According to the European Commission, the landmark rules on artificial intelligence will be rolled out as planned and will follow the legal timeline in the legislation. This is despite calls from companies such as Meta and Alphabet to delay the AI Act by years.
“I’ve seen, indeed, a lot of reporting, a lot of letters and a lot of things being said on the AI Act. Let me be as clear as possible, there is no stop the clock. There is no grace period. There is no pause. We have legal deadlines established in a legal text. The provisions kicked in February, general purpose AI model obligations will begin in August, and next year, we have the obligations for high risk models that will kick in in August 2026.”
-Commission spokesperson Thomas Regnier told a press conference.
The Commission plans to propose steps to simplify its digital rules by the end of the year. However, some companies are still concerned that these rules will be expensive and difficult to comply with. While the rules aim to establish clear standards for a technology playing a critical role in major industries, it is yet to be seen how businesses will adapt to this regulatory shift.
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.
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10. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 57
International Business Machines Corporation (NYSE:IBM) is one of the Top 10 AI Stocks in the Spotlight. On July 2, the company announced that Deutsche Telekom, a leading provider of telecommunications and IT services, will implement the AI-powered solution IBM Concert, enabling intelligent automation in patch management and making security tasks smarter and more automatic.
Patches help systems stay secure, relevant, and functional. Without them, there is a chance that software becomes obsolete, unstable, or even vulnerable. While patches are important, handling them can be a challenge. This is where IBM Concert comes in, helping companies reduce their operational costs and the effort needed for patching vulnerabilities. Doing so, they accelerate the speed of response and improve security.
Deutsche Telekom will be using IBM Concert to leverage intelligent resilience for complex IT operations. The solution combines all relevant data and specializations, creating contextual information to enable end-to-end AI-powered automation.
Deutsche Telekom reported a successful pilot implementation of IBM Concert, achieving a 10x reduction in a key metric “Median Time To Patch,” and going from 80 hours per critical vulnerabilities to eight hours.
“Security and trust are the cornerstones of success for all telecommunications companies. IBM Concert incorporates modern AI and automation technologies so that Deutsche Telekom can stay ahead of the dramatically escalating number and complexity of critical vulnerabilities across their Hybrid Cloud platform.”
-Steve Canepa, Global Managing Director at IBM.
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.
9. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 64
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is one of the Top 10 AI Stocks in the Spotlight. On July 7, Piper Sandler analyst Rob Owens downgraded the stock from “Overweight” to “Neutral,” maintaining its price target at $505.
The analysts at the firm said that it doesn’t see a near-term scenario that could meaningfully increase numbers or its terminal multiple. However, it does appreciate the company’s long-term potential as a player in security and IT.
It also said that investors should not be adding shares at the moment. This is because the upside may be limited over the short to medium term.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection.
8. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 84
Datadog, Inc. (NASDAQ:DDOG) is one of the Top 10 AI Stocks in the Spotlight. On July 3, TD Cowen analyst Andrew Sherman reiterated a “Buy” rating on the stock with a $150.00 price target.
The rating affirmation follows Datadog’s inclusion in the S&P 500. The cloud monitoring company will be replacing Juniper Networks, which has been acquired by Hewlett Packard Enterprise (NYSE:HPE).
The firm anticipates strong demand for Datadog’s shares, considering its market capitalization of more than $50 billion. The firm believes that the S&P 500 inclusion is expected to bring “a broader audience of large cap & generalist investors to the name.”
“Index inclusion is a powerful force given the trillions of assets indexed to the S&P 500. We have seen this benefit many of the other software stocks in recent years as many large-cap managers have to take a look and make a decision for the first time, and we expect this to happen here as well.”
-TD Cowen analyst Andrew Sherman said in a note to clients.
Datadog was part of a “select group of large-cap, high-growth, high-margin (and profitable on a GAAP basis) software companies.”
Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products.
7. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 94
Snowflake Inc. (NYSE:SNOW) is one of the Top 10 AI Stocks in the Spotlight. On July 3, Monness analyst Brian White maintained a Buy rating on the stock and set a price target of $245.00. White’s rating reflects Snowflake’s impressive innovations and strategic advancements.
At a recent summit, the company introduced several new features, including the Snowflake Intelligence and Snowflake Openflow. Both of these features are anticipated to enhance Snowflake’s AI capabilities and data management offerings, and also strengthen its position in the competitive software landscape.
CEO Sridhar Ramaswamy has been particularly good for the company. This is particularly true considering Snowflake has accelerated its pace of innovation, especially in the realm of generative AI, under his leadership.
This focus on generative AI is likely to yield long-term benefits for Snowflake, particularly as the broader industry values data-driven, consumption-based models. All in all, the company’s approach to integrating AI with data strategy emphasizes its growth potential and justifies the Buy rating.
Snowflake Inc. (NYSE:SNOW) is an artificial intelligence data cloud company benefiting from the AI boom as data warehouses are a critical component in making AI useful for enterprises.
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 96
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the Top 10 AI Stocks in the Spotlight. On July 7, Truist Securities analyst William Stein reiterated a “Hold” rating on the stock with a $111.00 price target.
“Debate rages around AMD’s Datacenter GPU strength- not whether the company can deliver Datacenter GPU product and ramp revenue, but instead: to what degree are customers (1) buying to stimulate competition and price-check NVDA (this is our view), or (2) buying because they or their customers actually prefer AMD’s technology. A narrower controversy that emerged mid-qtr was the question as to whether AMD’s next gen DC GPU’s will be used at AWS. Based on our discussions with management, we believe the appearance and disappearance of that customers’ logo from AMD’s list of customers reflects a desire for some customers to announce supplier relationships at their own events. Industry contacts reflect a significant inventory build in the channel which is difficult for us to explain. Near-term catalysts: We expect the next significant catalyst for AMD will be Q2 earnings. We do not have a strong view as to whether this will be a positive or negative catalyst for now.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
5. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 97
Oracle Corporation (NYSE:ORCL) is one of the Top 10 AI Stocks in the Spotlight. On July 3, Bernstein SocGen Group analyst Mark L. Moerdler reiterated an “Outperform” rating on the stock with a $225.00 price target.
The rating affirmation follows Oracle’s recent multi-year cloud contract, anticipated to fund more than $30 billion in annual revenue, beginning fiscal year 2028. The deal has significantly strengthened Oracle’s position in the cloud computing market.
With Oracle demonstrating strong growth, investors are no longer looking at it as a cheap option compared to the big 3 cloud providers. Oracle is also becoming important in AI and AI training data centers.
The firm has highlighted how the company’s capital expenditure requirements may be lower than market expectations. This is because it is “likely not renting, building or leasing data centers.” Moreover, Oracle’s multi-cloud database business is growing at over 100% year-over-year, leading to both growth and margin improvement.
“While Oracle’s IaaS/PaaS business (OCI Gen 2) generates far less revenue than the other hyperscale Cloud providers, it is showing consistent signs of gaining traction (and market share) not only within its traditional customer base but in the broader market and winning deals for non-Oracle workloads and at not traditionally Oracle customers.”
The firm isn’t updating its financial model or price target but anticipates financial projections to increase and investor confidence to strengthen.
“We really like the setup and the story. While we are not updating our model or our TP at this time as more work is required on modeling, we believe that numbers are going to go up, and that investor confidence is going to increase in the story and the stock.”
4. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 104
Tesla, Inc. (NASDAQ:TSLA) is one of the Top 10 AI Stocks in the Spotlight. On July 3, HSBC analyst Michael Tyndall reiterated a “Reduce” rating on the stock with a $120.00 price target.
The investment bank pointed out how Tesla’s second-quarter volumes have increased 14% quarter-over-quarter, which has been broadly in-line with consensus estimates. This is despite retail figures in major markets growing only 2% quarter-over-quarter.
“Based on retail figures in the major markets we track, June deliveries were exceptionally strong. It accounted for 47% of Q2 deliveries vs 41–44% historically. It is difficult to explain this sales bump. Important for us – is that run‑rate of 170,000–180,000 units per month is unlikely to become the new normal.”
The firm has questioned the sustainability of this delivery pace, suggesting that even though third-quarter sales may witness pulled-forward demand ahead of a new tax bill, the June run rate is unlikely to become “the new normal.”
The firm is cautious about Tesla’s volume development, static model portfolio, increasing competition, and also the absence of a promised and more affordable model.
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 159
Apple Inc. (NASDAQ:AAPL) is one of the Top 10 AI Stocks in the Spotlight. On July 3, UBS analyst David Vogt reiterated a “Neutral” rating on the stock with a $210.00 price target.
“According to press reports, the US has announced it signed a trade deal with Vietnam. Although Vietnam has been a key region for supply chain investment, the scale and scope of the offerings in the country relative to China is small. Based on our analysis of Apple’s supply chain China mainland remains the largest region representing over 35% of the total discrete locations in the supply chain while an estimated 35 Apple suppliers operate roughly 38 locations in Vietnam or roughly 5% of Apple’s supply chain footprint by location with material assets in Bac Giang, Bac Ninh, Hai Phong, Phu Tho, and Vinh Puch.”
Apple is a technology company known for its consumer electronics, particularly the iPhones and MacBooks.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 212
NVIDIA Corporation (NASDAQ:NVDA) is one of the Top 10 AI Stocks in the Spotlight. On July 7, Citi reiterated the stock as “Buy” and raised its price target on the stock to $190 per share from $180.
The rating affirmation has been partly driven by the uptick in sovereign AI demand. Sovereign AI demand is the nation’s efforts to produce and control their own AI infrastructure and data.
“We believe sovereign demand is already contributing up to billions of dollars in 2025 and expect the mix of sovereign AI sales to step up in 2026. Nvidia has line of sight to 10s of GW over the next couple of years for enterprise and sovereign AI factory buildouts and the company is involved in essentially every sovereign deal (1GW ~ $50B of Nvidia sales).”
– Malik wrote in a Monday note to clients.
The analyst anticipated that by 2028, the total addressable market for Nvidia’s data center, semis, and AI businesses may reach $563 billion, 13% higher than his prior estimate. Expectations on Nvidia’s networking segment were also lifted to $119 billion from $90 billion. Larger AI training clusters and emerging scale-up intra-networking opportunities were noted as reasons behind the lift.
“We raise TP on Nvidia to $190 on AI TAM expansion. We model total 2028 data center semis AI TAM to now reach $563B or 13% above our prior expectation of $500B. The 4% increase in compute TAM is driven by higher-than-expected sovereign AI demand.”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the Top 10 AI Stocks in the Spotlight. On July 3, Citizens JMP analyst Andrew Boone reiterated a “Market Outperform” rating on the stock with a $750.00 price target.
According to the firm’s analysis, Instagram continues to dominate among young adults. Among the firm’s interns, it leads in both user penetration and time spent. The firm is of the belief that Instagram will help build Meta’s next generation of users, reinforcing its long-term sustainability.
In other news, Needham & Company upgraded Meta from ‘Sell’ to ‘Hold,’ amid concerns regarding capital allocation and structural cost disadvantages compared to rivals.
It is indeed true that Meta is making significant strides in artificial intelligence, particularly with its recent investment in Scale AI and the recruitments from OpenAI. However, the tech giant has its fair share of challenges.
Mounting pressure from the European Union’s AI legislation and competition for talent from Chinese startup DeepSeek are two such challenges to name. Moreover, its Reality Labs division continues to suffer significant losses.
As such, while the firm is optimistic about Meta’s long-term potential, the costs and regulatory risks suggest a cautionary stance toward the tech giant.
While we acknowledge the potential of META 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 META and that has 100x upside potential, check out our report about this cheapest AI stock.
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