Major US indexes closed lower on Friday, even after Broadcom’s quarterly results and guidance beat Wall Street estimates. The plunge reflects investors pulling back from the artificial intelligence trade despite solid results, largely due to concerns about overall lower margins and uncertainty around deal activity.
The artificial intelligence theme has been the main driver of the stock market this year, and any negative sentiment has had far-reaching consequences.
However, many firms see the pullback as a perfect buying opportunity.
We “continue to see a favorable risk/reward equation for the stock on the back of sustained AI demand.” Broadcom is seen as a “leading alternative” to AI chip leader Nvidia (NVDA).
-William Blair
Bernstein analyst Stacy Rasgon also saw Broadcom’s Q4 report as a head-scratcher.
“It seems that AI stock angst is continuing with Broadcom’s shares trading down,” Rasgon said in a report. “Frankly we aren’t sure what else one could desire as the company’s AI story continues to not only overdeliver but is doing it at an accelerating rate.”
Despite the current negative sentiment revolving around the AI trade, 2026 is supposedly going to be stronger. As per Citigroup, the year-end target for the S&P 500 for 2026, is 7,700. This target is a reflection of robust corporate earnings and sustained tailwinds stemming from AI investments.
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.
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10. SoundHound AI, Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 22
SoundHound AI, Inc. (NASDAQ:SOUN) is one of the 10 Trending AI Stocks on Wall Street. On December 12, Cantor Fitzgerald upgraded the stock from Neutral to Overweight and raised its price target to $15.00 from $13.00. The firm is confident on the stock, pointing to long-term growth catalysts and upcoming CES 2026 as a catalyst.
“We raise our rating on SOUN to OW (from Neutral) and raise our 12-month PT to $15 (from $13), and would take advantage of the recent pullback in shares. SoundHound AI has executed very well, in our view, cross-selling and upselling voice and conversational AI services to its installed base, as well as expanding fully automated voice volumes related to its acquisition of Amelia in late-Summer 2024.”
Cantor believes that expectations for SOUN are low heading into 2026, creating potential upside for the stock. The recent acquisitions of Interactions, along with an expanding partner ecosystem, are also drivers of organic growth for the company in C25.
Model expectations for Voice Commerce, known as the company’s Pillar Three growth initiative, remain low. However, the upcoming Consumer Electronics Show (CES) in early January 2026 is seen as a positive catalyst, with possible Voice Commerce-related announcements anticipated.
The firm views conversational AI and voice AI as “meaningful beneficiaries of secular AI growth trends.”
“We continue to view conversational AI and voice AI as meaningful beneficiaries of secular AI growth trends, with SoundHound AI a leader in this market and well-positioned to capitalize on these trends. Solid execution on recent M&A and partnership expansions, reasonable expectations headed into C26, and optionality remaining from Voice Commerce (e.g., Pillar Three) inform our rating.”
SoundHound AI, Inc. (NASDAQ:SOUN) is a voice artificial intelligence company offering voice AI solutions to businesses.
9. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 36
Rivian Automotive, Inc. (NASDAQ:RIVN) is one of the 10 Trending AI Stocks on Wall Street. On December 12, Needham raised its price target on the stock to $23.00 from $14.00 while maintaining a “Buy” rating. The price target raise follows the company’s AI & Autonomy Day, with analysts citing vertical integration and R2 launch expectations strengthening long-term conviction.
Analyst Chris Pierce sees clearer signs of progress across Rivian’s tech roadmap. He believes that the EV maker has visible catalysts in software, autonomy, and its upcoming R2 launch.
Pierce contended that RIVN’s push into software and AI was the main highlight of the AI & Autonomy Day. Since the company builds most of its tech in-house, it has been able to roll out new features quickly.
Moreover, since buyers are likely to expect better driver-assist tools, cleaner interfaces, and smarter systems overtime, this setup will allow it to position itself better than its competitors.
“The event increased our confidence in RIVN’s positioning as software (and now AI)-defined vehicles increasingly become industry table stakes, with RIVN’s vertical integration allowing for fuller control driving faster learning and feature iterations across driver interface and autonomy technology, underpinning a durable competitive advantage.”
While AI updates are crucial for the stock, the firm noted that the company’s R2 SUV is the main reason for its bullish stance. Expectations for the R2 remain low, giving Rivian a chance to beat market view when its model arrives in the first half of 2026.
“Our updated target is 20x EV/FY28E adj EBITDA, discounted back from 15x prior, with percolating R2 enthusiasm supporting multiple expansion ahead of a 1H26 launch.”
Rivian Automotive, Inc. (NASDAQ:RIVN) is an automaker that creates and manufactures electric vehicles, as well as software and services.
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