According to investment bank and financial services firm UBS, the artificial intelligence rally “remains underpinned by solid fundamentals, accelerating adoption, and a still-favorable macro environment.” This is despite of the looming concerns of a potential bubble in AI-related stocks.’
The bank pointed to recent developments in the tech world, stating how they bring in more reasons for optimism. From OpenAI and AMD’s new deal to Dell doubling its growth estimates, the deals “point to hundreds of billions in investment commitments, reinforcing the sector’s rapid capital deployment and pace of innovation.”
The firm did point out that volatility may still exist, and that investors should remain alert. Nevertheless, there are strong reasons for investors to remain engaged with the AI theme, it said.
“We anticipate global AI revenues will grow at a 41% compound annual growth rate through 2030, reaching USD 2.6 trillion.”
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 Q2 2025.
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. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 33
Baidu, Inc. (NASDAQ:BIDU) is one of the 10 Hot AI Stocks to Keep on Your Radar. On October 10, Macquarie upgraded the stock to “Outperform” from “Neutral” and raised the price target to $176 from $91.
The firm stated that it sees “hidden value” in the internet services company, particularly with its transition to diversified revenue streams. The company has been shifting away from its weakening search business because of increased pressure from competition with short-video and social platforms.
The company’s core advertising revenue is set to decline through late 2025, but the firm said that weakness is already priced in. That said, investors should shift their attention to newer growth drivers such as AI cloud services, robotaxis, and chips.
Baidu’s stock has surged 57% year-to-date driven by strength in its artificial intelligence (AI) cloud business and growing investor confidence in its Kunlun in-house AI chip.
The firm noted that Kunlun’s AI chips could make up for an estimated one-third of the company’s valuation as shipments ramp and China pushes for greater self-sufficiency in semiconductor production.
“We see Baidu pivoting towards more diversified revenue streams, with positive option value arising from both AI cloud and robotaxis.”
Baidu, Inc. (NASDAQ:BIDU) is a Chinese internet giant and AI pioneer, known for its noteworthy investments in artificial intelligence technology and its position as the dominant search engine within the country.
9. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 113
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 10 Hot AI Stocks to Keep on Your Radar. On October 10, TD Cowen reiterated the stock as “Buy” and raised its price target on the stock to $270 per share from $195.
The firm believes there may be more upside ahead from AMD’s partnership with OpenAI.
“Neutral into the print on AMD (Buy): This would be positive, but after the landmark deal with OpenAI sent shares up 64% on the week, and with its 11/11 analyst day coming, the beat/raise we expect is unlikely to be a major catalyst.”
A recent deal between the two will allow OpenAI to purchase billions of dollars’ worth of equipment to build out AI capabilities. In exchange, it may also take a 10% stake in AMD.
“While a formal partnership shouldn’t come as a total surprise given Sam Altman’s appearance at AMD’s AI event, and OpenAI’s insatiable demand for compute, the line of sight and magnitude was still shocking. Still obviously much to prove with the actual deployments, but we believe this should help assuage several investor concerns regarding AMD’s roadmap,”
-Analyst Joshua Buchalter
“Overall, we believe the partnership offers significant validation that AMD is meaningfully participating in the AI compute TAM along with NVIDIA.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
