Artificial intelligence was one of the standout themes for investors in 2025. However, Max Wasserman, Miramar Capital co-founder and senior portfolio manager, believes it’s time for investors to take a closer look at their portfolios.
As the AI story begins to mature, market’s heavy reliance of a few tech giants is creating a single, risky point of failure, he believes. Wasserman told Yahoo Finance that investors should start diversifying, understanding what they own and what will happen if anything goes wrong.
Wasserman also highlighted concerns revolving around Wall Street’s AI darling OpenAI, which has been benefitting from massive AI funding. He noted how the company’s circular funding model has raised questions about circular financing, with investors eventually paying for their own revenue.
“If AI goes south on us, tech will go.”
-Tom Essaye, founder and president of Sevens Report, told Yahoo Finance in an interview.
Besides Wasserman, other names such as hedge fund manager Ray Dalio has also been warning about being in the early stages of an AI bubble. Dalio noted how U.S. stocks significantly underperformed non-U.S. equities and gold in 2025, fueling doubts on whether investments in the technology have been delivering real value for investors.
“Clearly, investors would have much rather been in non-U.S. stocks than in U.S. stocks, just as they would have preferred to be in non-U.S. bonds than in U.S. bonds and U.S. cash,” he wrote in the post.
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).
11. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Holders: 29
Five9, Inc. (NASDAQ:FIVN) is one of the 11 AI Stocks on the Market’s Radar. On January 4, Piper Sandler analyst James Fish downgraded the stock from Overweight to “Neutral” with a price target of $21.00 (from $26.00).
The downgrade comes despite a compelling risk-reward for FIVN, as execution challenges may limit upside. The firm believes that FIVN is facing significant challenges even though the company is slowly gaining more market share in customer experience and also has room to improve cash flow.
Some of these challenges include how the company isn’t gaining market share in the contact-center-as-a-service market, is facing positioning challenges in the upmarket segment, and is also under increased competition.
The analysts also discussed how the company has had several “go-to-market shuffles over the last few quarters.” Moreover, the company’s growth is decelerating to less than 10%, and while management has provided outlook for 2026 (including a re-acceleration in the second half of that year to over 10%), the firm believes that this will likely take time to materialize.
Furthermore, despite the company’s AI traction and shift toward more consumption-based offerings, artificial intelligence concerns are continuing to weigh on seat-based models like FIVN, analysts noted.
“Growth is decelerating to [less than] 10%, and while management has given color for 2026 already that includes a re-acceleration in 2H26 to [more than] 10%, it will likely take some time for this to play out and AI concerns continue to weigh on primarily seat-based models like Five9 (despite AI traction and shift towards more consumption). A new CEO has taken over, but the best path medium-term would be likely to go private at this stage.”
Five9, Inc. (NASDAQ:FIVN) is a technology company that offers cloud software solutions for contact centers.
10. SentinelOne, Inc. (NYSE:S)
Number of Hedge Fund Holders: 42
SentinelOne, Inc. (NYSE:S) is one of the 11 AI Stocks on the Market’s Radar. On January 5, Piper Sandler downgraded the stock to “Neutral” and reduced the price target on the stock to $17 from $20. The rating downgrade comes as part of its 2026 outlook for Security and Infrastructure Software stocks.
“2025 proved to be a tough year for our coverage, with the average name showing negative performance and only four names outperforming the NASDAQ (fewest in 5+ years). We are cautiously optimistic for a better year in 2026, with many names entering the year at interesting valuation levels setup well to be longer-term GenAI winners, despite monetization at the software layer not yet occurring at scale.”
-Analysts led by Rob Owens.
According to the firm, even though the current valuation of ~3x EV/CY’27E revenue appears extremely modest on the surface, factors such as recent management changes, an absence of near-term catalysts and disappointing recent results make the stock less compelling than others.
Piper Sandler does remain positive on Sentinel One’s technology platform, acknowledging that more could likely go right than can go wrong at the current valuation. However, with no impending catalyst to slow or reverse deceleration, the analysts have adjusted the rating to Neutral.
SentinelOne, Inc. (NYSE:S) is one of the leading artificial intelligence-powered cybersecurity providers.
