The latest quarterly results from a couple of major technology companies have soothed concerns about AI demand that prevailed in the market following the launch of DeepSeek. Storm Uru, Manager at Liontrust Global Dividend Fund, said while talking to CNBC that the Satya Nadella-led tech giant’s results were “extraordinary.”
“50% of that growth came from AI revenue, and that’s an important marker for us going forward. Because after Deepseek about four months ago now, the debate really was around as digital intelligence gets smarter and as it gets cheaper, what is going to be the impact on demand. And what we found out last night was that demand is accelerating,” he said.
David Grain, Founder & CEO of Grain Management, also believes AI demand could be strong amid a variety of factors.
“The advent of AI has created this explosion of demand for data centers and compute power, but the drivers of where it makes sense to actually build these data centers has a lot to do with the availability of reliable and high quantity of electricity. So I think there’s definitely no slowdown in the demand side of the equation,” he said during an interview with CNBC.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
For this article, we picked 10 stocks making moves these days. With each stock, we have mentioned the number of hedge fund investors. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. BHP Group Ltd (NYSE:BHP)
Number of Hedge Fund Investors: 22
Jim Cramer was recently asked about mining company BHP Group Ltd (NYSE:BHP). He said he likes the stock.
“I like BHP Broken Hill. I remember it was Broken Hill Properties—that’s how old I am, holy cow. But I like the story. I like the yield. I think you’ve got a good situation going there.”
9. MicroStrategy Inc (NASDAQ:MSTR)
Number of Hedge Fund Investors: 25
Jim Cramer was recently asked about MicroStrategy. He reiterated his view that one should buy Bitcoin for crypto exposure.
“Oh, Mr. Old Mr. Tragedy, no, no. Look, we like Bitcoin. We actually buy Bitcoin. That’s what we do. We want Bitcoin, we buy Bitcoin.”
Greenlight Capital stated the following regarding MicroStrategy Incorporated (NASDAQ:MSTR) in its Q4 2024 investor letter:
“There is an open debate as to whether Bitcoin will at some point enter the mainstream as an official currency. In fact, there is a bill before Congress for the U.S. to establish a “Strategic Bitcoin Reserve” and buy one million Bitcoins over five years. The bill’s purpose appears to be the use of public funds to ramp up the price of Bitcoin, thereby enhancing the wealth of existing Bitcoin holders. This seems a dubious use of taxpayer funds, but the new administration has a lot of Bitcoin-owning supporters, so it might happen. More likely, cooler heads will decide that the government should not borrow another trillion dollars in the bond market to speculate in Bitcoin and that there is, in fact, nothing strategic about doing so.
One of the biggest owners of Bitcoin is MicroStrategy Incorporated (NASDAQ:MSTR). While MSTR owns a small software business, its principal pursuit is buying Bitcoin. In practice, MSTR is an investment company that buys and holds Bitcoin.2 MSTR trades at a large premium to the value of the underlying Bitcoin it holds. The idea is to raise money from new investors at a premium and use the proceeds to buy more Bitcoin. Since the Bitcoin that MSTR buys costs less than the Bitcoin-implied value of MSTR’s stock, the new investment is dilutive to new investors but accretive to existing investors. MSTR’s promoters have labeled the return to existing investors created by this scheme the “Bitcoin yield”. As Bitcoin itself yields nothing, the Bitcoin yield is simply a measure of the Ponzi finance’s effectiveness. Lately, it has been pretty effective.”
8. Super Micro Computer Inc (NASDAQ:SMCI)
Number of Hedge Fund Investors: 33
Jim Cramer was recently asked about Super Micro. Here is what the CNBC host said:
“I’m sick of Super. It’s the not so Super Micro. If you want to be in that space, let’s just go by Dell. And I got to tell you, can I just say that if anyone’s going to keep on picking an Nvidia, I live right here. Come get me. Okay? And me and Jensen.”
Columbia Acorn Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q3 2024 investor letter:
“Super Micro Computer, Inc. (NASDAQ:SMCI) had a tough quarter due to a confluence of negative events. It declined, but is still up significantly for the year. While demand for the company’s AI server racks remains strong, with revenue up over 100%, gross margins have fallen sharply for two straight quarters, implying a price war. In addition, Super Micro was the subject of a short-seller report and a delay in filing its annual report with the SEC. We have been taking profits in the stock all year and have only a small position, which we are maintaining given the strong performance and demand for Super Micro’s AI racks and a depressed stock valuation.”
7. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Investors: 38
A caller recently asked Jim Cramer about Arm Holdings plc (NASDAQ:ARM) during the Lightning Round segment of his program on CNBC. Cramer recommended the stock to hold the stock and “trim” when it bounces:
“I want you to stay in it, Rene Haas (CEO) is doing a great job. I think that this whole semiconductor group has been oversold. It will bounce, and when it bounces, you want to trim back because it is expensive. That’s fine. Do not sell it here.”
6. The Boeing Company (NYSE:BA)
Number of Hedge Fund Investors: 52
Jim Cramer in a latest program on CNBC talked about a bullish note on The Boeing Company (NYSE:BA) and recommended investors to buy the stock:
“Boeing—there’s a really good note out by Bernstein today saying once Boeing gets the momentum going, you can’t stop it. That last quarter was good. I’ve got to tell you, Kelly Ortberg—nice guy—I was concerned that perhaps the difficulties there would overwhelm him. I think he’s taming them, David. I think Boeing has a multi-year runway, haha, and I think therefore you should be buying Boeing. And remember, David, you got me out of Boeing at 260—I never forgot it.”
Sound Shore Management stated the following regarding The Boeing Company (NYSE:BA) in its Q4 2024 investor letter:
“The Boeing Company (NYSE:BA): A detractor for the period was global aerospace leader Boeing. We were able to purchase the stock at a prospective 10% free cash flow yield on a normalized scenario. Over the past couple of years the stock rebounded from operational challenges and had surged on improved free cash generation from increasing order activity, driven by global demand for aircraft. It was one of our best performers in the fourth quarter of 2023 after its November plane deliveries increased. When additional manufacturing issues surfaced in January 2024, we believed it would push restructuring efforts back enough to warrant a review by our team. Reacting quickly, we sold our position at a gain in the first quarter, albeit less than before the news.”
5. UnitedHealth Group Inc (NYSE:UNH)
Number of Hedge Fund Investors: 112
UNH was falling after the company announced a CEO transition and suspended its guidance amid rising medical costs. A few days ago, Jim Cramer had talked about the stock and gave some bullish comments about it on CNBC.
“It’s going to be under pressure for some time because a lot of companies, really a lot of big pension funds and mutual fund managers, thought everything was perfect. But I am going to say today at $400, I would indeed start a position. I have been very negative on UnitedHealth Group Inc (NYSE:UNH) from 6:30 down to this caller right here. I would start a position at 400 bucks. That’s a big change for me.”
Parnassus Growth Equity Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q4 2024 investor letter:
“We sold two Health Care positions during the quarter, pharmaceutical company AstraZeneca and insurerUnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth’s business model is becoming higher-risk, which coupled with slowing Medicare Advantage growth and regulatory uncertainty led to us exiting the position.
After the UnitedHealth stock price recovered to its historical multiple in early November, we felt it was an opportune time to sell based on our concerns about slowing Medicare Advantage growth and the company’s growing business complexity and risk.”
4. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Gil Luria, D.A. Davidson managing director, said in a latest program on CNBC ahead of Apple Inc (NASDAQ:AAPL) quarterly report that his expectations were not high heading into the results. He believes Apple could be among the first companies to feel the heat of a consumer slowdown:
“We’re not expecting a good result or a good outlook. What we’re really hoping for is for Apple to give us visibility and a sense for a stable outlook — that they’ve wrapped their hands around what the impact from tariffs is going to be, and that they can give us an outlook based on that. You just talked a lot about Meta and Microsoft. Those results aren’t just not as bad as feared — those results were actually good. I would not expect that from Apple. Let’s not forget we’re talking about a consumer-driven slowdown, and Apple is the consumer product company. Only later on, a consumer slowdown may lead to an advertising slowdown and maybe eventually to an enterprise technology slowdown. For now, the impact is first going to be felt by Apple, and we want to get our hands around how much of an impact that is tomorrow.”
Apple’s iPhone revenue was above estimates in the latest quarter, but revenue for Services, one of the key pillars of hope for the company’s bulls, came in slightly below estimates. CEO Tim Cook said the company sees a $900 million impact from tariffs in the second quarter, and is unable to predict the effects of duties beyond that.
However, the US and China have reached a truce on tariffs for 90 days. Would this development help the stock?
Apple Inc. (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.
Investors had hopes from the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.
Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.
Columbia Seligman Global Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The fund maintained a position in Apple Inc. (NASDAQ:AAPL) throughout the quarter through the release of the company’s new iPhone 16 in September. Company leaders were excited about the release of the new model, as this is the first model that will feature enhanced AI capabilities through the Apple Intelligence features. Sales for the first few weeks in October and November trailed behind year over year sales from the iPhone 15, as availability of Apple Intelligence was not compatible with all iPhone models. Apple announced a partnership with OpenAI that has allowed the integration of ChatGPT into the Apple ecosystem, separate from the core Apple Intelligence features. This partnership highlights continued progress from Apple to introduce AI capabilities into its products and we expect the iPhone 17 to have even more expansive AI capabilities, increasing potential demand for the new model that is on track to be released in 2025.”
3. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 160
Dan Niles from Niles Investment Management said in a latest program on CNBC talked about major tech companies and explained why GOOG shares didn’t move much after the latest results:
“And by the way, the four companies that are going to report—I think all of them are going to beat revenues, beat EPS, beat margins—and probably that should be good enough. But then you look at Google and you go, stock’s up less than 1% after having done all of those things. And so you wonder, are investors really thinking forward to the next leg of this, which is, yeah, that’s because demand has been pulled in and we’re going to have to pay that back sometime later this year. And so I’m going to actually start to think a little bit further ahead.”
Alphabet posted strong quarterly results, but the market remains reluctant about the stock amid threats to its search business due to the onslaught of AI tools like ChatGPT. However, Alphabet Inc. (NASDAQ:GOOG) bulls believe these concerns are overstated.
Google has an edge over competitors because it’s easier for the billions of users of its search engine to switch to Gemini instead of opting for a completely new model. Google has over 1.5 billion monthly users interacting with its AI-powered Search overviews. OpenAI, Alphabet’s biggest competitor now when it comes to AI search, has less than 5% of its users paying, and its business model is still developing. Google’s first-quarter results showed continued strength in its cloud unit, with revenue up 28% year over year and solid operating income growth. This supports Google’s broader AI strategy and underscores the scale advantages of its cloud business.
Merion Road Capital Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q1 2025 investor letter:
“The long only portfolio fell slightly over 8% during the quarter, primarily attributable to our tech-oriented holdings (GOOG, AMZN) and economically sensitive industrials (CLH, FERG). Regarding the former, there continues to be a debate as to whether or not their investments in AI will produce adequate returns. The AI race publicly began back in 2023 when Microsoft CEO Satya Nadella threw the gauntlet down stating that he hopes GOOG would “come out and show that they can dance.” In response, Alphabet Inc. (NASDAQ:GOOG) ramped their capex spend from $32bn in 2023 to almost $53bn last year, with a planned $75bn this year. So far, their pre-tax return on tangible capital has barely budged at 48% (though consensus has this falling next year). With a wide range of ubiquitous products, GOOG is as well positioned as anyone to win the war. For instance, the integration of AI overviews into search has produced strong metrics and the company is broadening its application to encompass novel query formats, including images and audio.
But will all of this investment generate an acceptable return? I don’t know. And it will be many years before we have an answer. CEO Pichai’s philosophy is that the cost of missing out on what could be a generational opportunity far outweighs the benefits of conserving its cash. This makes sense to me. Even if GOOG burns the majority of their free cash flow over the next couple years, that’s a drop in the bucket. The value in the business comes from the long tail of earnings from things like Search, Youtube, Cloud, and hopefully some of their moonshots (I’m looking at you Waymo). If AI returns disappoint, I believe GOOG will scale back.”
2. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Talking to reporters a few weeks ago, NVIDIA Corp (NASDAQ:NVDA) CEO Jensen Huang dismissed the notion that China is behind the US and appreciated the country’s tech potential. The executive believes the AI “race” will be long:
“China is not behind. China is right behind us. I mean, we’re very, very close. But remember, this is a long-term, this is an infinite race. There’s no, you know, in the world of life, there’s no, those, you know, there’s no two-minute end of the quarter. There’s no such thing. And so we’re going to compete for a long time, and just remember that this is a country with great will, and they have great technical capabilities. 50% of the world’s AI researchers are Chinese, and so this is an industry that we will have to compete for.”
Nvidia is rising amid the company’s latest deal with a Saudi Arabia-backed AI firm. However, the market will keep punishing Nvidia for not coming up to its gigantic (and sometimes unrealistic) growth expectations. About 50% of the company’s revenue comes from large cloud providers, which are rethinking their plans amid the DeepSeek launch and looking for low-cost chips. Nvidia’s Q1 guidance shows a 9.4% QoQ revenue growth, down from the previous 12% QoQ growth. Its adjusted margin is expected to be down substantially as well to 71%. The market does not like it when Nvidia fails to post a strong quarterly beat. The stock will remain under pressure in the coming quarters when the company will report unimpressive growth.
Nvidia is facing challenges at several levels. Competition is one of them. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC’s 3nm capacity, which could limit Nvidia’s access to these chips. Why? Because Nvidia also uses TSMC’s 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offers alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia’s offerings. Apple is reportedly working with Broadcom to develop an AI server processor. Intel is also trying hard to get back into the game with Jaguar Shores GPU, set to be produced on its 18A or 14A node.
Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2025 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the undisputed leader in accelerated computing, with dominant market share in Graphics Processing Units (GPUs) powering AI workloads across data centers, edge devices, and emerging platforms. Its end-to-end ecosystem—from silicon to software (CUDA, networking, and AI frameworks)—creates high switching costs and a widening competitive moat. With secular demand for AI infrastructure still in its early innings, Nvidia stands to benefit from sustained topline growth and strong operating leverage. In early January, a little known Chinese AI company, DeepSeek, released its large language model (LLM), DeepSeek-R1, to an unexpecting world. This model was purportedly trained on very few high-end Nvidia chips and was highly efficient when compared to other leading models. This release set off a chain reaction where investors have had to grapple with the idea that the world may not need as many GPUs as previously thought, which hampered the Nvidia buy case and sent the P/E multiple down to its cheapest level in the past 5 years.”
1. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 235
Mark Mahaney, Evercore ISI head of internet research, said in a latest interview with CNBC that Meta Platforms (NASDAQ: META) is a high-quality stock amid low valuation.
“I think that at less than 20 times earnings, I think it’s nicely dislocated and it’s a high-quality name. I think it’s going to be one of the best performing, relatively, ad assets out there, almost irregardless of what happens later this year. There’s a lot of resiliency to the Meta Platforms Inc (NASDAQ:META) model that may be underappreciated,” Mahaney said. “I think investors are concerned about with Meta Platforms Inc (NASDAQ:META), I think is somewhat overstated. Yes, it’s about 10% of their revenue comes from China-based companies, but those companies are still selling. They may not be selling into the US, but they’re still selling into Europe, Latin America, etc. They’re using Meta to get there. There’s also this little bit of an interesting hedge. The worse things there are between the US and China, the less chance of a TikTok actually staying in the US, and that’s going to be a source of funds I think for Meta. So I think there’s a little bit more resilience to Meta Platforms Inc (NASDAQ:META) than the market makes.”
Meta Platforms’ (NASDAQ:META) biggest strength remains its huge user base, which continues to grow despite record levels. The company has 3.43 billion monthly active users as of March, up 6% year over year. This equals about half of the world’s total population, giving the company immense power for monetization and data processing. The company also raised its capex guide for the year from $60-$65 billion to $64-$72 billion, crushing concerns about an AI and data center slowdown.
Another overlooked element in Meta Platforms, Inc. (NASDAQ:META) business is its ads growth. The company, which depends on advertising for 98% of its revenue, is growing at a rate of 21% YoY. In comparison, Google Search grew by 9%, while Alphabet’s overall business, including Cloud and Services, expanded by 12%. Even YouTube’s year-on-year growth stands at 11%, well below Meta Platforms Inc (NASDAQ:META) rate.
Given Meta Platforms, Inc. (NASDAQ:META) current growth, Wall Street’s estimates of 21% EBIT growth and 18% OCF growth seem conservative compared to the tailwinds the company is benefiting from right now.
Nightview Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q4 2024 investor letter:
“Core Opportunity: Meta Platforms, Inc.’s (NASDAQ:META) platforms—Instagram, Facebook, WhatsApp, and Messenger—reach nearly half the world’s population daily, making it one of the most powerful advertising ecosystems globally. With investments in AI and augmented reality (AR), we believe Meta is also creating significant optionality for long-term growth.
Competitive Advantage: Thriving Core Platforms: In Q3, we saw Meta achieve a 23% YoY revenue growth,—a testament to strong user engagement across its ecosystem. The advertising landscape as a whole continues to evolve and we believe Meta’s existing platforms offer a defined advantage in this new world. Existing platforms in the age of AI continue to be the most powerful indicator of future success in our opinion.
AI Leadership: Meta’s AI capabilities and the Llama AI model are driving efficiency and product innovation. In our view, these assets have been under-appreciated by the market while enhancing Meta’s ability to further scale and innovate its leading advertising business…” (Click here to read the full text)
While we acknowledge the potential of Meta Platforms Inc (NASDAQ:META), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than META but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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