An increasing number of Wall Street analysts say the AI-fueled rally could continue, even as worries about high valuations and a possible bubble persist. Dan Niles, Niles Investment Management founder, said in a latest program on CNBC that AI stocks are “going to go up a lot” as the Federal Reserve is now in a rate-cut cycle. The analyst also talked about the potential impact of a change at the central bank:
“You’re going to get another probably three cuts between now and January and then you’re probably going to get Stephen Miran being the new head of the Federal Reserve in May and he wants rates about a percent and a half lower than everybody else. So in an environment of easy money, you’re going to be able to fund a lot of cash burning businesses and have these everybody be treated like everyone’s going to win,” Niles said.
Niles reiterated that AI investments are failing to generate strong ROI for now and this could lead to a potential “meltdown” in the future. However, the analyst believes “nobody cares” in the short term amid easy money and rising stock prices.
Photo by Chris Liverani on Unsplash
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For this article, we picked 10 stocks Wall Street analysts like. 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).
10. Construction Partners Inc (NASDAQ:ROAD)
Number of Hedge Fund Investors: 27
Kathryn Thompson, CEO of Thompson Research Group, said in a recent program on CNBC that Construction Partners Inc (NASDAQ:ROAD) is among the top under-the-radar AI stocks as the company will benefit from the infrastructure boom amid the data center revolution.
“Well, you’ve got the aggregate names CR, Martin, Vulcan, but you have to build a road to all of these um infrastructure projects. So, some off the-beaten path names could be Construction Partners Inc (NASDAQ:ROAD). We were told anecdotally of one job, 16 miles temporary road just to meet the needs of a new data center uh in Idaho. So, it’s stories like that you’re going to hear more from.”
Loomis Sayles Small Cap Growth Fund stated the following regarding Construction Partners, Inc. (NASDAQ:ROAD) in its second quarter 2025 investor letter:
“Construction Partners, Inc. (NASDAQ:ROAD) provides road building and paving services in the south/southeast region of the country. The company has been able to grow revenue in the mid-teens range through a combination of organic growth and M&A. This name outperformed during the quarter with a large M&A deal in Texas as well as other deals in existing markets that have accelerated revenue growth, all of which have led to higher revisions.”
9. Amkor Technology Inc (NASDAQ:AMKR)
Number of Hedge Fund Investors: 33
Nancy Prial, Co-CEO & Senior Portfolio Manager at Essex Investment Management, said in a latest program on CNBC that she likes AMKR amid several tailwinds and the company’s exposure to data centers.
“It’s both the AI trade and the reshoring of manufacturing in this country trade. We like it as a backdoor AI play. They’re a manufact they’re a supplier, sorry, of outsourced assembly and test. Think about advanced packaging that’s needed for these very sophisticated chips and these servers and the data centers. Um, and there will will be a full beneficiary of that. What’s particularly interesting about Amkor Technology Inc (NASDAQ:AMKR) is they’re building a big facility in the United States in Arizona. They’re partnered both with Apple as well as with Taiwan Semiconductor. It’s the only outsource assembly and test manufacturing with a significant presence in the United States while also having presence overseas. So, we think they’ve got a number of tailwinds. And I would remind everybody that semiconductors are the backbone of technology. We can’t have any of the advances we’re excited about, whether it’s quantum, space, robotics, AI, without semiconductors to drive those advances.”
8. Vulcan Materials Co (NYSE:VMC)
Number of Hedge Fund Investors: 59
Kathryn Thompson, CEO of Thompson Research Group, said in a latest program on CNBC that she likes VMC due to the company’s AI and data center exposure. Here is what the analyst said:
“The thing is that there’s been a lot of talk about AI for the past couple of years, but the first companies to see it are actually the heavy material companies. Vulcan Materials Co (NYSE:VMC) said they have $35 billion of projects that are directly related not only to AI and data centers but also to the energy buildup.”
Macquarie Core Equity Fund stated the following regarding Vulcan Materials Company (NYSE:VMC) in its second quarter 2025 investor letter:
“Vulcan Materials Company (NYSE:VMC) is the largest producer of construction aggregates (crushed stone, sand, and gravel) and a major producer of asphalt and ready-mixed concrete in the US. We are attracted to Vulcan’s oligopoly status across most major markets it serves, allowing for rational competition and the consistent ability to raise prices above the rate of cost inflation. This should allow for further gains in profitability in coming years.”
7. Martin Marietta Materials Inc (NYSE:MLM)
Number of Hedge Fund Investors: 64
Kathryn Thompson, CEO of Thompson Research Group, said in a latest program on CNBC that she likes MLM amid the company’s AI exposure. Here is why the analyst likes the stock:
“The thing is that there’s been a lot of talk about AI for the past couple of years, but the first companies to see it are actually the heavy material companies, and we’ve already been seeing it. CR’s CEO explained this, but I have a couple of other examples. Martin Marietta Materials Inc (NYSE:MLM) is one — a great way to repurpose an aggregate quarry is to build a gigafactory, and they’re doing just that in Texas. Vulcan Materials said they have $35 billion of projects that are directly related not only to AI and data centers but also to the energy buildup.”
Diamond Hill Mid Cap Strategy stated the following regarding Martin Marietta Materials, Inc. (NYSE:MLM) in its Q1 2025 investor letter:
“As volatility picked up sharply in the quarter, we were active in the portfolio — and we anticipate that as volatility continues into Q2, we will likewise attempt to capitalize on compelling opportunities to reposition the portfolio for the period ahead. We initiated four new positions in Q1: Martin Marietta Materials, Inc. (NYSE:MLM), Ventas, Illumina and TransUnion.
Martin Marietta Materials is a heavy building materials supplier and the second-largest aggregates producer and distributor in the US with competitively positioned cement, ready-mix, asphalt and magnesia specialty businesses. The company has a long-term mindset, which proved effective during the last recession. Generally, the company tries to be the price leader in its markets and has historically successfully passed inflationary prices along to its clients. Given its strategic positioning in markets with strong growth potential and in states with approved multi-year Department of Transportation plans, we believe it is well-positioned for the period ahead. Recent macroeconomic uncertainty has pressured shares, introducing a compelling opportunity for us to invest in a quality aggregates company at a good entry point.”
6. Starbucks Corp (NASDAQ:SBUX)
Number of Hedge Fund Investors: 66
Gilman Hill Asset Management CEO Jenny Harrington explained in a latest program on CNBC why she’s selling Starbucks Corp (NASDAQ:SBUX). The analyst said the stock paid “huge” dividends over the past few years and her investment was successful.
“This was such a home run of an investment. We actually had 117% total return in those four years because they were paying out huge, huge, huge dividends. So when we bought it, dry bulk shipping rates were high and the inventory of dry bulk ships was reasonably low. So they were just returning cash flow to the shareholders. They ended up making an acquisition, slightly changing their capital allocation priorities, not having this juicy dividend. And that’s fine. I made my money and then some on it. So I sold it. It’s a source of funds.”
Polen Global Growth Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its second quarter 2025 investor letter:
“We have reestablished our position in Starbucks Corporation (NASDAQ:SBUX), now under the leadership of newly appointed CEO Brian Niccol, formerly of Chipotle. Niccol has articulated a clear, multi-pronged turnaround plan that we view as both practical and achievable. We believe Starbucks’ store operations became overly complex, resulting in over-tasked baristas and a poor customer experience. Having successfully revitalized Chipotle, we view Niccol as the right leader for Starbucks. He has already identified fixes for in-store operations, marketing, and customer service that we believe can potentially result in meaningful impact in the not-too-distant future, provided they are effectively scaled across 17,000 U.S. stores. We believe Starbucks retains an aspirational brand and a loyal customer base. As such, we see solid growth ahead through store productivity, new-store growth, and significant margin expansion. After a few years of mismanagement and a languishing stock, we expect considerable upside for this iconic brand.”
5. CRH PLC (NYSE:CRH)
Number of Hedge Fund Investors: 89
Kathryn Thompson, CEO of Thompson Research Group, said in a latest program on CNBC that CRH PLC (NYSE:CRH) is among the top AI derivative plays to benefit from the AI boom impacting various industries.
“The thing is that there’s been a lot of talk about AI for the past couple of years, but the first companies to see it are actually the heavy material companies, and we’ve already been seeing it. CRH PLC (NYSE:CRH) CEO explained this.
During an earnings call in August, CRH PLC (NYSE:CRH) CEO Jim Mintern talked about the boost the company is expecting because of the data center boom.
“In our international markets, we expect a robust demand in infrastructure to continue, supported by significant investments from government and EU funding programs. In nonresidential, we expect continued positive momentum across our key markets, supported by large-scale manufacturing and data centers. In the residential sector, we expect new build activity in the U.S. to remain subdued, while repair and remodel remains resilient. In our international markets, we expect the residential sector to stabilize with structural demand fundamentals supporting a gradual recovery. As we have said in the past, we believe the long-term fundamentals for residential construction remains very attractive, supported by favorable demographics and significant levels of underbuild.”
Read the full transcript of the call here.
Baron Real Estate Fund stated the following regarding CRH plc (NYSE:CRH) in its Q1 2025 investor letter:
“CRH plc (NYSE:CRH) is the largest building materials company in both North America and Europe and supplies products for construction and infrastructure projects such as roads, highways, bridges, and commercial and residential buildings. Its products include materials such as aggregates, cement, asphalt, and concrete, as well as critical utility infrastructure and outdoor living solutions.
CRH is currently trading at 8.7 times 2025 estimated cash flow, while vertically integrated construction materials peers, who are not as big as CRH and do not have the same track record of consistent performance, have traded as high as 13 times cash flow. Aggregates focused peers with similar construction project exposure trade at approximately 16 times cash flow.”
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