Wall Street’s major hedge funds, Bridgewater Associates, Tiger Global Management and Discovery Capital, have all poured in billions in Big Tech in the second quarter to capitalize on the surge in artificial intelligence.
Bloomberg data reveals how hedge fund holdings of Microsoft grew by US$12bn to US$47bn by the end of June. The increased holdings now make it the most valuable overall position at US$46.83bn.
Another report from Reuters reveals Bridgewater Associates more than doubled its Nvidia stake, finishing the quarter with 7.23m shares worth US$1.14bn.
Hedge funds have been cutting back their exposure to industry laggards in the June quarter in a move to transition back to momentum investing. Undoubtedly, the S&P 500 is up 10% so far this year, lifted mostly by the largest tech companies.
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 Q1 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).
An employee at their desk surrounded by financial documents and a laptop analyzing the stock market.
10. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 42
Arm Holdings plc (NASDAQ:ARM) is one of the 10 Trending AI Stocks in Focus This Week. On August 18, Reuters reported that Arm Holdings has hired Amazon’s artificial intelligence chip director Rami Sinno to help develop its own complete chips.
Sinno has previously developed Amazon’s homegrown AI chips called Trainium and Inferentia that build and run large AI applications. While Arm hasn’t delved into the chip-making business previously, it has been involved in designing the core architecture and instruction set for processors that it sells to customers.
The company is now looking into expansion beyond the supply of crucial chip intellectual property to developing its own complete designs. Back in July, Arm had disclosed plans to devote a percentage of its profit into building its own chips and other components. CEO Rene Haas had also hinted at the possibility of moving beyond designs and building chiplets.
Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 57
International Business Machines Corporation (NYSE:IBM) is one of the 10 Trending AI Stocks in Focus This Week. On August 18, IBM and the United States Tennis Association (USTA) announced a new lineup of AI-powered digital experiences at USOpen.org and the US Open app for this year’s tournament.
The AI-powered digital experiences will allow fans to enjoy two weeks of customized, nonstop coverage. The first co-creation is Match Chat, an interactive AI assistant which will be available during and after all 254 singles matches. Match Chat, built with IBM watsonx Orchestrate technologies, responds to pre-written prompts or questions on topics such as player stats, head-to-head records, match insights and more.
Next, the IBM SlamTracker enables fans to see live Likelihood to Win probabilities for every singles match. The tool is based on AI-powered analysis of player statistics, expert opinion and match momentum, changing as the match goes on.
Fans can also enjoy AI-generated audio and subtitles in English for highlight videos with AI Commentary. Finally, Key Points built with watsonx offers three-bullet summaries of articles, tournament data and match analysis on the US Open app and website.
“As fan engagement and content consumption habits evolve, IBM and the USTA are at the cutting edge – leveraging data and AI to create unique digital experiences that bring the excitement of the US Open to life for audiences around the world. We’re applying the same powerful technologies that we use with client partners across all industries to meet the demands of tennis fans, deepening the connection to the players and game we all love.”
-Jonathan Adashek, Senior Vice President, Marketing and Communications, IBM.
International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products.
8. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 73
Marvell Technology, Inc. (NASDAQ:MRVL) is one of the 10 Trending AI Stocks in Focus This Week. On August 18, the company announced that Microsoft has selected the Marvell LiquidSecurity family of hardware security modules (HSMs) for Microsoft Azure Cloud HSM.
Building on their existing collaboration, Marvell will now also support Azure Cloud HSM, in addition to Microsoft Azure Key Vault and Azure Key Vault Managed HSM services.
Azure Cloud HSM enables customers to manage cryptographic keys and perform cryptographic operations within their own dedicated, cloud-based HSM cluster.
Being FIPS 140-3 Level 3 certified, Azure Cloud HSM offers customers secure, direct, end-to-end encrypted access over a private, dedicated link via their virtual network.
The collaboration allows Microsoft Azure customers to enjoy the most secure and compliant key management services available.
“We are excited to extend our collaboration with Microsoft on the Microsoft Azure Cloud HSM service with Marvell LiquidSecurity HSMs. Together, we share a vision to modernize the HSM market and enable Azure customers to leverage the latest security standards for the most demanding, cloud-scale applications.”
-Will Chu, senior vice president and general manager of Custom Cloud Solutions at Marvell.
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors, focusing heavily on data centers.
7. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 77
Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the 10 Trending AI Stocks in Focus This Week. On August 18, Raymond James analyst Adam Tindle reiterated a Market Perform rating on the stock without a price target. The rating affirmation follows Palo Alto’s better-than-expected quarterly results and guidance.
The firm noted how revenue, RPO, and bookings metrics all outpaced expectations supported by several large multiyear deals. The only concern has been a modest beat on NGS ARR.
PANW’s forward guidance also exceeded growth and profitability expectations. However, the firm expects these trajectories to change after the CyberArk acquisition closes next calendar year.
“Services are implied to be flat/decel in FY26 as Product growth accelerates; while we believe these conflicting trends could be a sign of demand pull-in for industry participants, we view Palo’s Product line having a larger software constitution versus peers as a more attractive model for predictability. A new 40%+ adj. free cash flow margin in FY28 post CyberArk acquisition could imply ~$6B of FCF generation at modest growth rates (that could help offset some deal dilution), and we think the FCF multiple could be attractive relative to recent valuation (low/mid 20x P/FCF vs. high 20x 5-year average). We think we have some time to understand integration plans and collect more channel feedback, but admit that the plan post CYBR close looks attractive.”
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity.
6. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 94
Snowflake Inc. (NYSE:SNOW) is one of the 10 Trending AI Stocks in Focus This Week. On August 19, Wells Fargo reiterated the stock as “Overweight” and increased the price target to $250.00 from $225.00. The firm noted that the near term setup looks attractive.
The firm’s optimism largely stems from Snowflake’s anticipated acceleration in product revenue growth and positive customer sentiment. It is likely that the company experiences a re-acceleration in the second quarter, Wells Fargo believes, with product revenues projected to grow significantly.
The firm noted that these revenues are driven by new products like Snowpark and Cortex. Additionally, it seems that the full-year guidance of 25% year-over-year growth would be achievable given easing comparisons in the latter half of the year.
Customer survey insights also reveal increased growth expectations and customer plans of increasing consumption. While cloud revenue results remain mixed, overall demand for cloud and AI services remains strong. The company’s progress in artificial intelligence is also seen as a positive catalyst, particularly owing to the partnership it has with OpenAI.
“We believe SNOW is among a few leaders in the cloud data space and poised to continue its momentum as a new mgmt team doubles down on its AI ambitions. We rate SNOW Overweight.”
Snowflake Inc. (NYSE:SNOW) is a cloud-based data storage company providing a data analysis, storage, and sharing platform.
5. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 97
Oracle Corporation (NYSE:ORCL) is one of the 10 Trending AI Stocks in Focus This Week. On August 18, the company announced that it has deployed OpenAI GPT-5 across its database portfolio and suite of SaaS applications. This includes Oracle Fusion Cloud Applications, Oracle NetSuite, and Oracle Industry Applications, such as Oracle Health.
Being OpenAI’s fastest, smartest model yet, the GPT5 excels not only in code generation, editing, and debugging, but also in bringing advanced agentic capabilities and complex reasoning to enterprise contexts.
Oracle’s deployment of GPT 5 will allow customers to search and analyze data across business processes, accelerate code generation, bug resolution, and documentation, as well as speed up business decisions.
Oracle strives to bring leading-edge AI technology to enterprise data, and this move is a step forward in this direction.
“The combination of industry-leading AI for data capabilities of Oracle Database 23ai and GPT-5 will help enterprises achieve breakthrough insights, innovations, and productivity,” said Kris Rice, senior vice president, Database Software Development, Oracle. “Oracle AI Vector and Select AI together with GPT-5 enable easier and more effective data search and analysis. Oracle’s SQLcl MCP Server enables GPT-5 to easily access data in Oracle Database. These capabilities enable users to search across all their data, run secure AI-powered operations, and use generative AI directly from SQL—helping to unlock the full potential of AI on enterprise data.”
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
4. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 104
Tesla, Inc. (NASDAQ:TSLA) is one of the 10 Trending AI Stocks in Focus This Week. On August 19, Reuters reported that Tesla has started accepting orders for its new Model Y L in China. As shown on the website, the starting price of the new model is 339,000 yuan ($47,184).
The Model Y was initially launched in 2020, which moved on to become the world’s best-selling car three years later. The model has since lost momentum, partly due to competition from rivals and partly because of weakened market demand for electric vehicles.
These conditions led Tesla to introduce a new version of the Model Y in Asia Pacific markets in January. The company then registered plans with Chinese authorities for the new Model Y L in July.
Filing information published on China’s industry ministry website in July has also revealed a longer-range, rear-wheel drive Model 3 also coming to the Chinese market soon.
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 227
Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 Trending AI Stocks in Focus This Week. According to BMO Capital, the U.S. District Court has already found Google guilty of “illegally maintaining its search monopoly in general search and search text advertising via exclusionary default agreements.”
In lights of this, analysts at the firm have highlighted that Google’s stock may fluctuate as much as 10% in either direction based on the Department of Justice’s upcoming decision.
Judge Amit Mehta’s decision on the appropriate remedies is anticipated very soon “to clear the deck ahead of the new Ad-Tech trial starting shortly.”
BMO Capital believes that the upcoming remedies for the search monopoly case are going to be significant but not “Draconian.”
It also believes that the most probable outcome would be “a comprehensive behavioral consent decree—not a structural breakup—imposing lasting constraints on Google’s distribution practices, data sharing, and competitive behavior, potentially including AI.”’
While Google is likely to avoid being forced to divest Chrome or Android, though any remedies “could directly impact core revenue streams and operating flexibility.”
The larger risk, however, is in the upcoming Ad-Tech antitrust case. This is because it “presents a higher probability of a structural breakup, with a ruling on remedies expected after September 2025.”
The two cases can together push Google toward “a decade of heightened regulatory oversight and fundamentally alter the competitive landscape for search and digital advertising.”
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the 10 Trending AI Stocks in Focus This Week. On August 18, BofA Securities analyst Justin Post reiterated a Buy rating on the stock with a $900.00 price target. The firm believes that Meta is well positioned for AI despite its fourth attempt at AI reorganization.
Discussing report from The Information about Meta’s AI overhaul for the fourth time in six months, the firm noted that these continuous efforts reflect on how complex and strategically important Meta’s AI goals are.
The company now plans on dividing its Superintelligence Labs into four distinct groups: a new “TBD Lab,” a products team, an infrastructure team, and the Fundamental AI Research lab
While concerns on the company’s AI execution are imminent bearing in mind the frequency of these reorganization efforts, the firm believes that Meta boasts a good track record of execution of new services.
“According to The Information, Meta is planning a fourth overhaul of AI efforts in six months. The company is expected to divide its new AI unit, Superintelligence Labs, into four groups: a new “TBD Lab”, a products team including the Meta AI assistant, an infrastructure team, and the Fundamental AI Research lab focused on long-term research. The report noted Meta’s plans for restructuring have not been announced internally and could change. Our Take: The frequency of reorganizations highlights both the strategic importance and potential complexities of Meta’s AI goals. While reshuffling may raise concerns on Meta’s AI execution, the AI opportunity is still very early, and Meta has a track record of execution around new services. We continue to see Meta as well positioned for AI given massive user base and tech infrastructure, maintain Buy.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 284
Microsoft Corporation (NASDAQ:MSFT) is one of the 10 Trending AI Stocks in Focus This Week. On August 18, Truist Securities analyst Joel P. Fishbein Jr raised the price target on the stock to $675.00 (from $650.00) while maintaining a Buy rating.
The firm believes that Microsoft holds the potential to sustain robust momentum from cloud and AI secular growth drivers. It has raised its fiscal year 2026 and 2027 estimates for revenue, operating profit and cash flow owing to upside opportunities to both its own and consensus street estimates.
“Bullish on Longevity of Cloud and AI Growth Drivers; We are confident Microsoft can sustain strong momentum associated w/ cloud and AI secular growth drivers, while benefiting from a growth-enhancing halo effect across a multitude of MSFT’s individual infrastructure, data and app businesses. We are raising FY26/FY27 ests for rev, op profit & CF and see opptys for solid upside to ours & street ests. Sustained strong cloud growth at scale & growing AI demand capture can lead to at least low teens doubledigit rev, profit & CF growth over an extended period, while consistently returning cash via divs/repurchases. Raising PT to $675 from $650 on higher ests; supported by 10-yr DCF (w/ LDD rev CAGR & mid 30s FCF margin).”
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.
READ NEXT: 10 AI Stocks in the Spotlight Today and 10 AI Stocks Analysts Are Tracking Closely.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
Hedge Fund Resource Center