small contribution in the third quarter of that year, before ramping to $125 million in the fourth quarter with a $500 million annualized run rate.
Benchmark added that at this point, revenue contribution should fully offset the dilutive impact of increased operating expenses, lower interest income, and increased share count dilution.
For fiscal year 2029, Marvell projects that revenue from Celestial AI to continue ramping throughout the year and to exit Q4FY29 at $250 million, or a $1 billion annualized run rate.
Marvell Technology, Inc. (NASDAQ:MRVL) develops and manufactures semiconductors, with a heavy focus on data centers.
9. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 81
Palantir Technologies Inc. (NASDAQ:PLTR) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Deutsche Bank analyst Brad Zelnick raised the price target on the stock to $200.00 (from $160.00) while maintaining a “Hold” rating. The firm sees shares as increasingly palatable but remains cautious on valuation.
The firm noted that even though it admires the company and this bias is reflected in its target price, valuation remains difficult to justify as investors increasingly scrutinize software companies for stock-based compensation.
Shares are increasingly becoming attractive at 70 times enterprise value to unlevered free cash flow based on 2027 estimates. However, including SBC this is more like 93x, which is why the firm hopes for a better entry point.
Deutsche Bank acknowledged the company’s growing $7.2 billion cash hoard alongside a relatively small $75 million share buyback planned for calendar year 2025.
We do believe the possibility of Palantir growing into its multiple is becoming more likely. Finally, we acknowledge the company’s growing $7.2bn cash hoard with a de minimis share buyback ($75mn in CY25) is attracting attention from shareholders desirous of capital returns. We remain Hold rated almost entirely on valuation and maintain our DCF-derive TP of $200.
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems.
8. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 110
AppLovin Corporation (NASDAQ:APP) is one of the 10 Buzzing AI Stocks on Market Radar. On February 2, Piper Sandler analyst James Callahan reiterated an Overweight rating on the stock with an $800.00 price target. The firm believes fears related to META bidding and Google’s Genie are overblown, noting valuation as compelling.
Citing positive gaming trends, the firm noted sellers.json total supply growth at the company remains consistent at an estimated 30% year-over-year. Moreover, app-ads.txt data appears to be consistent with AppLovin’s commentary that volume across MAX is growing at least low-double digits year-over-year.
Piper Sandler discussed Friday’s selloff, noting how it coincided with Google launching a beta of general-purpose world model known as Project Genie. There were also industry reports that Meta may be bidding more aggressively on off-platform mobile gaming inventory.
Project Genie is an AI-driven platform, currently a research prototype, which enables users to create gameplay worlds from text and images without relying on a traditional game engine.
According to the firm, Project Genie isn’t much of an issue but the META situation appears to be more controversial. It suggests that it’s likely too early to characterize these as more than tests.
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology.
7. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 122
Oracle Corporation (NYSE:ORCL) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Scotiabank analyst Pat Colville lowered the price target on the stock $220 (from $260), maintaining a “Sector Outperform” rating. Despite some bottlenecks, the firm has expressed its confidence in Oracle’s GPUaaS strength and capital access.
The firm highlighted Oracle’s recent $45-50 billion capital plan, which it believes will help remove some investor concerns about the company’s massive Oracle Cloud Infrastructure (OCI) buildout.
We shift down our EPS by 0.6% / 2.5% in F26E and F27E. Our analysis points to this capital giving Oracle runway through early F28, nonetheless lingering medium-term financing questions remain.
Several factors are needed for Oracle shares to perform better, Scotiabank noted, which includes execution on five large-scale data center projects currently under construction, confidence in OpenAI’s ability to meet its Oracle commitments, and whether OpenAI can show meaningful progress on a new foundation model.
The firm said that it likes Oracle’s positioning due to its technical expertise, capital raising ability, and independence from competing with its AI customers.
Many Oracle observers ‘want to see it to believe it,’ but we like Oracle’s positioning given its technical expertise in GPU-as-a-service, incredible ability to raise capital, and independence from competing with its AI customers. Oracle is in a tidy 4th spot in AI Accelerated Cloud, see pg 3–4, and well placed to capitalize on the supernova of demand for NeoCloud. We like the risk/reward.
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is one of the 10 Buzzing AI Stocks on Market Radar. On February 2, Evercore ISI analyst Amit Daryanani reiterated an Outperform rating on the stock with a $330.00 price target.
The firm noted Apple’s App Store revenues for January growing 7% year-over-year, a modest acceleration from 6% the previous month. Gaming revenues posted a third consecutive month of year-over-year declines, pressured by broad-based weakness across major markets such as China, Japan, US, and South Korea.
Notably, the year-over-year compare was tough here, with Jan. 2025 revenues growing +9%, though moving forward, Gaming revs will see easier comps through the rest of H1:CY26.
In contrast, the firm noted how revenues in other five categories that it tracks grew double-digits, led by music, photo and video, social networking, and entertainment. This helped to offset the softness in gaming, which remains the largest segment.
Gaming remains the largest category of App Store revenues at 45%, though excluding it from January data, remaining aggregate revenues would’ve grown +17% y/y.
By region, US App Store revenues grew an estimated 3% year-over-year, while App Store revenues in the second and third largest geos, China and Japan, declined 1% year-over-year. Overall. App Store revenue grew modestly month-on-month, rising 7%.
Meanwhile, gaming continues to remain a headwind to sales due to tougher year-on-year comparisons, but the firm has highlighted robust growth in other major categories that it tracks (remaining aggregate revs up +17% y/y).
We expect AAPL to continue to benefit from faster growing areas (Apple Pay, iCloud, Licensing, etc.), helping to offset <10% growth in App Store revs. Maintain OP and $330 target.
Apple is a technology company known for its consumer electronics, software, and services.
5. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 219
Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Bernstein SocGen Group analyst Mark Shmulik raised the price target on the stock to $335 (from $305) while maintaining a Market Perform rating. The firm recognizes strength across verticals for Alphabet, but also notes competitive pressures limiting upside.
The firm believes that Google has turned into a safe harbor for investors, appealing to those worried of an AI bubble. These are those that are bullish on the AI sector but are cautious about OpenAI.
Bernstein noted strong execution for Alphabet across all verticals, including AI, search, Cloud, and YouTube. The firm also highlighted management’s assurance that AI products are expanding search opportunities for the company without diluting monetization.
Moreover, advertising checks and engagement point to a robust Q4 setup, supported by positive signals from Meta’s earnings as well as foreign exchange tailwinds.
Analysts further noted how competitive threats coming from the likes of TikTok and ChatGPT are more prominent on smaller platforms than core search. However, valuation has grown stretched as investors’ crowd into the stock. Another reason is that competition across AI and search such as OpenAI, Meta, Anthropic, Amazon, and the Chinese players imply that Google’s dominance may face renewed challenges.
We remain Market-Perform, PT $335/share (+$30). We value Alphabet using a 50/50 combination of 2027e EV/EBIT multiple of 24x (+1x) and a DCF using a WACC of 10% and a terminal growth of 3.5%. We take up Google Cloud estimates and slightly tweak OpEx and DCF assumptions. We allocate higher multiple to reflect Google’s solid execution across verticals. We consider Alphabet primarily a digital advertising business and benchmark valuation to comparable peers in this industry set.
Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 234
NVIDIA Corporation (NASDAQ:NVDA) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Morgan Stanley reiterated Nvidia and Broadcom as “Overweight.” The firm is sticking with both stocks, slightly favoring Nvidia due to a lower AI valuation multiple.
We prefer NVDA at the margin – materially lower P/E multiple on the AI component – but we are positive on both at this level, this is not zero sum. … .We have been somewhat surprised at AVGO’ s underperformance YTD after a weak close to 2025, and similar to NVIDIA, one of our biggest FAQs so far this year has been on what the cause of that underperformance is, and how those overhangs can be resolved positively or negatively in 2026.
Analysts on Wall Street have a consensus “Buy” rating on the stock. The average price target of $250 implies a 38.6% upside; however, the Street-high target of $432 implies an upside of 139.98%.
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: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Freedom Capital Markets analyst Saken Ismailov raised the price target on the stock to $825.00 (from $800.00) while maintaining a Buy rating. The rating affirmation follows Meta’s fourth-quarter 2025 results.
The tech giant reported earnings that topped estimates and issued stronger-than-expected sales guidance. The company exceeded consensus expectations across all key metrics, the firm noted.
In particular, the company’s top-line growth was supported by record holiday-season demand and AI-driven improvements in ad efficiency. While AI infrastructure capital expenditure did significantly increase as well, Meta’s free cash flow generation was higher than market expectations.
Looking ahead, company management offered optimistic guidance for the first quarter of 2026, reaffirming that absolute operating profit in 2026 will exceed 2025 levels.
The firm particularly highlighted that investors have been reassured that rising capital expenditures are disciplined based on AI-enabled advertising strength and explicit profit targets. Advertising monetization is anticipated to drive returns over time.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 312
Microsoft Corporation (NASDAQ:MSFT) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Piper Sandler analyst Billy Fitzsimmons reiterated an Overweight rating on the stock with a $600.00 price target. The firm sees Microsoft as a top AI play, highlighting positive sentiment on Azure and Copilot.
It mentioned that it prefers hyperscalers and select vertical software names in the current backdrop. Microsoft and ServiceTitan serve as its top picks within the group.
In particular, Piper Sandler views MSFT as one of the most compelling pure-play beneficiaries of enterprise AI adoption today. Feedback from the respondents to the firm’s CIO survey from the second half of 2025 show a modest incrementally positive activity for both Azure and Copilot.
Amid this backdrop, we like the hyperscalers and select vertical software names. Our top picks are MSFT and TTAN as a result. We see Microsoft as perhaps the best pure-play on AI adoption today. Respondents to our 2H25 CIO survey were incrementally positive on both Azure and Copilot activity. We would be buyers on the pullback post-F2Q26 results.
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: 332
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, UBS analyst Stephen Ju raised the price target on the stock to $311.00 (from $310.00) while maintaining a Buy rating. The firm views AMZN as a coiled spring ahead of its 4Q25 results.
Amazon is scheduled to report its 4Q25 results on February 5, with the firm modestly raising its price target after rolling forward valuation assumptions by one quarter and increasing estimates for AWS revenue and Capital expenditures.
Highlighting plans to double capacity by 2027, the firm has raised its aggregated 4Q25-4Q27 CapEx estimates from $300B to $344B (AWS $225B to $260B). It noted that the market is yet to price in a scenario where AWS revenue doubles by 2028 following the step up in capital intensity. This, they estimate, could generate an additional $20 billion in free cash flow that year.
The firm further remarked that 4Q25 results mark the second quarter of AWS acceleration, expecting investor confidence to continue improving and supporting further outperformance.
As 4Q25 results marks the second quarter of AWS acceleration, we expect investor conviction to continue to rise and drive outperformance as capital continues to rotate into AMZN shares. And as we have called out before, the benefits of its other investments across all of e-commerce, content, and LEO – in the form of faster GMV, advertising, and data/access revenue – should also add to FCF upward revisions as well.
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.
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