According to Bank of America CEO Brian Moynihan, the acceleration in AI investment is likely to have a profound impact on the economy this year.
“The AI investment’s been building during the year and is probably a bigger contributor next year and the years beyond. AI is kicking in more and more, and so it’s not all attributable to AI, but that’s having a marginal impact that’s pretty strong.”
-Moynihan said in an interview with Bloomberg Television.
The bank anticipates the domestic economy to grow 2.4% next year, up from about 2% in 2025. Blackstone CEO Stephen Schwarzman further noted that the scale of spending on AI data centers is fueling the U.S. economy and will likely continue for some time.
However, Geoffrey Hinton, aka the “godfather of AI,” isn’t as optimistic about the impacts of AI as others. Looking ahead, he believes artificial intelligence will ignite a surge in unemployment and profits.
“What’s actually going to happen is rich people are going to use AI to replace workers,” Hinton said in September. “It’s going to create massive unemployment and a huge rise in profits. It will make a few people much richer and most people poorer. That’s not AI’s fault, that is the capitalist system.”
Hinton has also been previously warning about the dangers of AI without guardrails, believing that there is a 10% to 20% chance that superintelligence will pose an existential threat to humanity.
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. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 42
Arm Holdings plc (NASDAQ:ARM) is one of the 10 Trending AI Stocks on Wall Street. On January 13, BofA Securities analyst Vivek Arya downgraded the stock from Buy to Neutral and lowered the price target to $120 from $145. The rating downgrade comes ahead of ARM’s third quarter fiscal year 2026 results on Feb. 4.
BofA has flagged near-term smartphone unit headwinds (memory cost), increasing reliance on SoftBank in licensing, and royalty slowdown (only about 10% of royalties) for the stock.
Global smartphone shipments could decline at a low single-digit rate year-over-year, compared with LSD in CY25. This will likely be driven by higher memory costs and supply constraints, which would be a headwind to Arm’s Client business that accounts for more than half of royalty revenue.
Despite all these factors, the firm continues to like ARM’s potential in data center over the long-term.
“For ARM, we flag revenue slowdown (both royalties/licensing) and increasing SoftBank reliance into CY26. Particularly, global smartphone units could decline LSD YoY (vs. up LSD in CY25) on increased memory costs and supply constraints, a headwind to ARM Client (>50% of Royalty sales). Meanwhile, CSS adoption (or content expansion) is still limited and in early stages. For Licensing, we flag FY26 revenue could actually decline -5% YoY (if we exclude SoftBank which now represents 25–30% of total Licensing and could raise circular financing concerns). Longer-term though, we continue to like ARM’s potential in data center, in both server content ($ per core, more cores, share gains) and new silicon/chiplet opps.”
Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products.
9. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 42
Super Micro Computer, Inc. (NASDAQ:SMCI) is one of the 10 Trending AI Stocks on Wall Street. On January 13, Goldman Sachs analyst Katherine Murphy initiated coverage on the stock with a “Sell” rating with a $26 price target, down from $34. Firm analysts cited ongoing margin pressure and limited visibility on profitability despite SMCI’s AI server leadership in Tier 2 cloud markets.
“We assume coverage of Super Micro Computer Inc (SMCI) with a Sell rating (unchanged) and a 12-month target price of $26 reflecting 9X NTM+1Y EPS (vs. $34 reflecting 11X prior).”
Even though analyst Katherine Murphy believes that SMCI will remain a leader in the AI server market in the medium term, particularly demonstrating strength in the tier 2 cloud/ neocloud markets, she sees limited visibility into profitability levels.
This AI stock may fail to notch up major gains this year owing to large margin dilutive deals, increasing competition from OEMs and ODMs, and investments in scaling its enterprise opportunity.
The company’s margin-dilutive deals have already “halved its margin in the last three years to 9.5%,” with Murphy anticipating that to remain the case, at least for the short term.
“These concerns around profitability have weighed on consensus estimates, but we think there could still be further downside to margins, ultimately limiting visibility into SMCI’s forward earnings.”
Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures high-performance server and storage solutions for data centers, cloud computing, AI, and edge computing worldwide.
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