After years of soaring gains, technology stocks are facing heightened scrutiny as investors begin to grow increasingly wary of an “AI bubble” that may pop any time soon. Anxiety particularly heightened after the hedge fund investor who inspired the film The Big Short, Michael Burry, bet $1.1bn on a fall in prices for AI-related stocks Nvidia and Palantir.
For investors seeking protection without missing out on growth, Arnaud Girod, head of economics and cross asset strategy at Kepler Cheuvreux, believes that healthcare’s position is “the exact opposite” of anxiety around AI. Cheuvreux told CNBC’s Squawk Box that he believes healthcare may be the ultimate hedge against an AI correction in 2026.
“We are putting behind us a lot of headwinds like the tariffs.”
Girod noted that investors “need to find businesses where the franchises are not going to be challenged by the AI disruption itself and, at the same time, companies that could leverage the technology either through cost cutting, efficiencies, productivity, or indeed, incremental innovation.”
Healthcare, particularly pharma, offers a hedge due to easing tariff risks, supportive drug pricing policy, and robust long-term trends such as aging populations and obesity, even as tech stocks have outperformed healthcare this year.
“The recovery in Pharma stocks could accelerate as visibility improves after this year’s perfect storm and as the sector’s longer-term structural themes regain traction (ageing demographics, obesity).”
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. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 66
International Business Machines Corporation (NYSE:IBM) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, Erste Group upgraded the stock from Hold to “Buy” following robust third-quarter performance and improved financial guidance. The improved financial outlook for IBM, together with Red Hat momentum, support the rating upgrade.
“Following the good Q3 results, IBM management has raised its financial guidance for the full year 2025. The company now expects revenue growth of more than 5%. The expectation for free cash flow for the full year has also been raised to around USD 14 billion.”
IBM’s software segment is also likely to continue gaining importance in the future, supported by Red Hat products. Analysts anticipate IBM to achieve a higher increase in sales next year than this year.
“The share should benefit from the Group’s positive outlook and achieve further price gains.”
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. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 78
Coherent Corp. (NYSE:COHR) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, Raymond James raised its price target on the stock to $210.00 from $180.00 while maintaining a “Strong Buy” rating. The firm is optimistic about the optical components manufacturer, anticipating its underappreciated AI exposure to drive continued upside.
“We maintain our Strong Buy rating and raise our price target on Coherent after refining our estimates for new segmentation and updating our sum-of-the-parts analysis.”
Coherent is a leader and critical enabler across multiple AI architectures within and between AI data centers, making it agnostic to operators or Large Language Models. As such, analysts at the firm believe that the value of COHR’s technology breadth and IP are not “fully appreciated.”
Industrial segments have bottomed, and recent strategic actions signal a recovery moving forward. The firm’s estimates remain high-on-the-Street with continued upside seen ahead.
Coherent Corp. (NYSE:COHR) is an American manufacturer of optical materials and semiconductors.
10. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 119
Salesforce, Inc. (NYSE:CRM) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 4, UBS analyst Karl Keirstead reiterated a Neutral rating on the stock with a $260.00 price target. The rating affirmation follows Salesforce’s “mixed” third-quarter earnings report.
Revenue increased 8.6% from a year earlier in the fiscal third quarter, reaching $10.26 billion compared to the expected $10.27 billion. The firm noted that revenue growth aligned with expectations.
Meanwhile, the company’s current remaining performance obligation (cRPO) grew 11% in the third quarter. While this growth has been solid, the company’s guidance for 9% growth in the fourth quarter was merely in line with expectations.
Keirstead noted that the firm would like to remain “patient” on the stock until a clearer path back to 10%+ growth is visible. The company’s management has stated that bookings are improving enough that subscription and support revenue growth should soon reach a low point before ramping in the second half of fiscal year 2027.
Moreover, while positive signs such as stronger bookings and demand for Agentforce/Data exist, investor sentiment in the SaaS sector demands more evidence of the company’s ability to return to double-digit growth.
Company valuation suggests limited downside risk, but the current revenue growth rate of 8-9% still remains a concern. This is why the firm maintains a cautious stance and awaits clearer signs of sustained growth.
Salesforce, Inc. (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce.
9. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 120
Tesla, Inc. (NASDAQ:TSLA) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 4, RBC reiterated the stock as “Outperform.” The firm believes that Tesla is a key player in the humanoid race but that the robot race remains wide open.
“Tesla is focusing on deploying its Optimus humanoid robot across manufacturing, hospitality, and consumer markets, while intentionally excluding military and police applications.”
Firm analyst Tom Narayan projects a $400 billion in robot sales by 2050. Discounting this value back to today, he estimated that the robot division is currently worth about $640 billion. This valuation represents more than one-third of the firm’s $500 price target for the stock.
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
8. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 122
Oracle Corporation (NYSE:ORCL) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, RBC Capital reiterated its “Sector Perform” rating on the stock with a $310.00 price target.
The rating affirmation comes ahead of the company’s F2Q26 earnings report set to release on Wednesday, December 10th.
In an investor note, the analyst acknowledged growing investor caution increasing for the stock despite existing long-term AI and cloud tailwinds. The firm will be focusing on several areas in the upcoming earnings print.
“F2Q26 Earnings Preview: The Music Plays On But Investor Scrutiny Growing; We maintain our Sector Perform rating and $310 PT on Oracle, heading into F2Q26 earnings, slated for Wednesday, December 10th with a call at 5PM ET. We’ll be looking for commentary around: potential financing alternatives as fixed income and derivative markets show signs of skepticism; RPO trends going forward; timeline updates for ramped capacity; and AI potentially helping to accelerate cloud migrations.”
Analysts noted how Oracle shares have been under pressure due to investors’ caution surrounding OCI customer concentration, potential margin compression, and incremental leverage, amongst others.
“Shares trade at 28× CY26E EPS, while our $310 PT is based on a 43× CY26E EPS.”
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider.
7. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, CLSA analyst Bhavtosh Vajpayee raised its price target on the stock to $330.00 from $265.00 while maintaining an “Outperform” rating. The firm noted how iPhone sales are “surging to new highs, with AI as a key unlock ahead of future platform shifts.
Vajpayee noted that Apple continues to be “a consumer staple in financial predictability” even as hopes grow around its future in artificial intelligence. The minimum it can do is fix Siri through LLMs such as Gemini, and allow in-app access to give developers more creative tools.
Even though the likes of a rival device such as that from Jony Ive/OpenAI is still likely two years away, the firm believes it may be able to challenge the dominance of traditional apps and screens that have been dominating for the last 15 years.
Meanwhile, iPhone sales are climbing new highs.
“Elsewhere, iPhone sales are surging to new highs, driving a 3–5% increase to FY26–27CL revenue and earnings. We lift our TP from US$265 to US$330, based on 35× FY27CL PE. Maintain O-PF.”
Apple is a technology company known for its consumer electronics, software, and services.
6. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 183
Broadcom Inc. (NASDAQ:AVGO) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, Mizuho analyst Vijay Rakesh maintained an “Outperform” rating on the stock with a $435 price target. The firm is positive on the stock ahead of earnings as it believes Broadcom is a core AI enabler with multiple near-term and long-term catalysts.
The company is set to report its fiscal Quarter report ending Oct 2025 on December 11. Analysts believe that Broadcom is a top beneficiary of custom chip growth, noting that they are buyers on the stock.
This is particularly true considering how the company is poised to benefit from Google’s Gemini 3 ramp and wider TPU adoption by major AI developers including Meta, Alphabet, and Apple.
Broadcom remains a networking beneficiary with TPU ScaleUp and ESUM with META into 2026.
“Our total and AI revenue estimates for F27/28E are ahead of Street as multiple ASICs ramps are on the horizon along with Scale-Up/Scale-Across networking opportunities and a key CEO incentive–pay package boost.”
The company remains the firm’s “Top Pick” ahead of earnings.
Broadcom is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 234
NVIDIA Corporation (NASDAQ:NVDA) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, Bernstein reiterated the stock as “Outperform,” stating that the AI chipmaker is well positioned in the data center space.
“The datacenter opportunity is enormous, and still early, with material upside still possible.”
Another investment firm bullish on the AI behemoth is Goldman Sachs. Similar to Bernstein, the firm believes that the stock is quite compelling with more room to run.
“We reiterate our Buy rating as we continue to believe Nvidia has a sustainable model advantage over peers in AI training applications, we see significant upside to Street estimates, and we view valuation as relatively appealing at current levels.”
Overall, analysts on Wall Street currently have a consensus “Buy” rating on the chipmaker. The average price target of $250 implies a 37.05% upside, however, the Street-high target of $432.78 implies an upside of 137.26%.
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 243
Alphabet Inc. (NASDAQ:GOOGL) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, Pivotal Research raised its price target on the stock to $400.00 from $350.00 while maintaining a Buy rating. The firm’s optimism stems from Alphabet’s multi-year cloud momentum and free cash flow acceleration.
“Search is a resilient cash cow with pricing power, a powerful driver of GOOG’s best in class Gemini AI, with an opportunity to leverage AI take massive costs out of the search business.”
Pivotal Research has extended its forecast from year ’29 to ’20, adjusting its cloud revenue CAGR higher to account for expected market share gains.
The target terminal EBITDA multiple has also been raised in their DCF valuation methodology from 18X to 18.5X (8% discount rate), leading to a Street high target of $400.
Alphabet is anticipated to deliver solid multi-year growth across revenue, profitability, and cash generation.
“We expect Google’s 5-year (’26–’30) revenue CAGR to be 11% (even assuming slowing search), 14%+ EBITDA growth, and 26% free cash flow per share growth.”
Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 4, Mizuho analyst Lloyd Walmsley reiterated an Outperform rating on the stock with an $815.00 price target. The rating affirmation follows potential cuts to Metaverse; which signal upside for Meta and could potentially add $2/share to 2026 EPS.
A Bloomberg report from December 4 has revealed that Meta CEO Mark Zuckerberg is expected to meaningfully cut resources for building metaverse; Zuckerberg’s idea of a digital realm where people would work, socialize, and spend much of their life.
*”We see a significant rally ahead for Meta shares, and recommend investors add to positions, after the 5% move today, in light of multiple press reports the company planned to cut up to 30% out of Metaverse spending and was asking managers to identify broader cuts across the company.”
The firm believes that these cuts would drive a major surge in the shares. As per the report, the cuts would impact Meta Horizon Worlds and the Quest virtual reality unit, leading to layoffs as early as January.
The firm acknowledges that these cuts looks positive. However, it is the degree of incremental upside which remains uncertain.
“Metaverse cuts of this magnitude could add ~$2/share to our 2026 EPS of $29.50, with Reality Labs losses of ~$5.85 per share. One key question here: How much was already contemplated in the 2026 guide?
We suspect some of this is incremental but, ultimately, the plan to cut back in an area perceived as a black hole ($80B of cumulative operating income losses since 2019) alone should give investors more confidence the move to scale up investment in Gen-AI is not a blank check forever.”
Meta Platforms has been expanding its advertising capabilities and also invests heavily in artificial intelligence and the metaverse.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 312
Microsoft Corporation (NASDAQ:MSFT) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, Barclays reiterated an “Overweight” rating on the stock with a $625.00 price target.
The rating affirmation follows the company’s announcement of price increases for Office and Microsoft 365 subscriptions, reinforcing the company’s strategic position in the enterprise AI industry.
“MSFT announced increased prices for its Office and M365 subscriptions for Commercial customers starting July 1, 2026. This marks the second price increase (following the first in 2022) after the original launch of Office 365 subscriptions in 2011.”
These price hikes mark the second increase after the original launch of Office 365 subscriptions, with the company justifying them by pointing to the addition of 1,100 new features across Microsoft 365, Security, Copilot, and SharePoint during the past year.
The firm highlighted how the M365 F1 subscription has been raised the highest, noting that the segment has high net seat expansions.
“We view this development as reinforcing MSFT’s AI-driven pricing leverage, which is supported by its steady enterprise demand. MSFT argues that the increase reflects the addition of 1,100 new features across Microsoft 365, Security, Copilot, and SharePoint over the past year. Among the increased prices, M365 F1 subscription is raised the most by 33%, which is worth noting also because the segment has high net seat expansions.”
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 332
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 12 Must-Watch AI Stocks on Wall Street. On December 5, KeyBanc analyst Justin Patterson reiterated an “Overweight” rating on the stock with a $303.00 price target.
The rating affirmation reflects firm optimism post AWS re:Invent, with analysts signaling confidence in AWS momentum and long-term AI growth.
KeyBanc is particularly encouraged by Amazon’s efforts to provide more flexible AI offerings, from models to silicon deployments.
Customers have always been valuing having choices at AWS, with recent feedback showing that reception to AWS is improving.
“With capacity ramping over the next two years, we remain comfortable with our forecast for +21% y/y growth into 2026E. We maintain our OW rating and $303 PT (31.5× 2027E P/E).”
Amazon.com Inc. (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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