The use of artificial intelligence technology is becoming widespread, but technology leaders and consumers are still skeptical about its use. A recent survey of 1,393 technology leaders across nine countries by IT staffing and services provider Experis reveals that two-thirds of leaders are ramping up their AI capabilities, and almost half are incorporating AI skills into existing roles rather than creating new positions.
Meanwhile, a consumer survey reveals that a staggering 83% of Americans report distrust in companies developing AI systems responsibly. 72% feel the same way about the government regulation of these technologies.
“CIOs and technology leaders are embedding AI into existing functions and roles primarily by using it to augment existing work patterns and tasks. This initial use of AI tools is expected to generate modest productivity increases. In the short term, AI operates within boundaries, enhancing current processes without fundamentally transforming them.”
-Cameron Haight, an analyst at research firm Gartner.
Then again, tech giants such as Meta are betting higher and higher in the field, and traders are optimistic that the expensive bets will pay off. Only last week, Last week, the company finalized a $14.3 billion investment in Scale AI. Scale AI’s leader is also joining a team hand-picked by Chief Executive Officer Mark Zuckerberg to pursue artificial general intelligence.
Amongst this contrast between conscious adoption and massive investment bets, one thing is clear: artificial intelligence is here to reshape the future. For investors, this raises an important question about the companies and industries they should be watching to have a lead in the AI revolution.
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 Q1 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 57
International Business Machines Corporation (NYSE:IBM) is one of the 12 AI Stocks Every Investor is Watching. On June 16, Evercore ISI analyst Amit Daryanani raised the firm’s price target on the stock to $315 from $275 and kept an “Outperform” rating on the shares.
According to the firm, IBM can sustain mid to high single-digit sales growth and double-digit EPS and free cash flow growth over the next several years. This will enable the company to trend towards $16-$18 of EPS power over the next three years.
The analyst cited recent market multiple expansion for its raised target on the shares.
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.
11. Reddit, Inc. (NYSE:RDDT)
Number of Hedge Fund Holders: 72
Reddit, Inc. (NYSE:RDDT) is one of the 12 AI Stocks Every Investor is Watching. On June 16, the company announced the launch of two new AI-powered advertising features at the Cannes Lions 2025, designed to help brands drive greater engagement by tapping user conversations on the platform.
Powered by Reddit Community Intelligence, its first AI-driven social listening tool, “Reddit Insights”, aims to provide marketers with real-time insights for planning campaigns. This is done by identifying trends on the platform and testing campaign ideas.
The company will also be offering a “Conversation Summary Add-ons” feature. This feature will enable brands to integrate positive user comments directly beneath their advertisements to demonstrate what users think about the ad’s subject.
Together, the new AI-driven marketing capabilities will allow marketers to better leverage user discussions from the platform for improving their advertising effectiveness.
“These new products are features I’ve wanted to build since my first day at Reddit. In a world increasingly flattened by AI, the value of human content on our platform only grows. With Reddit Community Intelligence™, we’re not just surfacing insights and conversations; we’re offering deep context, perspective, and the voice of real people at scale.”
-Jen Wong, Chief Operating Officer at Reddit.
Reddit, Inc. (NYSE:RDDT) is a social media platform that leverages AI to strengthen search functionality and improve user engagement.
10. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 73
Twilio Inc. (NYSE:TWLO) is one of the 12 AI Stocks Every Investor is Watching. On June 15, Jefferies analyst Samad Samana raised the firm’s price target on the stock to $132 from $122 and kept a “Hold” rating on the shares.
The analyst told investors in a research note how investors have been debating whether growth can accelerate against second-half of the year comparisons. They are wondering whether gross margins will rebound or if healthy EBIT beats are sustainable.
According to the firm, growth acceleration for Twilio is achievable and makes for a “good tactical setup” in the shares. However, it doesn’t think that most bullish assumptions are achievable.
Twilio Inc. (NYSE:TWLO) is a leading cloud communications platform-as-a-service (CPaaS) company.
9. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 84
Datadog, Inc. (NASDAQ:DDOG) is one of the 12 AI Stocks Every Investor is Watching. On June 16, Stifel analyst Brad Reback reiterated a “Hold” rating on the stock with a $120.00 price target. Holding mixed views regarding the company’s growth trajectory and investment strategy, the firm noted how Datadog did not provide an intra-quarter consumption update in its mid-quarter meeting last week. This is unlike its previous practices.
It discussed its newer products and how the management has indicated that these products represent future revenue opportunities. This usually take years to reach meaningful scale, and customers are currently focused on the existing product portfolio.
The company management also talked about its investment in expanding sales representative capacity, particularly in international and enterprise segments, and how it has been squeezing its gross and operating margins. According to the executives, using cost optimization measures could drive additional leverage.
As such, the firm believes that increasing contributions from sales and marketing investments and easier core growth comparisons could lead to stability within the company’s core business in late 2025. Despite this optimism, the firm is also concerned about the uncertainty associated with large generative AI customer behaviour, as it tends to impact future performance.
Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products.
8. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 90
Vertiv Holdings Co (NYSE:VRT) is one of the 12 AI Stocks Every Investor is Watching. On June 16, Andrew Kaplowitz from Citi maintained a “Buy” rating on the stock with a price target of $130.00. The price target raise follows Vertiv’s strong positioning in the growing data center market and its growth potential.
In particular, Kaplowitz noted how the company is well-positioned to capitalize on the durable growth in AI and data center-related markets, which are anticipated to see global data center IT load growth of 14% CAGR through 2030.
Since Vertiv boasts the potential to focus on innovation and self-help initiatives, it holds the ability to outgrow the industrial market. The firm is particularly confident about the company’s strategy to mitigate tariff headwinds over time, with Vertiv anticipated to reach tariff-neutral status by the end of 2025.
Citi believes that Vertiv’s strong operational leverage and capital deployment opportunities will support “a solid runway for ramping margin expansion over time.” This includes potential mergers and acquisitions or share repurchases, and is expected to support earnings growth.
Based on these solid fundamentals and potential for improved performance, the firm has increased the EV/EBITDA target multiple and the target price for Vertiv’s stock.
Vertiv Holdings Co (NYSE:VRT) is a global provider of digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 97
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 12 AI Stocks Every Investor is Watching. On June 13, BofA declared AMD as the “next-best AI vendor” after its AI event in San Jose, maintaining a “Buy” rating and a $130 price target on the shares. The company unveiled new details about its next-generation AI chips, the Instinct MI400 series, set to ship next year. OpenAI’s Sam Altman made a surprising appearance at the event as well, with AMD noting how it has been offering it feedback on its MI400 roadmap.
Analyst Vivek Arya noted how the company provided an update to its end-to-end infrastructure platform, stating that investors’ expectations might “have been high,” but the company continues to execute in its AI roadmap, customer, and ecosystem proliferation.
The company has also doubled down on its partnerships with Meta, Oracle, Microsoft, xAI, OpenAI, and Saudi Arab’s AI startup Humain. The analyst also noted how no new hyperscaler customer was officially announced, and believes there may be “engagement” with Amazon’s AWS, given that it was a key sponsor for the event. Moreover, he added that AWS prefers announcing its new instances and engagements at its own events.
“We attended AMD’s Advancing AI Event in San Jose where AMD provided an update to its end-to-end AI infrastructure platform. Similar to last AI event in Oct-2024, investor expectations might have been high, but we highlight its continued execution in AI roadmap, customer/ecosystem proliferation, and software maturity.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 104
Tesla, Inc. (NASDAQ:TSLA) is one of the 12 AI Stocks Every Investor is Watching. On June 13, Morgan Stanley reiterated the stock as “Overweight,” stating that the stock remains extremely well positioned in “data, robotics, energy, AI, manufacturing, and supporting infrastructure.”
“While there are a growing number of US efforts to push the boundaries of physical AI, we struggle to think of any other company as well positioned as Tesla in terms of data, robotics, energy, AI, manufacturing and supporting infrastructure (from fleet fulfillment to communications network, etc).”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
5. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 111
Adobe Inc. (NASDAQ:ADBE) is one of the 12 AI Stocks Every Investor is Watching. On June 13, Goldman Sachs analyst Kash Rangan reiterated a “Buy” rating on the stock with a $570.00 price target. The rating reaffirmation follows Adobe’s fiscal second quarter 2025 results. Despite outperforming and raising +1% to fiscal 2025 Digital Media revenue, Rangan noted how the stock fell after hours as investors have been unsure if Adobe can be consistent with its double-digit top-line growth and whether its AI revenue contribution is tangible.
Nevertheless, the firm is optimistic about Adobe’s growth trajectory due to its Adobe Experience Platform and its Apps subscription revenue, which have been up 40% year-over-year. The company’s Express platform has added over 8,000 businesses, serving as a reliable engine for user acquisition. Adobe’s AI adoption is also accelerating, resulting in Firefly App first-time subscribers of +30% Q/Q.
Rangan is particularly optimistic about Adobe’s AI strategy. He believes it is growing to play a larger role in the company’s narrative as it can help make the company’s products better and allow customers to buy higher-priced SKUs, such as the CC Pro. He noted how early evidence from the core CC suite has been promising.
Adobe expects AI-standalone SKUs to surpass a $250 million run-rate by the fourth quarter of fiscal 2025. The firm believes that this could provide additional revenue growth. All in all, Rangan believes Adobe is well-positioned to benefit as Gen-AI spending transitions from Infrastructure into Platform and Application layers.
“We reiterate our Buy rating and $570 PT following Adobe’s F2Q25 results.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 159
Apple Inc. (NASDAQ:AAPL) is one of the 12 AI Stocks Every Investor is Watching. On June 13, Morgan Stanley reiterated the stock as “Overweight” with a $235 price target. The investment bank said that its Apple checks demonstrate how iPhone and iPad estimates are tracking ahead. The firm also said the iPhone and iPad sell-through in China are “positively surprising.”
The “deep” 618 Festival channel promotions in China have been successful in driving upside to both iPhone and iPad sell-through in the June quarter. The firm now sees an estimated 3 M units of upside to its June quarter iPhone shipments forecast and an estimated 2.5 M units of upside to June quarter iPad shipments or $4 B revenue upside, all else equal.
The analyst added how September quarter builds are tracking in line to slightly better. This implies that “Apple (AAPL) could catch a short-term bid.”
“Furthermore, despite trending below normal seasonality, preliminary September qtr iPhone/iPad builds point to in-line to slightly better than expected September qtr iPhone/iPad shipments.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 212
NVIDIA Corporation (NASDAQ:NVDA) is one of the 12 AI Stocks Every Investor is Watching. On June 13, Mizuho reiterated the stock as “Outperform.” The firm said that the company is the leader in the artificial intelligence race. CUDA is Nvidia’s computing platform and programming model.
“We continue to see NVDA leading the AI race with its fortress CUDA moat and strong hardware/networking performance for AI training and inference.”
On the same day, DBS analyst Fang Boon Foo maintained their bullish stance on the stock, giving a “Buy” rating. Fang Boon Foo discussed the strategic partnership with Mistral AI to build AI cloud infrastructure, as well as the CEO’s vision for expanding AI factories in Europe.
These factors underscore Nvidia’s leadership in AI infrastructure development. Nvidia’s trailblazing GPUs boost its dominant market share in AI chips. Moreover, Nvidia’s strong fundamentals are viewed as positives for future growth.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the 12 AI Stocks Every Investor is Watching. On June 16, Oppenheimer raised the firm’s price target on the stock to $775 from $665 and kept an “Outperform” rating on the shares. The firm cited an improved advertising environment as the reason behind the price target raise.
The macro and advertising environment has been better than feared as compared to what it was about six weeks ago, which is why the firm has increased its estimates and price target.
Assuming that there are no bans, TikTok’s first-quarter performance is seen to be a potential near-term risk for Meta. Some other longer-term concerns also prevail, such as Meta falling behind on AI model development. In particular, Llama 4 was “perceived as disappointment,” as well as Meta’s following $14.3 billion investment and acquisition of Scale AI.
According to the firm, Meta’s capital expenditures are forecast at $68 billion for 2025 and $85 billion for 2026. Meanwhile, earnings per share estimates were adjusted to $25.41 for 2025 and $28.23 for 2026, reflecting a year-over-year growth of 6% and 11%.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 328
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 12 AI Stocks Every Investor is Watching. On June 14, the company disclosed in a blog post that it will invest A$20 billion ($12.97 billion) from 2025 to 2029 to expand, operate, and maintain its data center infrastructure in Australia with the aim of boosting the nation’s artificial intelligence capabilities.
The investment, said to be Amazon’s largest global technology commitment in the country, will be directed toward new server capacity and support for generative AI workloads. It is also investing in three new solar farms in Victoria and Queensland.
“Amazon Web Services’ $20 billion investment in data centres in Australia will set us up for the future, boosting our economy and productivity. This is a huge vote of confidence in the Australian economy.”
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions.
While we acknowledge the potential of AMZN 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 AMZN and that has 100x upside potential, check out our report about this cheapest AI stock.
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