According to Jefferies, the race for “sovereign AI” is gearing up as nations race to control artificial intelligence capabilities across data, infrastructure and algorithms.
“Sovereign AI refers to a nation’s ability to independently develop, deploy, and govern AI technologies,” the firm explained, emphasising that the model “ensures strategic control over AI capabilities” without necessarily requiring full government ownership.
The firm told investors how the AI arms race is heating up by the minute.
“China has narrowed its gap with the U.S. to 12 months,” aided by civil-military integration and partnerships with companies like Alibaba and Huawei, according to Jefferies.
Jefferies also noted how the EU’s GAIA-X project aims to reduce reliance on U.S. hyperscalers. However, “fragmented regulations” and slower innovation hurdles persist.
Middle powers, such as Saudi Arabia and the Middle East, are known to be emerging as “strategic players.”
Noting on its benefits and risks, the firm said sovereign AI offers stronger national security, economic growth, and innovation, but also comes with “high infrastructure costs, fragmented innovation,” data bias from localized datasets, and limited talent diversity.
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 Q1 2025.
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10. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 57
International Business Machines Corporation (NYSE:IBM) is one of the 10 Buzzing AI Stocks on Wall Street. On August 14, Erste Group analyst Hans Engel downgraded the stock from Buy to Hold, reflecting the challenges IBM is facing in accelerating its revenue growth to contest broader technology sector performance.
According to the analysts, IBM’s sales growth is “well below” the sector average which isn’t expected to change this year. They believe that current valuation is “high in view of the below-average growth prospects.”
“IBM’s sales growth is well below the sector average. This is not expected to change this year either. The Group’s latest forecast for 2025 assumes moderate revenue growth of at least +5% (y/y). The free cash flow forecast has been left at USD 13.5 bn. The current P/E ratio of the stock is high in view of the below-average growth prospects.”
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.
9. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 61
Coherent Corp. (NYSE:COHR) is one of the 10 Buzzing AI Stocks on Wall Street. On August 14, Northland raised the firm’s price target on the stock to $105 from $95 and kept an Outperform rating on the shares. The rating affirmation follows “slightly better” than expected fiscal Q4 results.
According to the analysts, Coherent headed into earnings trading at a 35% discount to peers Lumentum and Fabrinet (FN).
However, it noted that “the kind of revelry” seen from Lumentum this earnings season “was not in evidence.” The firm further said that it “would look to take advantage of sharp after market weakness in the shares.”
Coherent Corp. (NYSE:COHR) is an American manufacturer of optical materials and semiconductors.
8. CyberArk Software Ltd. (NASDAQ:CYBR)
Number of Hedge Fund Holders: 64
CyberArk Software Ltd. (NASDAQ:CYBR) is one of the 10 Buzzing AI Stocks on Wall Street. On August 15, Cantor Fitzgerald analyst Jonathan Ruykhaver reiterated an Overweight rating on the stock with a $470.00 price target. The reiteration follows the company’s early release of its second-quarter 2025 results.
Cantor noted how CyberArk’s second-quarter results have been steady but that it didn’t provide any guidance update due to the pending acquisition by Palo Alto Networks.
The proposed acquisition, valued at $25 billion, will enhance Palo Alto’s platform by leveraging CyberArk’s best-in-class PAM and agentic identity capabilities.
“The deal strategically enhances Palo Alto’s platform by adding CyberArk’s best-in-class PAM and agentic identity capabilities, bolstering its identity security and AI-driven SecOps offerings. While regulatory scrutiny and integration risks exist given the scale and cultural differences, the acquisition aligns with broader industry consolidation and Palo Alto’s goal to expand its platform and customer base.”
CyberArk Software Ltd. (NASDAQ:CYBR) develops, markets, and sells software-based identity security solutions and services.
7. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 63
Dell Technologies Inc. (NYSE:DELL) is one of the 10 Buzzing AI Stocks on Wall Street. On August 15, Evercore ISI analyst Amit Daryanani raised the price target on the stock to $160.00 (from $150.00) while maintaining an Outperform rating.
According to the firm’s supply chain checks, there is potential upside to Dell’s artificial intelligence server momentum through fiscal year 2026 and probably beyond.
The company’s guidance also points to major gains in Dell’s AI server revenues. The firm further highlighted how demand momentum remains strong with multiple Tier-2 cloud players driving upside.
Dell’s key customers include xAI and Coreweave. The company is also ramping up capacity with Oracle as well.
“DELL’s formal guide for AI server revenues stands at $15B+ for the year and DELL expects to ship ~$7B of AI servers in July-qtr. Our checks suggest that momentum remains fairly strong with multiple Tier-2 cloud players driving demand upside (DELL’s key customers are xAI and Coreweave), and DELL is incrementally ramping up capacity with Oracle as well. We think conservatively DELL could end-up seeing AI server revenues in the $17-20B (implying $4.1B-$5.6B quarterly rev run-rate in H2) range for the year vs. current expectation of $15B+. The upside is coming from incremental allocation at key neo-cloud partners coupled with new customer ramps. There is an element of upside being driven by improved GB200 rack supply that is driving better availability for high-end NVL72 racks.”
Dell Technologies Inc. (NYSE:DELL) provides IT solutions, including servers, storage, networking, and personal computing devices, to businesses and consumers worldwide.
6. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 82
Cisco Systems, Inc. (NASDAQ:CSCO) is one of the 10 Buzzing AI Stocks on Wall Street. On August 14, Piper Sandler analyst James Fish lowered the price target on the stock to $64.00 (from $70.00) while maintaining a Neutral rating.
Fish noted how Cisco’s quarterly results were roughly in-line, and that FY26 guide came in below what bulls were hoping for. This is raising questions about “peak growth x peak multiple” being already seen, with second half of 2026 guide implying less than 5%.
However, the firm believes that the narrative for Cisco remains unscathed owing to artificial intelligence.
“However, the narrative here remains unscathed, as Cisco will see the ~$1B AI orders in F2H25 flow into FY26 revenue, further AI-infrastructure spend (including across customer-bases), campus refresh, datacenter refresh & modernization, growing Enterprise & Neoclouds traction, and Splunk cross-sell and cost-synergies. FY26 guide looks about how we anticipated and realistic, particularly for an incoming CFO. The debate from here will be sustainability, and while we remain optimistic around the narrative across multiple fronts, even an upside numbers scenario is already embedded in the stock at these levels. Reit. Neutral, PT to $70.”
5. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 91
Intel Corporation (NASDAQ:INTC) is one of the 10 Buzzing AI Stocks on Wall Street. On August 15, Bernstein SocGen Group analyst Stacy Rasgon reiterated a Market Perform rating on the stock with a $21.00 price target.
The rating affirmation follows news from Bloomberg that the Trump administration is discussing taking up a stake in Intel. The reported talks stemmed from Intel CEO Lip-Bu Tan’s meeting with Trump earlier in the week, with the proposed funding intended to speed up Intel’s Ohio efforts.
Bernstein believes that the hope trade on Intel is back, but investors will have to wait around and see whether “Trump Can Make Intel Great Again”.
“Yesterday just before the close, Bloomberg reported that the Trump administration was discussing taking a stake in Intel . The article suggested the plans stemmed from Intel CEO Lip-Bu Tan’s meeting with Trump earlier this week , with funding supposedly to help shore up Intel’s Ohio efforts (currently paused). Bloomberg also indicated that no decisions have been made yet, and that talks could end with no agreement. Both Intel and the administration have at this point supposedly declined comment. Overall though the hope trade on Intel is probably back (for now) as investors wait to see if Trump can Make Intel Great Again (though there is, as always, huge uncertainty around anything this administration does, and we are still not hugely tempted to get involved…). We rate Intel Market-Perform, $21 PT.”
Intel Corporation (NASDAQ:INTC) designs and sells computing hardware, semiconductor products, and AI-driven solutions for various industries.
4. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 104
Tesla, Inc. (NASDAQ:TSLA) is one the 10 Buzzing AI Stocks on Wall Street. On August 15, Bank of America reiterated the stock as “Neutral” stating that the company is making “strides” in expanding its robotaxi network.
“In addition, TSLA is taking first steps needed for entrance into other markets including: New York City, Phoenix, Miami, San Francisco/Bay Area, and Nevada. … Although we think the goal of reaching half the US population by the end of the year is ambitious given regulatory hurdles and need for a safe rollout, these are encouraging signs.”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advance.d artificial intelligence in its autonomous driving technology and robotics initiatives.
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 140
Salesforce, Inc. (NYSE:CRM) is one of the 10 Buzzing AI Stocks on Wall Street. On August 15, DA Davidson upgraded the stock to Neutral from Underperform with an unchanged price target of $225.
According to the firm, declining investor sentiment is appropriate for a business whose organic growth in its core business is decelerating along with mounting competitive pressure.
However, Starboard has increased its stake in Salesforce by 47% this quarter and “another round of activist involvement may help the company correct course.”
Upgrading the stock, the firm said the “challenges” are already priced in for Salesforce.
“We are upgrading our rating to NEUTRAL from Underperform and maintaining our $225 price target based on 18.5x our updated FY27 EPS estimate.”
Salesforce, Inc. (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce.
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 186
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the 10 Buzzing AI Stocks on Wall Street. On August 15, Bernstein SocGen Group analyst Mark Li reiterated an Outperform rating on the stock with a $249.00 price target.
The firm’s analysis is a reflection of TSMC’s significant position in the semiconductor equipment market.
Investors are paying close attention to TSM’s spending plans as they impact semiconductor equipment stocks, the broader chip industry, and AI. Bernstein noted that a substantial portion of TSMC’s capital expenditure is allocated to infrastructure and non-wafer-based equipment, such as packaging and testing technologies.
The firm also noted how WFE-to-semiconductor ratio remains elevated due to on shoring trends and technological complexity. Recent data illustrates that capital expenditure per wafer is also rising more rapidly than previously anticipated.
TSMC’s spending is deflationary while China’s is inflationary. With the US pushing companies to bring production back home, it is unclear whether it will be as aggressive as China.
“TSMC is 15-25% of the global wafer fab equipment (WFE) market, but China is 30-40%, as a sizable part of TSMCs capex is for infrastructure & non-wafer-based equipment (e.g. for packaging & testing). 15-25% is consistent with TSMC being10-20% of their total revenue disclosed by AMAT & TEL & 30-40% by ASML.
Technology complexity & onshoring trend will keep the overall WFE/semi ratio elevated if not higher. Recent data suggests capex per wafer is rising more rapidly than we thought. More importantly TSMCs deflationary but China is inflationary & much bigger. The US uses tariffs, etc. to push onshoring capacity but also grants exemptions. This motivates companies/countries to over-promise & under-deliver. Time will tell if the US will be as forceful as China to make the US as meaningful to WFE.”
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells advanced chips used in artificial intelligence applications.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 212
NVIDIA Corporation (NASDAQ:NVDA) is one of the 10 Buzzing AI Stocks on Wall Street. On August 15, Morgan Stanley reiterated the stock as “Overweight” stating that Nvidia’s Rubin chip is on track and that investors should remain calm.
“The chips and their system design should be finalized next March, with the chip entering mass production in 2Q26, followed by server racks ramp in 3Q26. So it appears there will be no delay to the Rubin schedule, despite some investor concerns.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $192 implies a 6.4% upside; however, the Street-high target of $250 implies an upside of 38%.
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
While we acknowledge the potential of NVDA 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 NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 10 AI Stocks in the Spotlight Today and 10 AI Stocks Analysts Are Tracking Closely.
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