According to Goldman Sachs, artificial intelligence spending is anticipated to go higher this year. However, investors are likely to become more selective about AI stocks.
The firm’s research has noted how the consensus estimate among Wall Street analysts for the tech hyperscaler’s 2026 capital spending is now $527 billion, up from $465 billion at the start of the third-quarter earnings season.
While investment has indeed surged, investors are becoming selective about the stocks they are investing in, shifting away from infrastructure heavy companies whose operating earnings growth is under pressure and capex is being funded via debt.
Instead, companies that are now being favored are ones that can clearly translate AI spending into revenue growth.
“The combination of continued corporate AI adoption and growing concerns about the AI infrastructure complex has increased recent investor focus on the next beneficiaries of the ever-expanding AI trade.”
-Goldman Sachs Research analyst Ryan Hammond.
While AI investment is anticipated to expand in the year ahead, the market is entering a more selective phase. It seems that companies that can demonstrate clearer revenue and productivity gains will be favored more than pure infrastructure plays.
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.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 33
Baidu, Inc. (NASDAQ:BIDU) is one of the 10 Must-Watch AI Stocks on Wall Street. On January 12, Benchmark analyst Fawne Jiang raised the price target on the stock to $215.00 (from $158.00) while maintaining a “Buy” rating. Firm analysts view the Kunlun spinoff and Robotaxi valuation reset as key catalysts for SoTP re-rating.
Baidu recently announced a proposed spinoff and separate listing of Kunlunxin (Beijing) Technology Co., Ltd., a non-wholly owned subsidiary of the Company, on the Main Board of the Hong Kong Stock Exchange. Kunlunxin is Baidu’s artificial intelligence chip subsidiary that Baidu plans to spin off as more domestic chipmakers are seeking funding amid Beijing’s drive for semiconductor self-sufficiency.
According to Benchmark, their price target raise for Baidu is reflection of clearer catalysts that will allow unlocking value from Baidu’s underappreciated assets, leading to a SoTP re-rating. The AI chip subsidiary Kunlun spin-off is particularly seen as a significant catalyst by the firm.
“In particular, we view the upcoming Kunlun spin-off as a major catalyst and have updated our SoTP to incorporate Kunlun’s value, which was not previously reflected in our valuation. We have also revised our Robotaxi valuation following recent capital raising.”
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. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 36
Rivian Automotive, Inc. (NASDAQ:RIVN) is one of the 10 Must-Watch AI Stocks on Wall Street. On January 12, Wolfe Research analyst Emmanuel Rosner downgraded the stock from Peerperform to Underperform, setting a price target of $16.00. Firm analysts see higher cash burn, rising losses, and limited near-term catalysts for the stock.
Rosner noted how the near-term and long-term fundamental setup for the stock has deteriorated, but that there is excitement around RIVN’s Autonomy platform which has led to a surge in shares.
However, the firm estimates an EBITDA loss of $2.1 billion, wider than Street estimates. Free cash flow burn is also seen exceeding $4 billion, as capital/operating and working capital headwinds intensify. Analysts further flagged demand for its R2 model, with volumes likely skewed to Q426.
“Meanwhile, and unlike TSLA, we do not expect many Autonomy / AI-related potential catalysts, with key launches set for late-2026.”
Rivian Automotive, Inc. (NASDAQ:RIVN) is an automaker that creates and manufactures electric vehicles, as well as software and services.
Hedge Fund Resource Center