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.
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. 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.
8. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 51
Dell Technologies Inc. (NYSE:DELL) is one of the 10 Trending AI Stocks on Wall Street. On January 13, Goldman Sachs analyst Katherine Murphy assumed coverage on the stock with a Buy rating and a price target of $165.00. Firm analysts see AI server strength and data center recovery driving upside for DELL.
“We assume coverage of Dell Technologies (DELL) with a Buy rating (unchanged) and a 12-month target price of $165 reflecting 12x NTM+1Y EPS (vs. $185 reflecting 14x prior).”
Firm analysts believe Dell continues to be an AI winner with cyclical recovery tailwinds in its core data center hardware business. This momentum supports upside despite near-term headwinds in the PC market.
The firm added that even under cautious assumptions for PC demand and profitability, Dell offers upside to consensus sales and earnings estimates. This is driven by continued AI server momentum, recovery in core servers and storage at improving margins, as well as Dell’s ability to manage commodity cost headwinds better than peers.
The company can manage cost headwinds better because of its scale, large direct sales force, and business mix.
Dell Technologies Inc. (NYSE:DELL) provides IT solutions, including servers, storage, networking, and personal computing devices, to businesses and consumers worldwide.
7. Iren Ltd. (NASDAQ:IREN)
Number of Hedge Fund Holders: 52
Iren Ltd. (NASDAQ:IREN) is one of the 10 Trending AI Stocks on Wall Street. On January 13, H.C. Wainwright analyst Mike Colonnese double upgraded the stock from Sell to Buy with a price target of $80.00. Firm analysts see a transformative year ahead for IREN, with $9.7B Microsoft AI deal and 2GW dev pipeline serving as key drivers.
Firm analysts anticipate the AI infrastructure trade to continue serving as a major investment theme in 2o26. Factors driving this momentum include hyperscaler capex budgets, accelerating demand for near-term access to large-scale power, and positive investor sentiment.
Colonnese believes that IREN offers the most leveraged exposure across its coverage universe since it has already secured one of the largest AI contracts to date among BTC miners with a blue-chip counterparty. This, he noted, isn’t fully priced into shares.
Meanwhile, IREN has also secured a $9.7B, five-year AI cloud deal with Microsoft which the firm anticipates to be fully monetized by the end of 2026 and generate an estimated $1.94B in ARR once 200 MW of critical IT capacity are deployed at Childress data center.
Firm analyst also highlighted how IREN has more than 2GW of incremental capacity to be energized by 2027, offering the company a pathway for AI colocation growth. The stock’s correction from its all-time highs in early November presents an attractive opportunity for investors.
“We would not be surprised to see the company announce new AI contracts in 2026 on a portion of this secured capacity. Meanwhile, the stock has corrected by ~35% from its all-time highs in early November 2025, presenting an attractive entry point for investors, as we see it. We also note that the company raised $2.3B of fresh capital via convertible offerings last month, adding to its $1.8B cash position (as of the end of October 2025) to support the buildout of its AI data centers at Childress.”
Iren Ltd. (NASDAQ:IREN) operates 100% renewable energy-based data centers across Australia and Canada.
6. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 61
KLA Corporation (NASDAQ:KLAC) is one of the 10 Trending AI Stocks on Wall Street. On January 13, TD Cowen analyst Krish Sankar upgraded the stock from Hold to “Buy” and raised the price target to $1,800.00 from $1,300. With foundry-led WFE demand accelerating, firm analysts have raised CY27 EPS to $50 and driving the PT lift.
As per the firm’s analysis, updated wafer fabrication equipment (WFE) analysis specifies that leading-edge foundry spending is anticipated to be the fastest-growing segment in the semiconductor equipment market.
It has a projected calendar year 2026-2027 compound annual growth rate (CAGR) of 20%, as compared to 15% for memory, led by TSMC and Samsung’s foundry operations.
The upgrade is a reflection of TD Cowen’s higher CY27 earnings estimate of about $50 per share, which sits above Street expectations.
“With attention centered on memory WFE amid rising DRAM/NAND pricing, our updated WFE work points to leading-edge foundry as the fastest-growing pocket of spend on a CY26–27 CAGR basis (20% vs 15% for memory), led by TSMC (& Samsung foundry based on their TSLA execution). We are upgrading KLAC from Hold to Buy & increasing our PT to $1,800 (36x our new CY27 estimates of ~$50, vs Street’s $44).”
KLA Corporation (NASDAQ:KLAC) is a semiconductor manufacturing corporation engaged in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide.
5. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 66
International Business Machines Corporation (NYSE:IBM) is one of the 10 Trending AI Stocks on Wall Street. On January 13, BofA Securities analyst Wamsi Mohan raised the price target on the stock to $335.00 (from $315.00) while maintaining a Buy rating. Firm analysts see robust FCF outlook for IBM, along with higher-margin software mix; offsetting near-term headwinds.
Following a robust year in 2025, firm analysts believe IBM is up for a more modest year due to a weaker close to F25 and several headwinds in F26. Analysts anticipate softer PTI margin driven by workforce rebalancing initiatives when IBM reports on F4Q25 on Jan 28th.
BofA also estimates a workforce rebalancing expense of $400mn in 4Q, which is expected to limit full-year 2025 PTI margin expansion to about 70bps. This is below management guidance of 100 bps. It also anticipates lower taxes to be a partial offset to EPS.
The firm anticipates about 5% revenue growth in 2026, led by robust software growth and modest infrastructure growth, and flat growth in infrastructure. Meanwhile, the Confluent deal could add to software revenue in 2026, though likely to be modestly earnings dilutive.
“For F26, IBM likely guides SW cc rev growth of ~10%, LSD% cc in Consulting, and flat cc in Infra totaling 5% cc growth for IBM (organic ~4%). CFLT is projected to close mid- year, and we assume +2% inorganic rev growth contribution to SW. We adjust our F26 numbers to reflect dilution of ~$0.40 with a minimal impact on FCF. For FCF, we model $14.0bn for F25 and expect a guide of ~$15bn in F26, maintaining 130% NI/FCF ratio. Overall, we are cautious on 4Q given workforce rebalancing and lower growth in SW. Reit. Buy on higher margin SW revs, strong FCF growth, and optionality from QC.”
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.
4. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 66
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is one of the 10 Trending AI Stocks on Wall Street. On January 13, BTIG analyst Gray Powell reiterated a Buy rating on the stock with a $640.00 price target. Firm analysts believe Crowdstrike’s recently announced acquisitions, SGNL & Seraphic, make strategic sense.
BTIG highlighted how Crowdstrike’s acquisitions directly target the identity market and protect AI workloads. Its acquisition of SGNL, which provides identity security and verification to permit access to systems and data in real time, is for $740 million. Meanwhile, the company didn’t disclose terms for its other acquisition, Seraphic Security. Both transactions are anticipated to close in FQ1’27.
According to Powell, both of these deals mark Crowdstrike’s bigger push into the broader identity market as enterprises increasingly begin to prioritize identity protection amid rising AI adoption. CRWD is able to see this trend very clearly.
As a result, the company has been expanding its identity capabilities, including ITDR and Just In Time credentials, into a comprehensive platform. Discussions with Investor Relations further reveals how the company’s near-term focus is on capturing incremental security budgets in the PAM market, especially as enterprises seek new tools to protect AI workloads.
“Longer term, CRWD has its sights across the identity market and sees potential to become a player in the IGA market. In our opinion, this will take longer to play out – potentially a couple of years. In this note, we highlight our insights on recent transactions and thoughts on CRWD’s broader platform strategy. Reiterate Buy.”
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection.
3. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 81
Intel Corporation (NASDAQ:INTC) is one of the 10 Trending AI Stocks on Wall Street. On January 13, KeyBanc analyst John Vinh upgraded the stock from Sector Weight to Overweight with a price target of $60.00. Firm analysts see improving foundry yield gains and robust hyperscaler-driven data center demand.
Despite several headwinds in the server CPU market, KeyBanc believes that Intel is still in the lead. Its checks are a reflection of the same, indicating how INTC is almost sold out for the year in server CPU as hyperscalers accelerate data center building activity.
The company, as noted by firm analysts, is also considering a 10-15% increase in average selling price. The firm also pointed to progress made on foundry, with 18A yields improving to over 60% which is good enough to enable the ramp of Panther Lake.
Intel’s yields compare favorably with SF2 at Samsung Foundry, analysts noted, though they trail TSMC’s 2nm process. KeyBanc further revealed that its checks indicate that Intel has onboarded Apple as an 18A-P customer. The company will use that advanced node to make chips for its low-end Macs and iPads.
“While not best in class, as TSMC was at 70–80% when it launched 2nm, INTC’s aspirations of being the #2 foundry supplier, 60% yield is significantly better than SF2 at Samsung Foundry, which we believe is less than 40%. Our checks indicate IFS has landed Apple as a customer on 18A for low-end M-series processors for MacBooks and iPads, which is expected to go into production in 2027. Additionally, we believe INTC is in discussions with AAPL to use 14A to support low-end mobile A-series processors for iPhones in 2029.”
Intel Corporation (NASDAQ:INTC) designs, manufactures, and sells computer products and technologies, delivering data storage, computer, networking, and communications platforms.
2. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 105
Micron Technology, Inc. (NASDAQ:MU) is one of the 10 Trending AI Stocks on Wall Street. On January 13, KeyBanc analyst John Vinh raised the price target on the stock to $450.00 (from $325.00) while maintaining an Overweight rating. Firm analysts see a stronger-for-longer cycle for MU, anticipating a different cycle this time.
Analysts noted that the Greenfield capacity is not anticipated to come online until mid-2027 at the earliest, underpinning the firm’s view that the current memory cycle is structurally different and likely to be stronger for longer.
The firm has kept its estimates unchanged, noting that they remain well above consensus estimates.
“MU (positive, Overweight, increasing PT to $450 from $325) – We believe this cycle is different this time and will be stronger for longer. Greenfield capacity not expected to come online until mid-2027 at the earliest. We are not changing ests, as our ests remain well above cons with our FY27 (Aug) rev/EPS ests at $94.4B/$45.20, while the Street is at $89.6B/$40.88.”
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide.
1. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 115
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 10 Trending AI Stocks on Wall Street. On January 13, KeyBanc analyst John Vinh upgraded the stock from Sector Weight to Overweight with a price target of $270.00. Firm analysts see surging hyperscaler demand for AMD, alongside stronger-than-expected server demand, and improving visibility across CPU and AI GPU segments.
Earlier, KeyBanc had downgraded AMD to Sector Weight as it was concerned about a potential demand “air pocket” between MI355 and the launch of its rack-scale Helios platform with MI455, anticipated to ramp into volume about late 2026. However, updated supply chain checks have eased these concerns.
The firm stated how supply chain data has revealed that the recent surge in hyperscaler demand has led to AMD being almost completely sold out of server CPU for 2026. Moreover, it may also potentially consider a price increase of about 10-15% in 1Q26.
KeyBanc estimates AMD’s server CPU and AI GPU business to demonstrate strong growth, driven by hypersaler demand and a ramp in MI455 and MI355 accelerators. AI revenues are likely to reach the range of $14-$15 billion this year.
“We estimate server CPU for AMD will grow at least 50% this year. Regarding AI GPUs, we’re seeing indications of 200K MI355 GPUs in the 1H and a significant ramp of MI455 in the 2H, of which 290K–300K is targeted for its rack-scale solution Helios. It remains unclear how many racks AMD will be able to ship; similar to NVDA, we expect AMD to recognize significant amounts of MI455/Helios revenues as it sells in its components to its ODM partner ZT Systems. We estimate that this will support AI revenues this year in the range of $14B–$15B.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
While we acknowledge the potential of AMD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AMD and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 11 AI Stocks on the Market’s Radar and 10 Must-Watch AI Stocks on Wall Street
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.
