Global stocks slipped Wednesday as investors weighed divisions within the Federal Reserve and closely watched earnings that could test elevated valuations in the AI sector. The AI trade is at a critical turning point with all eyes on Broadcom and Oracle as they post earnings today after markets close.
The print for these two AI bellwethers will serve as barometers for AI-driven cloud infrastructure and custom chip demand.
“What they detail on capex intentions and future funding plans could resonate across the AI space, and there are clear risks they could miss on cloud infrastructure,” said Chris Weston, head of research at broker Pepperstone.
“The options market is pricing an earnings-day move of around -/+10%, so outsized volatility is certainly expected.”
A new summary of Fed members’ economic projections will also be unveiled.
“The end-of-2025 dots will show the still divided stance of the committee, and will reveal what [Chair Jerome] Powell was up against,” said analysts at ABN Amro, in a note. “The 2026 dots will likely be dispersed, with both substantial rate cuts, rate hikes, and everything in between, reflecting the uncertainty in the outlook.”
Meanwhile, the Wall Street Journal has reported that President Donald Trump is preparing to begin the final round of interviews related to the Federal Reserve’s leadership transition in the coming days.
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).
12. Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 57
Astera Labs, Inc. (NASDAQ:ALAB) is one of the 12 Hot AI Stocks on Wall Street’s Radar. On December 9, H.C. Wainwright analyst Gus Richard raised the price target on the stock to $195.00 (from $175.00) and reiterated a “Buy” rating. The firm is optimistic on the stock as it sees ALAB poised for growth amid accelerating AI infrastructure trends.
According to the firm, Astera Labs is “well-positioned as the interconnect vendor of choice and rapidly growing its opportunity per rack”. Besides stronger growth per rack, Richard also sees future upside for the stock from NVLink Fusion and copackaged optics.
“We believe that ALAB is well positioned as the interconnect vendor of choice and rapidly growing its revenue opportunity per rack. Throughout CY26 ALAB will grow its Scorpio X revenue with increasingly larger switches in 2H:26. In CY27 its NVLink Fusion product will maintain if not grow its revenue per AI accelerator chip. Longer term ALAB is well positioned as copackaged optics move into the mainstream. We are lifting our PT to $195 on multiple expansion.”
Astera Labs, Inc. (NASDAQ:ALAB) is engaged in the design, manufacture, and selling of semiconductor-based connectivity solutions for cloud and AI infrastructure.
11. Confluent, Inc. (NASDAQ:CFLT)
Number of Hedge Fund Holders: 60
Confluent, Inc. (NASDAQ:CFLT) is 12 Hot AI Stocks on Wall Street’s Radar. On December 9, Bernstein reiterated an “Outperform” rating on the stock with a $31.00 price target. The rating affirmation follows IBM’s announcement to acquire the company for $11 billion.
IBM announced Monday that it is acquiring data streaming platform Confluent. According to the release, the company will pay $31 per share in cash for all of the issued and outstanding common shares of Confluent.
In this regard, Bernstein commented how Confluent has long been an acquisition target owing to its relatively low multiple and strong market position.
Its attraction as a target deepened further after OpenAI committed to using the company’s leading open-source middleware technology, particularly Kafka and Flink, for its next-generation model infrastructure.
Bernstein noted that Confluent’s technology holds particular importance also because generative AI is more easily delivered in Cloud Native technology, such as web or mobile apps commonly built for Java VMs. The company also enjoys a very tight correlation to AWS, reinforcing its position in the tech landscape.
Confluent, Inc. (NASDAQ:CFLT) is a technology company that provides data streaming platforms.
