Wall Street is currently in a bubble-or-not-bubble debate around the AI rally, with some investors warning a peak might be near, while others say the rally still has plenty of room to run.
Brad Gerstner, Altimeter Capital founder and CEO, continues to believe the AI trade has several tailwinds amid increasing spending and declining interest rates. In a latest interview with CNBC, the tech investor compared the AI industry with the Manhattan Project to give investors an idea about the size of the AI technology spending:
“Just to provide some context here. The Manhattan Project was $4 billion. You inflation adjust that that’s 40 billion. It was 1% of GDP. So if you take 1% of GDP, that’s 300 to 400 billion. Okay, that and that was a government-funded project that had a big impact on the economy. The compute buildout that’s going on now is 10x the Manhattan Project with no government funding. All privately funded by deals like the one you just heard announced. Right? So this is a when you think about the tailwinds in the economy,?” Gerstner said.
Brad Gerstner of Altimeter Capital
The analyst reiterated that we are at the beginning of an AI investment cycle and said the Federal Reserve’s interest rate cuts would also help the market.
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10. Blue Owl Capital Inc (NYSE:OWL)
Number of Hedge Fund Investors: 40
During a recent podcast on Bloomberg, James Van Geelen, the founder and portfolio manager at Citrini Research, was asked how to hedge the risks related to “circular financing” in the AI space. Here is what the analyst said:
“You could buy all the real companies that are building this kind of data center and then you could short Blue Owl and the private credit companies that are doing the kind of financing aspect of it. Because if it goes bad, they have limited upside and kind of unlimited downside. And if it continues happening, the companies that are actually building it have unlimited op upside and they’re still, like you said, these old line kind of industrial that like they still have a core business to go back to.”
9. Seagate Technology Holdings PLC (NASDAQ:STX)
Number of Hedge Fund Investors: 71
James Van Geelen, the founder and portfolio manager at Citrini Research, said in a recent podcast on Bloomberg that Seagate could be a potential beneficiary of the AI boom amid rising demand for storage. Here is what the analyst said before mentioning Seagate Technology Holdings PLC (NASDAQ:STX):
“People kind of forgot that video takes up a lot more storage than text does. And if we’re gonna start just like throwing out the slop on video, the part, basically one of the only areas of semiconductors that has gotten ignored has been storage. Not like, not like memory, like, like RAM and stuff, but like hard drives and solid state disks.”
Seagate Technology Holdings PLC (NASDAQ:STX) is up 96% over the past year.
8. Western Digital Corp (NASDAQ:WDC)
Number of Hedge Fund Investors: 74
James Van Geelen, the founder and portfolio manager at Citrini Research, said in a recent podcast on Bloomberg that Western Digital could be a potential beneficiary of the AI boom amid rising demand for storage due to the rise of AI videos.
“People kind of forgot that video takes up a lot more storage than text does. And if we’re gonna start just like throwing out the slop on video, the part, basically one of the only areas of semiconductors that has gotten ignored has been storage. Not like, not like memory, like, like RAM and stuff, but like hard drives and solid state disks. Like Western Digital Corp (NASDAQ:WDC) and you know,” he said.
Geelen said video models will play a key role in the overall LLM space.
“LLMs don’t really interact with the world, but we’re starting to see in robotics, AI models interact with the world. So you have these video language action models and you can structure it so that, there was a interesting paper on archive recently that, and you know, this is video models like VEO 3 are emergent zero shot learners and understands. And what that just means is you can give it basically like a second of context and then it can extrapolate about what’s going on beyond that. That becomes extremely important for robotics.”
7. Caterpillar Inc (NYSE:CAT)
Number of Hedge Fund Investors: 76
James Van Geelen, the founder and portfolio manager at Citrini Research, talked about his visit to the Project Stargate facility in Abilene, Texas. Answering a question about companies powering this major facility, Geelen talked about Caterpillar Inc (NYSE:CAT):
“That was the first thing we saw in the drone is you fly over it and they just built their own natural gas plant. And the interesting thing is, these aren’t like the really good natural gas turbines because if you wanted, so natural gas turbines fall along, simple cycle, combined cycle. These are simple cycle. They’re each 35 megawatts, which is very much on the lower end. Half of ‘GE Vernova, half of ’em are from Caterpillar Inc (NYSE:CAT). A company the Caterpillar ons called Solar Turbines. And the reason why they’re not, you would think, oh, you’re spending half a trillion dollars on these things. You could probably get the best thing ever, but that’ll take you seven years.”
6. PG&E Corp (NYSE:PCG)
Number of Hedge Fund Investors: 77
Jim Lebenthal, a partner at Cerity Partners, recently explained during a program on CNBC why he likes utility company PG&E.
“This is a California utility. It got unreasonably smacked down with the wildfires earlier this year. Its liabilities are nowhere near what the market feared. And it’s got good momentum right now.”
Third Point Management stated the following regarding PG&E Corporation (NYSE:PCG) in its Q4 2024 investor letter:
“We are devastated by the recent events in Southern California. Several of our family members and team members call Los Angeles home, and our hearts are with all impacted by the fires.
While PG&E Corporation (NYSE:PCG) does not operate in this region, there is press speculation that one of the fires, Eaton, may have been related to transmission equipment owned by SoCal Edison (SCE), another investor-owned utility (parent company Edison International.) Edison has stated publicly that they do not believe their equipment was involved. The investigation is ongoing, and we believe it is premature to make conclusions about the origin of the fire…
If the Eaton fire ignition was related to SCE equipment, the California legal standard of “inverse condemnation” exposes SCE to resultant property damage liabilities. After PG&E’s bankruptcy in 2019, California passed a bill called AB1054 which protects the state’s investor-owned utilities (Edison, PG&E and Sempra) from these liabilities as long as they adhere to a rigorous safety standard. This includes a comprehensive wildfire mitigation plan approved annually by the government and a commitment to spend billions to harden the grid; for example, PG&E is spending a whopping $18 billion on wildfire mitigation from 2023 -2025. In exchange, AB1054 includes several protections, such as a legal prudency standard that entitles the utility to cost recovery via multiple avenues in the event of a catastrophic fire and a $21 billion insurance fund to cover incurred liabilities. SCE has an active safety certificate and thus should benefit from the protections under AB 1054, just as PG&E would in case of a future fire. Regulator-approved cost recovery is a routine proceeding for utilities in areas prone to severe climate events (hurricanes, tornadoes, earthquakes, etc.) in acknowledgement of the fact that it is not feasible to remove all risk from overhead grid infrastructure. PCG has been the preeminent advocate in California for undergrounding, which we believe is the only way to permanently eliminate wildfire risk from grid assets…” (Click here to read the full text)
5. Constellation Energy Corp (NASDAQ:CEG)
Number of Hedge Fund Investors: 79
Tim Seymour, the founder and Chief Investment Officer of Seymour Asset Management (SAM), recently said during a program on CNBC that he likes Constellation Energy. Here is what the investor said:
“Constellation Energy Corp (NASDAQ:CEG), I think you’ve got a lot of the same trends we talked about, but in a utility company with nuclear and in AI.”
ClearBridge Global Infrastructure Income Strategy stated the following regarding Constellation Energy Corporation (NASDAQ:CEG) in its second quarter 2025 investor letter:
“U.S. electric utility Constellation Energy Corporation (NASDAQ:CEG) Energy also outperformed for the quarter. Constellation is primarily a nuclear generation company and is the largest producer of carbon-free electricity in the U.S., serving states including New York, Illinois, Maryland, Pennsylvania and New Jersey. The company’s combined generation capacity is more than 32 GW and 90% of annual output is carbon free. Constellation’s share price benefited from the renewed optimism on data center deals.”
4. GE Vernova Inc (NYSE:GEV)
Number of Hedge Fund Investors: 106
James Van Geelen, the founder and portfolio manager at Citrini Research, recently investigated the Stargate data center facility in Texas and talked in detail about the potential beneficiaries of the data center buildout during a Bloomberg podcast. When asked which companies are actually powering the AI infrastructure projects, here is what the analyst said:
“So that’s the, that’s the best part. That was the first thing we saw in the drone is you fly over it and they just built their own natural gas plant. So you have outside of Stargate, Abilene 10 natural gas turbines. And the interesting thing is, these aren’t like the really good natural gas turbines because if you wanted, so natural gas turbines fall along, simple cycle, combined cycle. These are simple cycle. They’re each 35 megawatts, which is very much on the lower end. Half of ’em are from GE Vernova, half of ’em are from Caterpillar. A company the Caterpillar owns called Solar Turbines. And the reason why they’re not, you would think, oh, you’re spending half a trillion dollars on these things. You could probably get the best thing ever, but that’ll take you seven years.”
Carillon Scout Mid Cap Fund stated the following regarding GE Vernova Inc. (NYSE:GEV) in its second quarter 2025 investor letter:
“GE Vernova Inc. (NYSE:GEV) provides technologies and services for generating, converting, storing, and managing electricity, including gas, nuclear, wind, solar, and grid solutions. As with Quanta Services, investors see significant electricity demand growth led by AI data centers, in addition to other drivers. Led by increasing demand for gas turbines, earnings expectations continue to trend higher as GE Vernova’s backlog already stretches into the next decade. Also, as nuclear power is being reconsidered, nuclear power plant turbines and small modular reactors could add additional growth. We see significant opportunities for this market leader to support power demand growth.”
3. Oracle Corp (NYSE:ORCL)
Number of Hedge Fund Investors: 124
Joseph Terranova, Senior Managing Director, Virtus Investment Partners, recently commented on Oracle Corp (NYSE:ORCL) following the stock’s decline on a media report that said the company’s margins related to its Nvidia Cloud business are low. The analyst said Oracle Corp (NYSE:ORCL) stock gains following its AI deals showed “euphoria,” and the company may not be in a strong position to invest heavily like Amazon or Alphabet.
“I think that’s the euphoria. I think it’s represented on September 10th. You know, Josh is talking about a bubble. Sir John Templeton talks about the stages of a bull market. The last stage is euphoria. And in certain areas of the market, there will be euphoria. I think Oracle Corp (NYSE:ORCL) is a classic example of that. September 9th to September 10th, a parabolic 40 plus% move higher. And then the dramatic steady retracement ever since. Why? Because the spending here is being done by debt. That is not what the market should be encouraged by. What the market previously had been encouraged by in the early stages of 2025 and in 2024 is that free cash flow was the catalyst behind a lot of the spending. You don’t want to see this evolve into a debt-driven cash spend on CapEx. That’s troubling for the market, and I think it’s clearly represented here. I understand why Oracle Corp (NYSE:ORCL) did what they did in signing the deal. They need to suffer in the near term with their profit margins for long-term profitability. But in reality, maybe they are not best positioned like a Google or like an Amazon to accept that type of financial dynamic.”
ClearBridge Large Cap Growth Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its third quarter 2025 investor letter:
“During the quarter, the Strategy initiated new positions in infrastructure software providers Oracle Corporation (NYSE:ORCL) and Datadog and added to custom silicon developer Broadcom. Oracle, a leading provider of database software for large enterprises, has successfully expanded into cloud infrastructure as a platform to run generative AI workloads. Oracle is gaining share among hyperscalers due to its lower-cost data center architecture, which is well-suited for large scale AI training workloads. We believe Oracle’s share of the market will continue to grow over the next few years with profitability of this growth underappreciated by the market.”
2. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 235
James Van Geelen, the founder and portfolio manager at Citrini Research, was recently asked during a Bloomberg podcast why NVIDIA Corp (NASDAQ:NVDA) is investing in its own customers if the demand for its AI chips is real. Here is what Geelen said, focusing on the “not skeptical” view of the matter:
“I could take the very skeptical view or the kind of not skeptical view. The non-skeptical view is the best thing for Nvidia is that we accomplish AGI. So anything that it can do to get us closer to that massive, massive infrastructure that’s required for that is great for them as quickly as possible. As quickly as possible. Because every year that you don’t achieve a GI becomes less likely. So that is maybe the core factor. And then there’s, it’s good for, for them and yeah, the, the and playing into that, the, because this, this isn’t necessarily like the.com bubble because the.com bubble had fiber and then it had, you know, pets.com and, and Amazon and all that stuff. This is all pretty much CapEx Right? Tech is capital intensive again, which means that it’s, it, the bust won’t necessarily be like the.com bubble where it gives the real players time to shine. If the CapEx spending grinds to a halt because the market goes down, that’s the worst thing in the world. So in a way it’s also, it’s in their interest obviously to make sure that that doesn’t happen.”
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.”
1. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 260
James Van Geelen, the founder and portfolio manager at Citrini Research, was asked during a podcast on Bloomberg why Meta Platforms Inc (NASDAQ:META) had to sign a deal with CoreWeave when it has significant data center capacity. Here is what the analyst said
“It’s basically, I would say anything you can do to shift that CapEx away from yourself Okay. A lot of this stuff is funded from Cashflow and yeah, we’re starting to see debt financing take its place. But if you arerunning a company that’s existed for a while and is one of the biggest companies in the world, and yes, you could justify taking anor inordinate amount, amounts of risk to do this. But just like anyone else, if you have a goal and you can kind of shift away some of that risk to, ’cause if, you know, if Core weve goes bankrupt Meta Platforms Inc (NASDAQ:META) not, it’s not, it’s not the worst thing in the world for Meta.”
CoreWeave recently signed a $14 billion agreement with Meta Platforms Inc (NASDAQ:META) to supply the Zuckerberg-led giant with computing power capacity.
Alger Spectra Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its second quarter 2025 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) is the world’s largest social-media company, spanning Facebook, Instagram, WhatsApp and Messenger, and its Reality Labs arm pursues next-generation augmented- and virtual-reality hardware. Its Family of Apps averaged 3.4 billion daily active users in March 2025, highlighting the unrivalled scale that underpins its advertising franchise. The company’s AI powered ad-delivery tools are driving higher pricing and better campaign performance, while new initiatives—such as the rollout of ads in WhatsApp—have the potential to unlock fresh revenue streams and are supported by a cash-rich balance-sheet that now includes a quarterly dividend. Shares rose during the quarter after fiscal first-quarter results came in better-than-expected due to strong revenue growth and operating margin expansion. Additionally, management guided fiscal second-quarter revenue above consensus and trimmed full-year expense guidance even as it lifted capital-expenditure plans to accelerate AI-infrastructure build-out.”
While we acknowledge the potential of META 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 META and that has 100x upside potential, check out our report about this cheapest AI stock.
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