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.”
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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.”
4. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Fund Investors: 150
MNTN CEO Mark Douglas recently talked about Netflix during a program on CNBC. He believes Netflix has an edge over its competitors.
“I think the biggest advantage Netflix Inc (NASDAQ:NFLX) always has, it’s the first place most people think to go when they turn on their TV. And—and it’s just an incredible advantage. We’ve talked about this before. It allows them to turn like a female fight, which typically in the past hasn’t had great ratings, into the one of highest rated fights of all time, another form of their live content. So, as long as you have consumers coming to you first, you want a mixture of these top tier shows, but you also want new content that isn’t that expensive to produce, like live programming, like dating shows, like, you know, um, soccer, football in Europe and things like that that you can produce and put out there and attract those viewers worldwide.”
ClearBridge Large Cap Growth Strategy stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its second quarter 2025 investor letter:
“Netflix, Inc. (NASDAQ:NFLX), one of the Strategy’s largest active weights, saw its shares rise due to overall continued robust execution with double-digit revenue growth, driven by a balance of subscriber growth and price, and continued margin expansion. We took some profits in the position but remain confident in the company’s long-term strategy, strong market position and attractiveness of the global streaming market.”
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 159
CNBC’s Dan Nathan, who is also the principal of RiskReversal Advisors, talked about a downgrade from Jefferies on Apple Inc (NASDAQ:AAPL) and said the company will face further headwinds in the second half of the year. The analyst appreciated the downgrade:
“I think that there’s not a lot of catalyst right here. And I think you could say, well, the sentiment’s really bad when you have someone like this guy who’s one of like five sells on the street — which is kind of weird for Apple Inc (NASDAQ:AAPL), by the way, that it has five sells. You look at the rest of the Mag 7, I think like 90% of the ratings are buys on all of them. So, you know, kudos to this guy, depending upon where he put it on.
There’s going to be a pull forward. I mean, the Q2 for a lot of these companies is going to be better than a lot of folks thought in early April, right, when they’re selling stocks or tripping over themselves to do so. But the back half of the year for a company like Apple Inc (NASDAQ:AAPL) is going to be a problem. They still don’t have an AI strategy. So that means that a product that has not been growing for the last three years is not going to grow again. I mean like, literally, they’re going to miss an entire year of a product cycle. So I think there’s probably better growthier places to be.”
Columbia Seligman Global Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q1 2025 investor letter:
“The fund maintained an underweight position in Apple throughout the quarter. Apple Inc.’s (NASDAQ:AAPL) stock pulled back during the first quarter, in line with the performance of many other technology stocks, and the company experienced some challenges of its own during the quarter. Apple delayed the release of an AI-upgraded Siri, claiming that the new Siri was taking longer to complete than the company expected, and it should come out later this year. The U.S. Department of Justice also stood firm — as it did during the prior administration — in asking a federal judge to block Google from paying Apple and other companies to secure its search engine as a default on smartphones and other devices.”
2. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 212
Lo Toney from Plexo Capital said in a recent program on CNBC that NVIDIA Corp (NASDAQ:NVDA) is a leader in the industry, but it will start seeing rising competition in the future
“You know, obviously there’s going to be other solutions that are available. We’re starting to see that. I think there’s going to be other options available for folks. But nonetheless, I think NVIDIA Corp (NASDAQ:NVDA) at this point, clear leader and setting the tone for things to come.
However, Toney believes NVIDIA Corp (NASDAQ:NVDA) will keep benefiting from strong demand despite competition:
“It would if it were the case that we believe that the growth was stalling out for AI. In fact, it’s actually increasing. So, I think with that bigger pie, NVIDIA Corp (NASDAQ:NVDA) will still play an important role, albeit even with increased competition.”
Nvidia shares rose after the company said it will soon resume selling H20 chips in China. With this update, the company has removed yet another hurdle in its stock growth. The demand for Nvidia chips is growing worldwide. Saudi Arabia’s Humain plans to buy more than 200,000 AI GPUs from Nvidia, potentially generating $15 billion in sales. The UAE reportedly has an agreement for up to 500,000 GPUs. Even without China’s involvement, Nvidia said nearly 100 AI factories are under construction. These factories have hyperscalers deploying 1,000 GB200 NVL72 racks weekly, each with 72,000 Blackwell GPUs.
Longriver Partners Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:
“This shift in capex priorities has reopened the debate over compute architectures. Custom silicon promises a way out of NVIDIA Corporation’s (NASDAQ:NVDA) pricing power, especially for inference. But the path is not straightforward.
For hyperscalers, the logic of custom silicon is clear. Nvidia’s pricing power is real and inference costs are spiralling. ASICs offer lower cost, better integration, power efficiency, and more control. But while this sounds ideal on paper, it is hard to deliver in the real world.
Custom chips work best when workloads are stable and scale is extreme. AI is neither. Models have evolved quickly, shifting, for example, from transformers to diffusion, and from instruction-tuned to multimodal. Fixed-function chips, by design, are not built to adapt. If the model shifts, their value evaporates. As one expert put it, “If you spend all this money building something and then you find out the workload changes underneath you, you’re basically stuck…” (Click here to read the full text)
1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 328
Mark Mahaney, head of internet research at Evercore ISI, recently said Amazon needs to show further AWS growth for stock outperformance.
“The retail business is important for Amazon.com Inc (NASDAQ:AMZN). It’s a necessary condition. I think for the stock to really outperform though, it will be the cloud business. You need to see acceleration in that in the back half of the year. I think we’re going to see that. If we’re wrong on that, the stock’s not going to outperform from here. The retail business also needs to show this continued expansion in margins. And you know the—I know we’ve sort of waxed off and on and now we’re off about tariff risk, but it’s still there and you know, Amazon.com Inc (NASDAQ:AMZN) need—and Amazon’s kind of the canary in the coal mine. Shoot, they may be the whole coal mine. I mean they’re going to give us a read into, and we’re going to be tracking pricing, for prices on products on Amazon.com Inc (NASDAQ:AMZN) and, you know, not these four days but as we go through the back half of the year and, you know, there is risk here.”
AWS revenue jumped 16.9% year over year in the last reported quarter, while its operating income rose 22.6%. AWS has now surpassed a $100 billion annual run rate, playing a central role in helping businesses modernize infrastructure, reduce costs, and accelerate innovation.
The market often overlooks Amazon’s ads business, which is generating more than $10 billion in quarterly revenue despite being built from scratch. In the first quarter, ad revenue rose 19% from a year earlier to $13.9 billion, continuing to support overall profitability.
According to some Wall Street estimates, Amazon is projected to earn $6.20 per share in 2025 and $8.95 in 2027, reflecting 44.4% earnings growth over two years.
Lakehouse Global Growth Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its May 2025 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) reported a solid quarterly result with net sales up 9% year-on-year (10% in constant currency terms) to $155.7 billion and operating profit up 20% to $18.4 billion. The company’s core e-commerce business remained resilient in the face of potential tariffs, with management noting they hadn’t seen any material change in consumer buying behaviour as at the end of April. Amazon web services (AWS) grew 17% to $29.3 billion which was a slight deceleration from the 19% delivered last quarter. Whilst this seems disappointing at first blush, management reiterated that demand is very strong they are still capacity constrained. Artificial intelligence (AI) continues to be a key growth driver with AI workloads growing in excess of 100% year-on-year on AWS. Overall, it was a positive result, and we remain confident that the company is set to deliver many years of solid revenue growth and margin expansion.”
While we acknowledge the potential of AMZN to grow, 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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