As reported by Reuters, Wall Street’s main indexes rose on Monday to more than one-week highs, driven by a rally in semiconductor stocks and news suggesting that the incoming Trump administration could adopt a less aggressive tariff stance than previously anticipated.
READ NOW: Top 10 AI Headlines Shaping Wall Street for 2025 and 10 AI Stocks Taking Wall Street by Storm
Microsoft has recently announced that it plans to invest $80 billion in AI-enabled data centers in fiscal 2025, suggesting how semiconductor demand is expected to remain strong this year. According to Citigroup, the company’s spending plan was a “modest positive” update as it removed the risk of a drop in capital expenditures.
Ever since OpenAI launched ChatGPT in 2022, investments in AI have surged drastically. Since AI requires drastic computing power, tech companies have been investing billions to enhance their AI infrastructures and broaden their data center networks. The race, however, isn’t just limited to the US. Efforts are being made to protect the country’s leadership in AI against the rest of the world, particularly China. China, in turn, has begun offering developing countries subsidized access to scarce chips, and it’s also promising to build local AI data centers. Moves like these could position the country as an AI leader in the future, something that the US is actively making efforts to avoid.
However, regardless of the capital expenditures companies are making toward AI, one analyst says that these are no longer going to be enough in 2025. David Dietze of Peapack Private Wealth Management said that a major theme for 2025 is going to be “Show Me The Money”. Dietze said that even though major companies have been investing billions in AI partnerships and similar initiatives, investors are soon going to be demanding proof of returns.
“Wall Street’s the type of place where it’s like, ‘Show me the money, like, yesterday…These investments and capital expenditures are great, but when does the cash flow start coming in? And right now many AI companies have gotten a pass on that, but I think increasingly Wall Street’s going to say, ‘No, we’ve seen the capital expenditures, you’ve got the AI label, but now we want to see the cash flows coming in from that. And that’s what we’re gonna be watching so carefully next year”.
– David Dietze, Peapack Private Wealth Management.
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.
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10. Asana, Inc. (NYSE:ASAN)
Number of Hedge Fund Holders: 18
Asana, Inc. (NYSE:ASAN) is a leading enterprise work management platform. On January 6th, Jefferies raised the firm’s price target on Asana, Inc. to $19 from $16 and kept a “Hold” rating on the shares. The analysts told investors in a research note that adopting a more cautious approach to software stocks is justified heading into 2025. This is because 2024 performance was stronger in the year’s second half. The analyst further anticipated that software space will accelerate in the second half of 2025 driven by increased contributions from artificial intelligence and as “positive revisions on conservative guidance come through”.
9. Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 39
Astera Labs, Inc. (NASDAQ:ALAB) is engaged in the design, manufacture, and selling of semiconductor-based connectivity solutions for cloud and AI infrastructure. On January 6th, Stifel Nicolaus raised the firm’s price target on Astera Labs from $100.00 to $150.00 with a “Buy” rating on the stock. According to the firm, Astera Labs is one of the most attractive stocks in its coverage in the Analog, Connectivity, and Processors Sector. The analyst told investors in a research note that Astera Labs is a key AI infrastructure beneficiary. The company provides advanced connectivity and memory solutions that enable faster and more efficient data processing in AI infrastructure. The top 10 trends for 2025 by Stifel are Cyclical Recovery, Interconnect Technologies, Incremental Bandwidth Growth, Geopolitical Risk, Power and Data Centers, Electronics Manufacturing Services and Hyperscale Opportunity, Emergence of Consumer AI, Specialized AI Cloud, Mergers and Acquisitions, and Automotive Production Expectations.
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