In this piece, we will discuss the 15 Best AI Stocks to Watch in December 2025.
Amid rising valuations, increased capital spending, and cautionary signals from global investors and policymakers, the AI sector continues to draw attention. The intense competition that is shaping the sector was highlighted by Bill Gates, who spoke at Abu Dhabi Finance Week on November 8, 2025. He warned that not all companies with high valuations will end up as winners, even though he regards AI as “a deeply profound technology that will reshape the world.” While stating that “some of them will go down,” he reflected on the growing investor concern about overvaluations, which have taken some AI-focused stocks far beyond traditional price-to-earnings benchmarks.
Speaking to CNBC on November 8, 2025, BlackRock’s Ben Powell said the AI infrastructure ecosystem, including chipmakers and energy and copper-wire suppliers, will benefit most from ongoing investment. While discussing how hyperscalers are investing heavily to stay ahead in AI performance and offerings, driving what he called a “capex super boom,” he suggested that substantial gains may lie more with the underlying hardware and energy providers supporting the AI buildout than with the model developers themselves.
Meanwhile, European regulators urge caution. Concentrated exposure among U.S. hyperscalers, including Nvidia, Alphabet, Microsoft, and Meta, was highlighted in the European Central Bank’s 2025 Financial Stability Review, released in late November. While acknowledging that valuations are supported by strong earnings, it cautioned that market sentiment could change drastically if growth expectations stall. Noting a mix of FOMO-driven investment and solid earnings growth, strategists highlight the need for differentiation across AI picks.
With this backdrop in mind, we will jump to our list of the 15 Best AI Stocks to Watch in December 2025.
Our Methodology
To curate our list of the 15 best AI stocks to watch in December 2025, we relied on financial media, ETFs, and screeners to identify Artificial Intelligence (AI) stocks with significant upside potential as of December 5, 2025, and hedge fund interest as of Q3 2025. We considered not only pure-play AI stocks but also companies leveraging AI to enhance their business. Next, we used Insider Monkey’s hedge fund database to assess hedge fund sentiment across these stocks, which tracks 978 hedge funds. Finally, we present our list of the best AI stocks in ascending order based on the number of hedge funds holding stakes in each stock.
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).
15. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 64
Upside Potential: 25.31%
With significant hedge fund interest and upside potential, Workday, Inc. (NASDAQ:WDAY) secures a spot on our list of the 15 best AI stocks to watch in December 2025.
On December 2, 2025, Workday, Inc. (NASDAQ:WDAY) saw DA Davidson’s Robert Simmons reiterate his “Hold” rating with a $235 price target. Reflecting mixed signals in the company’s growth trajectory, he pointed toward its Core HCM segment, which is expanding at a slower pace due to market saturation and intensifying competition, despite remaining Workday’s largest revenue driver. Although the Financial Management portfolio and international operations are experiencing rapid growth, the analyst believes they have yet to improve the company’s overall growth profile meaningfully.
At the same time, Simmons highlighted cross-selling and up-selling efforts, which remain strong contributors to bookings. He believes margins are expected to go up, further supporting his price target. However, the analyst noted that Workday, Inc. (NASDAQ:WDAY) remains more expensive than its peers on a revenue multiple basis, justifying his “Hold” rating as he awaits a more compelling entry point.
A week earlier, on November 25, Workday, Inc. (NASDAQ:WDAY) reported its fiscal Q3 2026 results. The quarter saw revenue growth of 12.6%, driven by 14.6% growth in subscription revenue, along with improved operating margins and stronger cash flows. Thanks to new customers, expanded enterprise relationships, and contributions from recent acquisitions such as Paradox, the subscription revenue backlog recorded double-digit growth. While the quarter also featured multiple AI-focused product launches and partnerships reinforcing the company’s innovation pipeline, the analyst’s short-term growth concerns remain unchanged.
Workday, Inc. (NASDAQ:WDAY) offers an enterprise AI platform that manages people, money, and agents.
14. Block, Inc. (NYSE:XYZ)
Number of Hedge Fund Holders: 64
Upside Potential: 37.47%
Block, Inc. (NYSE:XYZ) is one of the 15 best AI stocks to watch in December 2025.
On December 3, 2025, UBS analyst Timothy Chiodo reiterated his “Buy” rating on Block, Inc. (NYSE:XYZ) with a $90 price target. The analyst’s bullish stance reflects sustained momentum across both the Square and Cash App ecosystems.
Despite seasonal trends pointing to some Gross Payment Volume (GPV) deceleration, Block, Inc. (NYSE:XYZ) reiterated its Q4 2025 outlook, which translates into strong gross profit and adjusted operating income growth. Within the Square ecosystem, the analyst sees further domestic and international scaling potential as expanded investments in telesales and field sales continue to generate strong returns.
Moving on to the Cash App ecosystem, the analyst sees it as a key growth driver, with management further bolstering his optimism by projecting a mid-teen gross profit CAGR over the next three years. Moreover, rising active users and deeper monetization across bitcoin offerings and pre-purchase BNPL features continue to drive growth expectations. The analyst also highlighted Block, Inc. (NYSE:XYZ)’s ability to enhance consumer spending flexibility and apply internal data to strengthen underwriting.
Meanwhile, Block, Inc. (NYSE:XYZ) shared its longer-term guidance for key business performance metrics on November 19, 2025. Projecting mid-teens annual gross profit growth through 2028, the company projects it will reach $15.8 billion. At the same time, it projected an approximately 30% annual growth in adjusted operating income and adjusted EPS. Furthermore, management believes the company will achieve the Rule of 40 in 2026. By 2028, non-GAAP cash flow is expected to reach 25% of gross profit, or more than $4.0 billion on a non-GAAP cash flow basis.
Block, Inc. (NYSE:XYZ) also boosted its share repurchase program by $5 billion, which reflects leadership’s confidence in the company’s financial trajectory.
Block, Inc. (NYSE:XYZ) leverages Artificial Intelligence (AI) to develop technology that broadens economic access through Square, Cash App, Afterpay, Bitkey, and Proto. It supports global commerce, financial services, digital payments, and bitcoin innovation.
13. Nebius Group N.V. (NASDAQ:NBIS)
Number of Hedge Fund Holders: 65
Upside Potential: 66.40%
With significant hedge fund interest and upside potential, Nebius Group N.V. (NASDAQ:NBIS) secures a spot on our list of the 15 best AI stocks to watch in December 2025.
Appearing in an interview with Reuters on December 3, 2025, Nebius Group N.V. (NASDAQ:NBIS)’s co-founder Roman Chernin spoke with optimism. He argued that demand for AI infrastructure can potentially expand ten- to hundred-fold once enterprises start to adopt rapidly evolving AI models. He shared that the company is building high-margin services and long-term customer relationships to prepare itself for potential downturns. This, he believes, positions the company to act as a consolidator if market conditions tighten.
Nebius Group N.V. (NASDAQ:NBIS)’s expansion strategy includes multibillion-dollar agreements with Microsoft and Meta. These include a $17 billion Microsoft deal signed in September and a $3 billion Meta partnership announced in November. Thanks to these strategic plays, NBIS has risen 248% so far in 2025, with its market cap surpassing the $25-billion mark. Chernin added that these efforts will now be leveraged to expand the company’s client base across traditional enterprises and emerging AI companies amid concerns about an AI bubble.
Meanwhile, the significance of these partnerships was highlighted in earlier analyst commentaries.
Reaffirming its “Buy” rating on November 13, BWS Financial cited strong demand for Nebius Group N.V. (NASDAQ:NBIS)’s AI cloud services and sees the Meta agreement as evidence of growing market confidence, despite short-term operational headwinds.
On the other hand, Citizens JMP initiated coverage of Nebius Group N.V. (NASDAQ:NBIS) on November 19, 2025, setting a $175 price target and an “Outperform” rating. The investment firm noted a shift in broader sentiment, with analysts now seeing the company as a credible ecosystem player, thanks to the Microsoft and Meta deals. The firm added that partnerships with these tech giants dismissed investor concerns tied to the company’s historical links to Yandex.
Through its Avride and TripeTen assets, as well as stakes in Toloka and ClickHouse, Nebius Group N.V. (NASDAQ:NBIS) delivers advanced AI infrastructure solutions to support large-scale compute and data workloads.
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