In this article, we will take a detailed look at the 10 Trending Stocks to Watch As AI Bubble Warnings Heat Up.
An increasing number of analysts now warn that the AI-led rally will sooner or later see a correction. But does that mean you should not invest in profitable and high-quality AI companies and miss out on gains? Josh Brown from Ritholtz Wealth Management said in a latest program on CNBC that there will be a “reckoning” and the market will correct as there’s “no way” we can continue to see elevated stock valuations. However, the analyst said that does not mean people should not invest:
“I think I am qualified to say this, there’s going to be a correction. Even if we’re only in the first inning, as the technologists would tell you, there’s just absolutely no way you can have stock prices all hundreds of companies uh all revolving around this theme spread out from industrials to utilities to communications to semis, software. You cannot have this level of activity and bullishness and empire statebuildings-esque vertical charts in perpetuity. It just it’s never happened before and it won’t happen this time. There is absolutely going to be a reckoning. That’s not a reason to not invest because as we’ve seen over the last 15 years, corrections happen really fast. People don’t even get a chance to panic if and when they happen. So, I don’t think that should keep you out of these stocks or being in the market. I just think people need to calm down. Maybe the right focus is position size rather than some sort of binary in-out decision,” Brown said.
READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In
Photo by Campaign Creators on Unsplash
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. Mosaic Co (NYSE:MOS)
Number of Hedge Fund Investors: 54
Joseph Terranova, Senior Managing Director, Virtus Investment Partners, highlighted chemical company Mosaic Co (NYSE:MOS) during a latest program on CNBC. Here is what the analyst said:
“Mosaic Co (NYSE:MOS), keep your eye on that one. It looks like we’ve got a little bit of a multi-month breakout unfolding.”
Ariel Focus Fund stated the following regarding The Mosaic Company (NYSE:MOS) in its second quarter 2025 investor letter:
“Producer and marketer of crop nutrients, The Mosaic Company (NYSE:MOS), also traded higher following the delivery of solid quarterly earnings results. The company expects phosphate markets to remain tight through 2025 supported by limited new supply, lower inventories and a reduction in imports driven by tariffs. MOS remains focused on cost discipline, improved free cash flow generation and maintaining an investment grade credit profile, while continuing to return significant capital to shareholders. Given management’s renewed discipline on capital allocation, we continue to believe the company is well positioned.”
9. Advanced Micro Devices Inc (NASDAQ:AMD)
Number of Hedge Fund Investors: 113
Joseph Terranova, Senior Managing Director, Virtus Investment Partners, recently discussed Advanced Micro Devices Inc (NASDAQ:AMD) latest deal with OpenAI and market concerns about a potential AI bubble. The analyst said most of the major AI deals have OpenAI playing a central role and highlighted concerns about capital spending:
“We’re relying a lot on Open AI, aren’t we, in that spending. And we’re are relying on Open AI to spend trillions of dollars. And I think the question becomes, where’s this capital coming from? You can make the argument it’s coming from venture capital, debt markets, some unique type of financing. This spending that we seem reliant on from OpenAI. Obviously, it benefits Nvidia. You asked at the top of the show, what does the deal with Advanced Micro Devices Inc (NASDAQ:AMD) mean? Not very much. Nvidia is down 40 basis points on barely.”
Macquarie Core Equity Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its second quarter 2025 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) designs and manufactures semiconductors, including central processing units (CPUs), graphics processing units (GPUs), and other high-performance computing solutions for various markets like gaming, data centers, and AI. The company currently maintains a small market share for GPUs used for AI applications though by 2027, we believe the company will have product on par with the market leader, NVIDIA. Hyperscale customers with deep programming expertise may increasingly decide to dual-source high-end chips leading to much larger revenue and profit gains in coming years for AMD than investors currently expect.”
8. Howmet Aerospace Inc (NYSE:HWM)
Number of Hedge Fund Investors: 57
Joseph Terranova, Senior Managing Director, Virtus Investment Partners, recently talked about Parker Hannifin and Howmet Aerospace, and said he likes Howmet Aerospace Inc (NYSE:HWM) “a little bit better” than the former.
“Industrial aerospace derivative play actually like Howmet, HWM a little bit better. Both of those companies are benefiting from being multinationals. Halmet a little bit more at 50%, Parker Hannneathan at 40%. Both of these stocks in the portfolio doing remarkably well. A little bit more of an uptick on how”
Fidelity Growth Strategies Fund stated the following regarding Howmet Aerospace Inc. (NYSE:HWM) in its second quarter 2025 investor letter:
“An outsized position in Howmet Aerospace Inc. (NYSE:HWM) (+45%) helped, too. The maker of jet engine components has been riding a post-COVID recovery wave in air travel amid surging demand for its products. After achieving record financial results in 2024, in May the company reported more good news for Q1 of 2025, with record revenue, an all-time high profit and $125 million deployed for stock repurchases. We added substantially to the stake, and it was our second-biggest holding and overweight at the end of the quarter.”
7. TKO Group Holdings Inc (NYSE:TKO)
Number of Hedge Fund Investors: 48
Joseph Terranova, Senior Managing Director, Virtus Investment Partners, shared some bullish comments about TKO in a recent program on CNBC.
“Purchased this at the end of July. We’ve got a little bit of a lead on the story. Upcoming earnings going to be critical here. When you look at the UFC comps are somewhat difficult. The other side of it, WWE looking for a strong quarter here. Recent announcement with the deal with ESPN. That should be a favorable one as well. Near a high. Let the stock work for you and continue to move higher.”
Cooper Investors Global Equities Fund stated the following regarding TKO Group Holdings, Inc. (NYSE:TKO) in its second quarter 2025 investor letter:
“TKO Group Holdings, Inc. (NYSE:TKO) is the owner and operator of the two leading combat sports content assets – the UFC and WWE. We wrote about TKO in our September Quarterly Report (Insights, Fund Performance & Financial Updates | Cooper Investors – Cooper Investors). Since making our initial investment, the company has also acquired Premier Bull Riding (PBR), sports marketing agency IMG and premium (sports) experience provider On Location (in a single transaction). The core UFC and WWE assets still account for the vast majority of TKO’s economics.
TKO has had a strong start to 2025; UFC and WWE grew EBITDA 17% and 38% respectively in the March quarter and the company expects to grow EBITDA at a mid-teens rate for calendar year 2025.
An important near-term milestone is the renewal of the UFC media rights in the US. These rights account for over 15% of TKO’s revenues, so while the absolute dollar gure is important (and we expect a material step-up from the current deal), we are more focused on the partners TKO chooses to work with. For example, TKO signed a landmark global deal with Net ix for the WWE last year and this is proving to unlock material upside in the other parts of content flywheel, namely sponsorship and live events (site fees and ticketing).
We also believe that there is a larger site fee opportunity for TKO, as compared to our initial expectations. TKO currently earns site fees from local governments on a portion of its 24 marquee annual events (e.g. Wrestlemania, UFC 314). Across UFC, WWE and PBR the company puts on close to 200 annual events. By “festivalising” a combination of these events across multiple days, TKO is demonstrating they can deliver more economic value to cities and hence earn site fees on previously unmonetised events…” (Click here to read the full text)
6. Zoom Communications Inc (NASDAQ:ZM)
Number of Hedge Fund Investors: 48
Joseph Terranova, Senior Managing Director, Virtus Investment Partners, said in a latest program on CNBC that ZM is no longer a growth story. Here is why the analyst is bearish on the stock:
“Not smiling over it either because it really hasn’t worked out particularly well. The reasons behind the entry were a very strong rally in 2024 and it reached its peak point at that point and it really hasn’t accelerated since then. It’s been moving sideways to lower. This is not a growth story. You think about what growth was, growth was and Zoom Communications Inc (NASDAQ:ZM) years ago. You could make that strong robust growth argument. You can’t make that anymore. You’re talking about low singledigit revenue growth for this company.”
Guinness Global Innovators stated the following regarding Zoom Communications Inc. (NASDAQ:ZM) in its Q4 2024 investor letter:
“Zoom Communications Inc. (NASDAQ:ZM) has struggled since coming out of the pandemic with changing consumer trends and a tougher macroeconomic environment. At purchase, Zoom looked attractive from a valuation perspective, having derated from its 2021 highs to near pre-pandemic levels – despite being a fundamentally better business. The company had built a strong brand, with ‘Zoom’ becoming synonymous with online conferencing and video calling after the company’s success during the pandemic, and the resulting paradigm shift towards increased hybrid working. What was once a more ‘speculative’ growth stock at the start of the pandemic, was now a slightly more mature growth company with high market share (underpinned by a best-in-class product), stickier revenues, and a stronger balance sheet with $5bn in cash creating room for growth investment. With a superior product and strong brand presence, growth expectations for the company were around mid to high single digits. However, since purchase, Zoom has returned -34% versus the MSCI World Index, which was up 28%, with a growth profile that has disappointed. The company’s key Enterprise segment has seen decelerating growth, with both customer growth and the net dollar expansion rate (Zoom’s revenue per user metric slowing significantly). Customer growth has slowed from a rate of 25% YoY in the quarter prior to purchase to an estimated 3.6% by the first quarter of 2024. Net Dollar Expansion rate has slowed even further, currently at 101% (1Q24) vs c.123% at purchase…” (Click here to read the full text)
5. DoorDash Inc (NASDAQ:DASH)
Number of Hedge Fund Investors: 100
Joseph Terranova, Senior Managing Director, Virtus Investment Partners, said in a latest program on CNBC that DASH is his top consumer discretionary holding. Here is how the analyst made the case for the stock:
“Number one consumer discretionary holding that we have strongly correlated to what we’ve seen in the growth of Uber. They have dominant market share. It’s interesting. You know, my son’s up in Danbury, Connecticut playing hockey. He needed a vacuum last night. DoorDash Inc (NASDAQ:DASH) within 45 minutes.”
Sands Capital Technology Innovators Fund stated the following regarding DoorDash, Inc. (NASDAQ:DASH) in its Q1 2025 investor letter:
“DoorDash, Inc. (NASDAQ:DASH) is the leading food delivery platform in the United States by market share. The business exceeded investor expectations in its most recently reported quarter, demonstrating continued strong execution. Orders grew 19 percent year-over-year, supported by 14 percent growth in monthly active users, while adjusted EBITDA rose 56 percent. First-quarter 2025 guidance was better than consensus expected, calling for 20 percent gross order volume growth. Our investment case continues to play out, and we continue to believe that consensus underestimates DoorDash’s longer-term earnings power.”
4. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Fund Investors: 133
Steve Weiss, chief investment officer and founder of Short Hills Capital Partners, said in a latest program on CNBC that he’s “sticking with” Netflix Inc (NASDAQ:NFLX) despite the latest declines. He thinks Netflix Inc (NASDAQ:NFLX) remains the “leader” in the industry.
“They’re still the leader in space. They’ll continue to be the leader. I just don’t understand the concerns, frankly. But it has weighed on I think part of it is is people reallocating Netflix, what they’ve seen in there, which even stalled before it started correcting and saying, “Look, we can get some juice elsewhere.” So that’s it. I’ve also been out there defending it. It’s been my final trade, you know, at least once over the last few weeks. That hasn’t worked out, but I’m sticking with it. I just don’t think the model’s broken at all or being damaged.”
Macquarie Core Equity Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its second quarter 2025 investor letter:
“Netflix, Inc. (NASDAQ:NFLX) offers a subscription-based streaming service. We expect the company’s growth momentum will continue while investments in content and licensing grow at a slower rate, allowing for higher margins over the coming two to three years.”
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 156
Billionaire Paul Tudor Jones recently warned that “ingredients” are in place for a massive stock rally before a potential downturn amid rising speculative behavior in the markets. The billionaire said investors should position themselves to take advantage of the bull run.
“Feels exactly like 1999. I don’t know whether we’ll actually replay it exactly, but I think all the ingredients are in place and certainly from a trading standpoint, you have to position yourself like it’s October 99. I don’t see why you would do anything but that. And remember, the NASDAQ doubled between the first week of October 99 and March of 2000. So, if it looks like a duck and quacks like a duck, it’s probably not a chicken.”
How is Tudor Jones positioning amid the AI boom?
According to the latest filings as of the end of the second quarter, Tudor Investment owns a $141.9 million stake in Apple Inc (NASDAQ:AAPL).
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its second quarter 2025 investor letter:
“Finally, shares of technology bellwether Apple Inc. (NASDAQ:AAPL) underperformed the market and lost value as the company faced a classic innovator’s dilemma, which appeared all the more egregious as competitors embraced the AI opportunity. Apple has had a dominant market position in smartphones and services, but now more than ever, investors are questioning the future outlook for the company. Despite posting a negative absolute strategy return during the quarter, which weighed on absolute strategy returns, relative to Apple’s the company’s large position in the benchmark our underweight position proved to be a tailwind to relative results during the quarter.”
2. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 178
Barton Crockett, Rosenblatt Securities senior analyst and managing director, said in a latest program on CNBC that OpenAI is the “next Google.”
“We’re investing in Open AI in a company that you have nobody ever heard of three years ago. Nobody heard of three years ago. And now you have to believe that these guys are the next Google, you know, as rich and as wealthy and as much money as Google makes from search or bigger maybe or bigger even that this assumes that market and many others around it and is absolutely transformative and the thing about money is that it can make things happen particularly in this area. So it’s hard to really stand against this tide, right? I mean, you have to run with it until you get some reason to think it’s not going to happen. And certainly this year, next year, a lot’s going to happen.”
Middle Coast Investing stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its third quarter 2025 investor letter:
“We invested in Alphabet Inc. (NASDAQ:GOOG) earlier this year when the market viewed it as an AI loser, which seemed unlikely to me. Gemini has only grown in prominence since then. The other part of this thesis was that a government break up of Alphabet would be good for shareholders. The market disagrees; but after the recent anti-trust ruling did not force Google to sell its Chrome unit, the stock has gone up. Waymo, Alphabet’s autonomous driving unit, is also an AI-powered company that is deploying fleets in more and more cities. Not GenAI, exactly, but in the ballpark.”
1. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 235
Tom Lee, Head of Research and CIO at Fundstrat, said in a recent program on CNBC that there are strong tailwinds for the market. The analyst reiterated his view that Nvidia’s stock valuation is attractive.
“You know, one is that we know there’s a tremendous capex tailwind from AI. And the second is that the Fed’s been on hold for 9 months and it’s kept the ISM below 50 for now 31 months and the Fed’s dovish. So that’s the rest of the economy getting basically a lifeline. Those are going to be powerful tailwinds that even a government shutdown doesn’t really change the story around. And now that we’re in this seasonally strong fourth quarter and valuations I just don’t think are that demanding because you know NVIDIA Corp (NASDAQ:NVDA) is still at 26 times earnings. I mean, I think stocks still have a lot of upside into year end.”
Baird Chautauqua International and Global Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) reported first quarter results that were extremely solid. The company took a write-down on China-specific datacenter products and flushed out any future China contributions from their guidance, following the new export restrictions introduced in April. Demand commentary ex China was extremely encouraging—Nvidia is outgrowing expectations despite supply constraints and outgrowing competing ASIC products by a large margin. We have been underweight Nvidia relative to the benchmark, which was up 46% in the quarter, given our short-to medium-term concerns that the feverish AI datacenter build may be resulting in overcapacity, which has not come to bear.”
While we acknowledge the potential of NVDA to grow, 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 NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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.
