In this article, we discuss 11 trending AI news and ratings.

AI continues to be a transformative force, which is driving advancements across industries through improved infrastructure, data analytics, and automation. Its adoption is reshaping almost every sector in the market, including manufacturing, cloud computing, and robotics. Even though some challenges can be in scaling applications and managing demand, the long-term potential for AI to revolutionize industries and create new growth opportunities seems undeniable.

Investing in Long-Term Trends and AI Potential

In a Bloomberg interview, Lei Qiu, CIO for Thematic Innovation Equities at AllianceBernstein, discussed her team’s approach to identifying major long-term trends that drive equity growth beyond economic cycles. The firm focuses on significant themes, such as AI, which dominated 2023 and 2024. In addition to enabling AI infrastructure, they are closely monitoring the adoption of AI applications, including advancements in data analytics, cloud migration, networking, and communication equipment, which are significant for connecting smaller, more power-efficient data centers.

Qiu highlighted how automation and AI are already improving efficiency in industries like manufacturing, where companies are realizing substantial cost savings. She also mentioned the potential for related areas such as robotics, autonomous systems, and the Internet of Things to grow in 2025.

On the topic of M&A, Qiu acknowledged its potential resurgence, supported by favorable regulatory environments and strong company balance sheets. However, as an investor, she mentioned the challenge of predicting specific transactions. She also stressed the importance of stock selection and noted that not all ideas succeed without the right management, product, and execution.

Regarding macroeconomic influences, Qiu explained that while dramatic shifts, such as the sharp rate hikes in 2022, can impact long-duration assets, her team prioritizes fundamentals and long-term trends over short-term market timing. She concluded that secular growth themes remain central to the firm’s investment strategy.

For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.

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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

11. Penguin Solutions, Inc. (NASDAQ:PENG)

Penguin Solutions, Inc. (NASDAQ:PENG) designs enterprise solutions across advanced computing, memory, LED products, and edge computing for various industries globally.

Loop Capital analyst Ananda Baruah reaffirmed a Buy rating and a $30 price target on Penguin Solutions (NASDAQ:PENG) following its Q1 earnings beat. The firm views Penguin as a promising player in generative AI and critical next-generation technology, with several potential catalysts expected over the next 12-24 months. The firm also highlighted the underappreciation of Penguin’s relationship with SK Telecom and considered the stock’s valuation attractive, especially with the recent SK Telecom investment and upcoming developments.

10. Applied Digital Corporation (NASDAQ:APLD)

Number of Hedge Fund Holders: 26

Applied Digital Corporation (NASDAQ:APLD) provides digital infrastructure and cloud services, specializing in HPC and AI solutions, including GPU computing for AI, machine learning, and critical workloads.

Applied Digital (NASDAQ:APLD) secured a $5 billion investment from Macquarie Asset Management to support its HPC data center growth. The funds will primarily back the buildout of the Ellendale HPC Campus and future expansion, which will allow Applied Digital to recover $300 million of its equity investment. The agreement grants Macquarie a 15% common equity interest and also ensures that Applied Digital retains 85% ownership, which will minimize stockholder dilution. With the partnership, Applied Digital is aiming to lead in AI-driven data center solutions by using unique power resources and advanced cooling technologies to meet growing AI demands.

Anton Moldan, Senior Managing Director of Macquarie Asset Management commented:

“Applied Digital has a differentiated strategy with access to a unique near-term power portfolio across North America in markets attractive for computing needs which address the most demanding AI and other HPC applications at scale. The significant progress at the Ellendale HPC campus makes this a very compelling opportunity for us as well as for potential hyperscale customers. With our global experience as an owner and manager of data center platforms, we see this as highly attractive opportunity to help build an industry-leading HPC data center company well positioned in these high growth segments of the market.”

9. Wix.com Ltd. (NASDAQ:WIX)

Number of Hedge Fund Holders: 46

Wix.com Ltd. (NASDAQ:WIX) provides a cloud-based web development platform with AI-powered tools for building and managing online businesses.

Morgan Stanley analyst Elizabeth Porter has upgraded Wix (NASDAQ:WIX) to Overweight from Equal Weight and raised the price target to $276 from $248. The analyst highlighted improving growth among self-creators driven by AI innovations, steady growth in the Partners segment, which is owed to subscription increases, and better operational efficiency as important factors supporting strong free cash flow potential that the stock does not currently reflect. The analyst commented:

“Improving growth in Self-Creators, driven by AI innovation, durability in the Partners segment from compounding subscription growth, and increased operational discipline support outsized free cash flow generation. This potential is not fully reflected in the current valuation, with shares trading at 0.81x growth-adjusted versus peers at 0.97x. We upgrade to Overweight.”

8. Motorola Solutions, Inc. (NYSE:MSI)

Number of Hedge Fund Holders: 48

Motorola Solutions, Inc. (NYSE:MSI) delivers public safety and enterprise security solutions globally, including AI-driven video analytics, unified communications, and command center software across various industries.

Motorola (NYSE:MSI) has announced an agreement to acquire Theatro Labs, a Texas-based company that focuses on AI and voice-powered communication and workflow software for frontline workers. Theatro’s cloud-based platform provides real-time collaboration tools through a wearable device that allows users to access information, assist customers, check inventory, and communicate with team members using conversational AI. The technology also makes workplace safety better by enabling discreet alerts to management during unsafe situations and providing step-by-step guidance for incident responses.

Theatro’s software integrates with video security systems to detect potential safety threats or theft and alert employees. Motorola plans to combine Theatro’s offerings with its existing technologies, such as body cameras, fixed video systems, and radios, to create improved solutions for industries like retail, healthcare, manufacturing, and education. Mahesh Saptharishi, executive vice president and chief technology officer of Motorola Solutions commented:

“With Theatro, we are continuing to invest in innovative technologies that purposefully apply AI to protect employees while automating how they work and improving their service to customers.”

7. Hewlett Packard Enterprise Company (NYSE:HPE)

Number of Hedge Fund Holders: 64

Hewlett Packard Enterprise Company (NYSE:HPE) provides global data-driven solutions, including AI-powered HPC systems, intelligent edge products, cloud-based networking, and analytics services across various industries.

Bloomberg reported that Hewlett Packard Enterprise (NYSE:HPE) secured a deal worth over $1 billion to supply Elon Musk’s X social network with AI-optimized servers. The agreement, finalized late last year, saw competition from Dell Technologies and Super Micro. HPE’s growth in AI servers has been strong, yet it lagged behind competitors. HPE’s success in landing the deal may be linked to its liquid-cooling technology. The agreement helped boost HPE’s stock, but larger deals could pressure margins, the report states.

6. Micron Technology, Inc. (NASDAQ:MU)

Number of Hedge Fund Holders: 107

Micron Technology, Inc. (NASDAQ:MU) designs and manufactures memory and storage products, serving diverse markets including data centers, automotive, mobile devices, and consumer electronics worldwide.

UBS has reaffirmed a Buy rating on Micron (NASDAQ:MU) with a price target of $125, adjusting its model based on recent industry pricing checks. The firm lowered its pricing outlook for 2025, as it expects prolonged inventory adjustments but expects a modest DRAM undersupply starting in Q4 2025 and continuing into 2026. UBS is optimistic about Micron’s HBM roadmap, especially its HBM3E 12-Hi chips for Nvidia, referencing competitor delays and positive updates shared at CES. Despite reducing NAND pricing forecasts, UBS highlighted supply discipline among key players like Micron, SK Hynix, and Kioxia, with Samsung expected to follow, predicting a better supply-demand balance by late 2025.

The firm further commented:

“Admittedly, while it is a bit hard to see an immediate catalyst, we see no change in the big picture story here – MU has established technology leadership and the HBM ramp is siphoning wafers away from traditional PC/smartphone memory markets meaning that the market is going to get very tight once again if we see any sort of traditional server refresh or AI PC cycle.”

5. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 107

Advanced Micro Devices, Inc. (NASDAQ:AMD) develops semiconductors, offering processors and graphics solutions for gaming, data centers, and embedded systems, with a focus on high-performance computing for AI applications.

Goldman Sachs downgraded AMD to Neutral from Buy and reduced the price target from $175 to $129. While the firm remains positive on AMD’s ability to gain market share from Intel in x86-based computing, concerns have risen over the impact of Arm-based custom CPUs and increasing competition in accelerated computing. These factors may slow AMD’s revenue growth, increase operating expenses, and pressure its stock multiple. The firm added:

“Since being added to the Buy list on 11/04/2020, the stock is up 50% vs. the S&P 500 at +72% over the same period. We believe this underperformance stems from weakness in PC and traditional end-demand, as well as slower-than-expected growth in Data Center GPUs.

We now expect the stock to remain range-bound until the market regains confidence in AMD’s future growth and margin trajectory.”

4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 158

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) produces a wide range of semiconductor devices, including AI-enabled solutions for high-performance computing, smartphones, automotive, and IoT applications globally.

Taiwan Semiconductor Manufacturing Co. (TSMC) exceeded revenue expectations for the October-December quarter, reporting a 39% increase to NT$868.5 billion (NT$1 = US$0.030), due to strong demand for AI hardware. TSMC’s revenue growth for 2024 reached 34%, surpassing its 30% target, as the company benefits from the global AI race, Bloomberg reported.

However, some investors are concerned about over-building and a lack of a major AI-driven application. TSMC’s reliance on Apple and its geopolitical challenges in 2025 may also impact its performance. Key areas to watch include the company’s advanced packaging capacity, US fab progress, and capital-spending plans for next year, the report stated. Bloomberg Intelligence Technology Industry analyst, Charles Shum said:

“The company’s gross margin is likely to expand to a two-year high of 58%, or more. On the upcoming earnings call, four areas merit attention: First, the outlook for CoWoS advanced-packaging capacity build and revenue, which is likely to give insight into the expected strength for AI chip demand in the coming 12-18 months. Second, progress on the US Arizona fab’s ramp-up, which is critical to meeting the onshoring chipmaking needs of Apple, Nvidia and others. Third, potential margin pressure from weaker demand in 7-, 16-nm and larger mature nodes.

Finally, capital-spending plans for 2025, which will signal TSMC’s confidence in the uptake of its next-generation N2 node.”

3. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 193

NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven technologies, offering platforms for cloud computing, robotics, autonomous vehicles, and data centers.

BofA hosted NVIDIA CFO Colette Kress, IR Stewart Stecker, and Andrew Nguyen for an investor dinner in Las Vegas, a day after the company CEO’s keynote. The firm reiterated a Buy rating on NVIDIA with a price target of $190. The firm is increasingly confident in the company’s role as an AI incubator, and noted growth in AI/robotics, AI workstations, and autonomous driving. The firm also believes that NVIDIA is early in capitalizing on a $2 trillion infrastructure opportunity. However, volatility may continue until Q4 earnings in February due to potential China restrictions and product transitions. NVIDIA is the firm’s top sector pick and BofA believes that the GTC conference in March is expected to be a key catalyst.

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) focuses on AI through its advanced cloud solutions, AI-powered business applications, and cutting-edge language processing and computing technologies.

Microsoft (NASDAQ:MSFT) said that its Digital Crimes Unit (DCU) is taking legal action to combat cybercriminals who develop tools to bypass safety measures in generative AI services, including Microsoft’s. The company has discovered that a foreign-based group exploited exposed customer credentials to access and alter AI services for malicious purposes. Microsoft revoked access, implemented countermeasures, and strengthened security. The ongoing investigation, which is supported by a court order, aims to seize illicit infrastructure and gather evidence on the criminals behind these activities. In a blog post, the company wrote:

“Microsoft’s AI services deploy strong safety measures, including built-in safety mitigations at the AI model, platform, and application levels. As alleged in our court filings unsealed today, Microsoft has observed a foreign-based threat–actor group develop sophisticated software that exploited exposed customer credentials scraped from public websites. In doing so, they sought to identify and unlawfully access accounts with certain generative AI services and purposely alter the capabilities of those services. Cybercriminals then used these services and resold access to other malicious actors with detailed instructions on how to use these custom tools to generate harmful and illicit content. Upon discovery, Microsoft revoked cybercriminal access, put in place countermeasures, and enhanced its safeguards to further block such malicious activity in the future.”

1. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 286

Amazon.com, Inc. (NASDAQ:AMZN) plays a significant role in AI innovation, leveraging the technology to enhance shopping experiences, entertainment, and operational productivity. It is also a major investor in AI development including AI infrastructure.

Argus maintained a Buy rating on Amazon (NASDAQ:AMZN) with a price target of $230, making it the top pick for 2025 in the consumer products sector. The firm believes that Amazon Web Services (AWS) is strengthening its position in the growing AI market, using its leadership in cloud services to play a significant role in AI development. CEO Andy Jassy mentioned that AI is growing three times faster than cloud services. Additionally, Amazon’s partnership with Anthropic is seen as an important move to boost AWS at a time when AI technology is becoming more important.

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