Speaking on CNBC’s “The Exchange,” Stacey Rasgon, senior U.S. semiconductor analyst and managing director at Bernstein, said that while artificial intelligence worries have been climbing, demand remains off the charts.
In particular, sustainability-related concerns tied to AI have been rising as huge numbers start to draw disbelief, while the scale of Nvidia’s ecosystem investments have also been raising eyebrows.
Despite these concerns, the firm remains bullish on the sector for now. At some point, there may be some air pockets, Rasgon noted, but it is not now, probably not this year or the next.
Wedbush analyst Dan Ives holds similar views, projecting that tech stocks may be up over 20% in 2026.
“Heading into 2026 the tech world and investors are both excited and nervous about the AI Revolution. On one hand this is a 4th Industrial Revolution taking shape with the US leading China on tech for the first in 30 years…while on the other hand the trillions of dollars needed to reach the heights of enterprise/consumer AI Revolution have caused nervousness and doubters among investors.”
-Analysts led by Dan Ives.
While Ives believes both sides could be right at the same time, it “ultimately speaks to 2026 being an inflection point year for the AI Revolution buildout.”
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.
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12. Pony AI Inc. (NASDAQ:PONY)
Number of Hedge Fund Holders: 27
Pony AI Inc. (NASDAQ:PONY) is one of the 12 AI Stocks in the Spotlight for Investors. On December 16, Barclays analyst Jiong Shao initiated coverage of the stock with an Equal Weight rating and $15 price target.
According to the firm, robotaxi technologies are mostly ready in China and there is a viable business model for them. While challenges facing the industry cannot be overlooked, the future potential of PONY AI lies in robo, not in taxi.
A day earlier, Macquarie initiated coverage on the stock with an Outperform rating and set a price target of $29. The firm believes 2026 is a turning point for robotaxi profits.
Firm analyst sees Pony AI at the forefront of robotaxi commercialization in China. It believes that 2026 is the starting point for the robotaxi push, with fleet size set to triple as well as witness a 20% decline in hardware costs that will push forward toward profitable operations.
“Our benchmarking suggests robotaxis could reach 45% of the China mobility market share by 2035E. Our base case is Pony remains a top-two China robotaxi player, which implies a $12.6B equity value.”
– Analyst Eugene Hsiao
Pony AI Inc. (NASDAQ:PONY) specializes in autonomous mobility, offering AI-driven robotruck and robotaxi services, intelligent driving software, and vehicle integration solutions.
11. SentinelOne, Inc. (NYSE:S)
Number of Hedge Fund Holders: 42
SentinelOne, Inc. (NYSE:S) is one of the 12 AI Stocks in the Spotlight for Investors. On December 15, Citizens reiterated its “Market Outperform” rating on the stock with a $23.00 price target. The firm is cautiously positive on the stock, noting room for re-rating despite slower growth.
Citizens maintains its positive outlook on SentinelOne despite its “lack of scale relative to peers” and “declining top-line growth rate relative to profitability expectations.”
“SentinelOne currently trades at a CY26E EV/revenue multiple of 3.7x, while our $23 price target assumes a CY26E EV/revenue multiple of 6.0x, which is a discount to the peer group median multiple of 11.1x. We believe this is justified given SentinelOne’s lack of scale relative to peers, combined with a declining top-line growth rate relative to profitability expectations.”
The firm believes that there is room for re-rating provided execution improves, even if revenue growth remains moderated.
SentinelOne, Inc. (NYSE:S) is one of the leading artificial intelligence-powered cybersecurity providers.
10. Fabrinet (NYSE:FN)
Number of Hedge Fund Holders: 44
Fabrinet (NYSE:FN) is one of the 12 AI Stocks in the Spotlight for Investors. On December 15, Susquehanna initiated coverage on the stock with a “Positive” rating and set a price target of $550.00.
Fabrinet holds a strong position in the optical networking market, with analysts viewing the stock well positioned to benefit from sustained infrastructure and AI tailwinds.
The firm anticipates the stock to capitalize on expanding opportunities in optical networking, which includes transceivers, DCI (Data Center Interconnect), and CPO (Co-Packaged Optics) technologies.
“Fabrinet has so far tremendously benefited from the inflection of transceivers in data centers and is set to further benefit from multiplying opportunities in optical networking (transceivers, DCI, CPO), with an emerging story in HPC contract manufacturing for AI servers to boot. We initiate with a Positive rating and $550 PT (~39.5x 2026E EV/NOPAT).”
Fabrinet (NYSE:FN) offers optical packaging, along with precision optical, electro-mechanical, and electronic manufacturing services.
9. KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 61
KLA Corporation (NASDAQ:KLAC) is 12 AI Stocks in the Spotlight for Investors. On December 15, Jefferies upgraded the semiconductor equipment maker to “Buy” and raised the price target to $1,500 from $1,100. The firm believes that KLAC’s run is “just beginning,” citing expanding AI accelerator use cases and a robust outlook for leading-edge and advanced packaging demand.
Besides KLAC, Jefferies also identified Nvidia and Broadcom as companies with sustainable demand from the build out of AI infrastructure. With chip complexity increasing, the firm sees upside for KLA as rising process control intensity plays directly on its strengths.
“We are seeing power and performance move to the forefront from AI servers, pushing node transitions faster and expanding the use case beyond handsets. The growth in expectations of accelerators ex-NVDA increases the demand at the bleeding edge.”
The firm further highlighted how packaging complexity is also rising, which requires more process control and benefits KLAC’s business model. China exposure was also highlighted.
“While China remains a concern, we believe China revenues are relatively derisked at 25% for C26 with history suggesting there is actually upside (Semi Caps continue to guide conservatively on China but the demand remains strong). We raise our PT to $1500 based on 30X our C28 EPS of $50.”
KLA Corporation (NASDAQ:KLAC) is a semiconductor manufacturing corporation engaged in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide.
8. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 81
Palantir Technologies Inc. (NASDAQ:PLTR) is one of the 12 AI Stocks in the Spotlight for Investors. On December 15, BofA Securities reiterated its “Buy” rating on the stock with a $255.00 price target following investor meetings with company executives in South Korea.
The meetings included Palantir’s CFO Dave Glazer, Deployment Strategists Hind Kraytem and Austin Lee, and Investor Relations representative Cary Li.
Following the meetings, analyst Mariana Perez Mora noted how Palantir continues to witness robust enterprise adoption of its AI platforms as well as expanding government contracts, supporting sustained revenue growth.
US Commercial demonstrates the strongest momentum, noted the analyst, driven by strengthening backlog, lower contract duration, and customers rapidly advancing through Palantir’s value chain.
The firm also discussed how PLTR recently secured a two-year $448 million US Navy ShipOS award. The Navy will be using Palantir’s Foundry and AIP to accelerate submarine construction by identifying supply chain bottlenecks.
This award in its government business segment further aligns the company with the Trump Administration’s priorities toward American reindustrialization.
Mora also pointed to opportunities for margin expansion, stating that operating leverage grows with each use case across PLTR’s business segments.
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems.
7. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 83
Autodesk, Inc. (NASDAQ:ADSK) is one of the 12 AI Stocks in the Spotlight for Investors. On December 17, BTIG initiated coverage on the stock with a “Buy” rating and a price target of $365.00. The firm is positive on the stock as it sees durable growth for ADSK from product expansion.
Autodesk holds a strong position in CAD and BIM software, the firm noted. Besides its core portfolio, it has also been expanding and has created industry-specific cloud collections such as Forma, Fusion, and Flow.
These offerings by ADSK have been designed to encompass more users and streamline workflows across Design, Make, and Operate. The expansion will meaningfully expand ADSK’s total addressable market and also opened new monetization opportunities.
The opportunities will in turn pave way for continued and disciplined growth for the company.
“Lastly, ADSK continues to make strides on its margin profile, and we see ADSK’s FY29 OM target (+41%) as feasible.”
Autodesk, Inc. (NASDAQ:ADSK), a multinational software corporation, leverages generative AI technology to drive innovation across the design, construction, manufacturing, and entertainment industries.
6. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 85
Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the 12 AI Stocks in the Spotlight for Investors. On December 17, Cantor Fitzgerald analyst Jonathan Ruykhaver reiterated an “Overweight” rating on the stock, highlighting quantum and AI strategies, following F1Q26 beat.
Palo Alto reported better-than-expected performance across all metrics, driven by platform consolidation momentum and booming demand for AI-era security architectures.
The company raised its long-term NGS ARR target to $20B by FY30, citing traction across SASE, Cortex, and AIRS; along with expanding total addressable market as the company pushes further into identity, observability, and quantum readiness.
Cantor also discussed PANW’s acquisition of Chronosphere in their investor note, which is a next-generation observability platform built to scale with AI workloads. The acquisition will further enable Palo Alto to become a “full stack security and observability leader.”
“We maintain a constructive long-term view as Palo Alto positions ahead of major platform shifts in AI, identity, and quantum security.”
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity.
5. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 88
Adobe Inc. (NASDAQ:ADBE) is one of the 12 AI Stocks in the Spotlight for Investors. On December 15, BMO Capital lowered its price target on the stock to $400 from $405 while maintaining an “Outperform” rating. The firm remains cautiously positive on the stock despite robust Q4 FY2025 results, citing competitive pressure in lower-end and AI segments.
Adobe reported upside in both net new Annual Recurring Revenue (ARR) and total revenues, showcasing robust performance against low market expectations.
It also guided roughly in line with consensus for FY26 revenues, which the firm views as a reasonable starting point with potential for growth in net new and total ARR in FY26 vs FY25.
While the firm does acknowledge Adobe’s solid results, it also believes that the competitive environment remains “challenging.”
“Hence, against low expectations, we think results were solid. At the same time, we believe the competitive environment remains challenging particularly with lower-end users and AI applications. Net, we remain Outperform though lower our price target to $400 from $405.”
Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions.
4. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 119
Salesforce, Inc. (NYSE:CRM) is one of the 12 AI Stocks in the Spotlight for Investors. On December 17, BTIG initiated coverage on the stock with a “Buy” rating and a price target of $335.00. Firm analysts see upside on Agentforce momentum, an improving narrative, and underestimated execution.
Having helped pioneer the SaaS model nearly three decades ago, Salesforce is once again confronting a structural shift brought by artificial intelligence. By doing so, it aims to secure a credible second act.
The firm noted how Salesforce has been able to re-architecture its core platform, has developed Data 360, its comprehensive data platform for enabling golden customer records, and also extensively innovated the Agentforce layer.
“The debate on CRM’s execution with Agentforce will likely continue in the years ahead while the current valuation suggests to us that some investors are pricing in CRM’s demise.”
BTIG did note how management’s tone improved at Dreamforce, sharing business trends transparently and proactively.
“This includes confidence in NNAOV accelerating and continuing to grow faster than AOV through next year (we project a return to organic double-digit subscription revenue growth in F4Q27).”
Meanwhile, the adoption of Agentforce is in early phase but demonstrating momentum. Feedback from customers and partners has been largely positive in this regard.
“Just over a year since its release, Agentforce ARR passed $540M (+330% y/y), which is mostly driven by customers piloting the platform as its ARPC is ~$57K. Yet, customers in production are rapidly growing (70% q/q). Lastly, feedback from talking to customers and partners is very positive on Agentforce and the general demand environment. We initiate coverage at Buy with a $335 PT.”
Salesforce, Inc. (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce.
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 120
Tesla, Inc. (NASDAQ:TSLA) is one of the 12 AI Stocks in the Spotlight for Investors. On December 19, Truist Securities raised its price target on the stock to $444.00 from $406.00 while maintaining a “Hold” rating.
The firm believes that autonomous driving developments will lead to continued volatility in the stock despite long-term AI vision. A large part of Tesla’s value is linked to how successfully it is able to commercialize its AI products and services, it said. This is particularly true for its Robotaxi service, which is enabled by its FSD technology.
“We believe new city announcements will be forthcoming in 2026, but timing of these will be unpredictable. Further, imperfections in FSD outcomes (see this note) and announcements from competitors will contribute to the volatility.”
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 234
NVIDIA Corporation (NASDAQ:NVDA) is one of the 12 AI Stocks in the Spotlight for Investors. On December 19, Truist reiterated the stock at “Buy” and raised its price target to $275 per share from $255. The firm revised price targets in the semiconductor and artificial intelligence group after establishing 2027 projections.
“In this construct, we favor Buy-rated AI infra companies NVDA, AMD, and AVGO, and derivatives MPWR, TTMI, APH, & MTSI.”
While Truist acknowledges that there are challenges in finding power to run AI infrastructure and sourcing the funds, it believes AI infrastructure stocks remain cheap compared to their growth.
The firm also sees more upside pressure to estimates for the group compared to more diversified analog semis heading into 2026. Analysts also noted how AI capital expenditure upside will continue in 2026.
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 243
Alphabet Inc. (NASDAQ:GOOGL) is one of the 12 AI Stocks in the Spotlight for Investors. On December 17, Citizens analyst Andrew Boone reiterated a “Market Outperform” rating on the stock with a $340.00 price target. The rating affirmation follows Waymo’s third-quarter operational update.
The firm disclosed how Waymo, Alphabet’s autonomous driving subsidiary, reported its cumulative rider-only miles increased by 28 million in the third quarter of 2025, a 24% quarter-over-quarter growth.
The subsidiary’s strongest market, Phoenix, added 10 million rider-only miles during the quarter. Meanwhile, San Francisco and Los Angeles contributed an estimated 9 million additional miles each.
Even though Waymo appears to be supply constrained, the firm is monitoring its slow but steady progress.
“While we believe Waymo continues to be supply constrained, with rider-only miles more dictated by the allocation of vehicle supply than demand, we continue to monitor progress in Waymo One markets. That said, Waymo’s growth continues to grind higher relatively slowly, rather than inflecting upward, given it is manufacturing constrained, which bodes well for Uber (UBER, MP).”
Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.
While we acknowledge the potential of GOOGL 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 GOOGL and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT:12 Hot AI Stocks on Wall Street’s Radar and 10 Buzzing AI Stocks on Wall Street.
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