In this article, we will take a detailed look at the 10 Buzzing Stocks to Watch as AI Trade Makes a Comeback.
AI skeptics who had been sounding the alarm over demand concerns and calling the AI trade a bubble are on the retreat as mounting evidence points to strong demand and continued capital spending across the industry. Investors are cheering a new update from Nvidia in which the company said it will resume selling its AI chips in China. The company was previously informed by the US government of new restrictions on selling chips in the Asian country.
Mike Wilson, Morgan Stanley CIO and chief U.S. equity strategist, talked about the importance of Nvidia’s announcement for the company and the overall industry.
“That’s going to be a huge positive kick to margins, you know, going forward. And, you know, look, one of our big themes this year as we came in was that AI capex was going to slow, decelerate, and then all that troughed in April. And I think that explains a lot of the selloff in the first quarter and a lot of the recovery. It doesn’t get a lot of attention though. People are focused on tariffs, are focused on other things that are going on, but the AI capex cycle has been very important for the overall market direction. First down in the first quarter and then the recovery in the second quarter. And this deal or announcement I think is just more fuel to that fire.”
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
For this article, we picked 10 buzzing stocks these days. With each stock, we have mentioned the number of hedge fund investors. 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. Reddit Inc (NYSE:RDDT)
Number of Hedge Fund Investors: 72
Rich Greenfield, Lightshed Partners co-founder, explained in a recent program on CNBC how Reddit (RDDT) can benefit from the changing nature of the internet amid the rise of LLMs and AI search. The analyst believes companies need Reddit because of its extensive human-driven data.
“ChatGPT does not send a lot of traffic to Reddit Inc (NYSE:RDDT). Google actually still does. And yes, it’s been volatile and Google’s making changes with all of their algorithms, but if ChatGPT wants to keep access to Reddit Inc (NYSE:RDDT), and they need Reddit, like the key is Reddit is human information, like real information. When you look at what’s going to happen to the internet with less and less traffic being sent from search engines over to publishers, a lot of these sites that don’t have brand names, like people may still go to CNBC, but there’s a lot of sites on the internet that are going to get crushed by not having the Google funnel of search traffic being driven to them. So, a lot of the internet’s going to get a lot worse. That’s going to make Reddit Inc (NYSE:RDDT) more valuable to search engines as well as to LLM like ChatGPT or Gemini. So, I think they’re going to get paid a lot more money over the course of the next few years.”
Greenfield is right. With about 100 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models.
Maple Tree Capital stated the following regarding Reddit, Inc. (NYSE:RDDT) in its Q1 2025 investor letter:
“Reddit, Inc. (NYSE:RDDT) is Heartwood’s newest, and smallest, position. We anticipate growing this position in size over the coming quarters and years as the story parallels pretty closely to what we see in Grindr in the Jonagold portfolio. Reddit holds incredibly unique and structured user-generated data, which will be extremely valuable in the AI era. Additionally, their user base spends a ton of time on the app. It is far easier to monetize users if you have users! Reddit has spent decades acquiring a user base and is just at the beginning of their monetization journey. More people visit Reddit every day than they do Netflix. Their balance sheet is clean, but stock-based compensation and dilution are significant. We wrote a little more about Reddit here and expect to share more on our thesis shortly.”
9. DR Horton Inc (NYSE:DHI)
Number of Hedge Fund Investors: 67
Stephanie Link, CIO at Hightower, explained in a recent program on CNBC why she’s buying DR Horton Inc (NYSE:DHI) shares despite headwinds in the housing industry. Potential rate cuts in the upcoming months is one of the possible catalysts for housing stocks, she said.
“Because it’s cheap at 11 times forward estimates, I think the guidance that they gave with regards to margins and deliveries has been not kitchen synced, but it has come down to reasonable levels. I am intrigued with the interest rate move. We talked about the yields earlier today — they’re at 6-week lows. The 30-year fix is still high at 6.8% for mortgage. That has to come down, but I do think you will see that actually start to come down, and maybe, just maybe, we do get a rate cut in the fall. These stocks are going to fly.”
Parnassus Core Equity Fund stated the following regarding D.R. Horton, Inc. (NYSE:DHI) in its Q1 2025 investor letter:
“We also repositioned to increase our underweight in Consumer Discretionary by selling homebuilder D.R. Horton, Inc. (NYSE:DHI) amid uncertainty and increasing risk to housing fundamentals. D.R. Horton’s cycle risk is now more accurately priced in. Additionally, housing demand prospects in the areas where the company operates remain uncertain.”
8. Hilton Worldwide Holdings Inc (NYSE:HLT)
Number of Hedge Fund Investors: 76
Josh Brown, CEO of Ritholtz Wealth Management, recently talked about hotels and resorts company Hilton Worldwide Holdings Inc (NYSE:HLT) during a program on CNBC and called it a breakout stock. Here is how Brown made the case of the stock that’s up 12% so far this year.
“This is a potential breakout. It’s not quite in progress, but it’s getting very close. And I thought I’d spotlight this. Basically, we saw a golden cross happen as the stock climbed out of its Liberation Day lows. Hilton was in a 24% drawdown. Now, it’s back to within 4% of 52-week highs. Got that 50-day crossing back over the 200-day. Look, the sector itself — leisure, lodging, travel, service industries in the S&P — every single name, with one exception, is above its 50-day. The sector is just absolutely on fire. We talked about the cruise lines the other day, and Hilton should follow through here. Full-year guidance looked great, and that’s why the stock’s working. So, I think the 270s is where traders want to watch for that trigger. If it can get through the 270s on convincing volume, I think it’s a pretty good setup.”
7. Oracle Corp (NYSE:ORCL)
Number of Hedge Fund Investors: 97
Brad Reback, Stifel managing director, in a latest program on CNBC talked about his latest take on Oracle Corp (NYSE:ORCL) and explained why he’s bullish on the company. The analyst believes Oracle Corp (NYSE:ORCL) increasing spending will pay off mainly due to AI and Cloud.
“We think there’s plenty left in front of us. And really what got us over the hump here is the capex spending over the last couple of quarters had meaningfully accelerated, and our concern was that they weren’t going to be able to keep pace with the likes of the other hyperscalers. But with nine billion of spend in the last quarter, with capex expected to be up 4x this year from two years ago, it’s very clear they’re spending and that their backlog should convert into accelerating revenue growth here in the coming quarters, well on their way to getting to 20% revenue growth next fiscal year.”
Asked about the specific areas of potential growth for Oracle Corp (NYSE:ORCL), here is what the analyst said:
“It’s definitely the cloud, and that’s a combination of, as you just mentioned, cloud infrastructure, which is existing customers moving their Oracle databases to the cloud, be it Oracle’s cloud or Oracle running inside of hyperscaler clouds, and then increasingly AI. And then beyond that, they have a really significant level of SaaS apps that continue to grow at 20%. So when you bring it all together, Oracle’s cloud, which is approaching more — which is more than the majority of the revenue right now — is growing 40% year-over-year this year, expected, and should continue to sustain that pace going forward.”
ClearBridge Dividend Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its second quarter 2025 investor letter:
“Of course, what makes the ClearBridge Dividend Strategy unique is that we do not just invest in dividend stalwarts in communications services, energy, health care and consumer staples. Our flexible approach to dividends enables us to invest in stocks with lower upfront yields, provided they offer compelling risk/rewards and the companies can significantly grow their dividends. This is how we got to own Broadcom and Oracle Corporation (NYSE:ORCL), two of the best AI plays around, (in addition to Apple, Microsoft, Visa and others). But, unlike today, we built our positions in Broadcom and Oracle when their stocks embedded weak outlooks, not meteoric expectations (Exhibit 2).
We bought Oracle in September 2020 when it was trading 14x earnings and investors were sour on the name. It has likewise performed well. We have taken gains along the way but still hold a large, but measured position, of 2.2%. We would be better off had we not trimmed our holdings, but investing requires making decisions probabilistically, without perfect knowledge of how the future will unfold.”
6. Walmart Inc (NYSE:WMT)
Number of Hedge Fund Investors: 100
Scott Mushkin, founder and CEO of R5 Capital, called Walmart Inc (NYSE:WMT) the Nvidia of retail during a recent program on CNBC. The analyst said Walmart is one of his top picks.
“You know, that’s our top pick. We had a buy on it for about three years, took it off for a couple months, and then have reestablished it as a buy. It’s actually again our number one pick. Things are really changing at Walmart Inc (NYSE:WMT).”
Mushkin, however, talked more about the broader retail industry instead of Walmart Inc (NYSE:WMT) and talked about reasons for being cautious:
“Tariffs are definitely a factor. But we look at all of discretionary items. Another, you know, good figure is you look at furniture. Since 1995, volume purchases of furniture up 250%. So we don’t think consumerism is dead in the US. In fact, we think they’re really trying to get more of the fruits of the economy down to the bottom 90%, and be much less dependent on a top 10%’s purchases or consumption of imported goods. But we do wonder where that money, if this is successful, ultimately gets spent, and we’re cautious on discretionary generally speaking in the next 6 months. Again, I think that caution is still there even though the sector underperformed. You have very low population growth. You have tariffs coming on. So, you know, we remain very cautious on the industry. And then one other thing I would point out is competition — talked about Walmart, Amazon, Costco, the big three that are just consuming a lot of oxygen in the room.”
For fiscal 2026, Walmart expects earnings in the range of $2.50 to $2.60, which includes a $0.05 headwind from currency effects. At the midpoint, this implies just 1.59% year-over-year growth, down sharply from the 13.1% increase in FY2025.
5. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 104
Jed Dorsheimer, William Blair energy and power tech group head, recently talked about Tesla during a program on CNBC. He believes Trump’s new tax bill will directly impact the company.
“I mean it’s going to affect the cash flow of the business certainly. And so when you look at the combination of the $7,500, that just meant that the pricing of US vehicles are going to get more expensive. Or they’re going to have to cut the pricing in order to keep that same level of demand, and that will cut into margins and affect cash flow. And then the tax credits going away in terms of the zero emission — that, you know, is a direct hit to cash flow.”
Tesla’s EV sales are falling all over the world as the company faces challenges from competitors. Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
Macquarie Large Cap Growth Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2025 investor letter:
“At the individual stock level, the greatest contribution was attributable to not owning Tesla, Inc. (NASDAQ:TSLA), and our positions in Intercontinental Exchange Inc. (ICE) and Visa Inc. Tesla faced well-publicized headwinds last quarter that may bleed into future periods. This has remained a constant stock of debate among the investment community and is volatile as a result. The business has never met our quality standards and we are happy to sit on the sidelines of this battleground stock.”
