The latest earnings season is creating a scene that has become common on Wall Street: companies promising big AI CapEx and investors cheering it and doubting soaring stock valuations at the same time. The key question in the coming days would be whether the technology sector could start seeing a return on these AI investments.
Alex Kantrowitz, Founder of Big Technology and CNBC contributor, said in a recent interview that there are still “a lot of ifs” in the AI buildout. He believes Nvidia potentially getting a go-ahead to sell its chips in China would be a major short-term catalyst for the stock.
“The thing is the bigger the number gets, the higher your revenue and profit has to be over time to justify it,” the analyst said, referring to Nvidia’s market cap. “ I think there are still a lot of ifs in this AI buildout to see whether it is going to continue building at pace. A lot of things have to work out. Enterprises have to get a lot more value out of the current slate of AI in order to justify these massive valuations. But the one thing that might be able to do it is the US allowing Nvidia to start selling that Blackwell chip into China where there would be insatiable demand for it.”
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9. Marathon Petroleum Corp (NYSE:MPC)
Number of Hedge Funds Investors: 49
Josh Brown, CEO of Ritholtz Wealth Management, talked about this best stocks list during a latest program on CNBC and mentioned Marathon Petroleum Corp (NYSE:MPC). Brown recommended investors stay with the stock despite its gains. The stock is up 30% over the past one year. Brown believes it can touch $200.
“ I think is worth getting into here would be Marathon. I think you stay the course. People are asking me, “What do you do here?” If we could just pull it back and get a little bit of a longer-term chart, what do you do here? I just think the refineries that we have that are publicly traded, there’s only a couple of them. They look really good. And so if people are asking me, all right, this thing broke out. Now what, do I stay with it? My answer would be yes. I think the stock wants 200.”
Oakmark Fund stated the following regarding Marathon Petroleum Corporation (NYSE:MPC) in its Q1 2025 investor letter:
“Marathon Petroleum Corporation (NYSE:MPC) is an integrated downstream energy company that refines, markets and transports petroleum products. Marathon commands the largest refining system in the United States with operations in attractive regions, which has provided meaningful cost advantages for the company and significant barriers to entry for competitors. In addition, we think Marathon’s midstream business is an attractive asset thanks to its high market share in one of the most prolific gas fields in the world, which provides stability to the company’s cash flows. Lastly, we appreciate management’s focus on returns on invested capital and willingness to return capital to shareholders. Over the last year, refining industry margins have come under pressure due to a global wave of new supply during a period of soft demand. We believe industry margins have fallen below sustainable levels and that, in the long run, supply and demand will return to balance which should lead to higher refining margins for Marathon. Today’s short-term imbalance provided the opportunity to purchase shares at an attractive valuation relative to both current and mid-cycle earnings.”
8. PayPal Holdings Inc (NASDAQ:PYPL)
Number of Hedge Funds Investors: 89
PayPal Holdings Inc (NASDAQ:PYPL) shares recently surged after the company signed a deal with OpenAI, after which ChatGPT users will be able to buy products using the payment firm’s platform.
Dan Dolev, Mizuho senior analyst, said in a latest interview on CNBC that research shows that Agentic AI could result in a 20% increase in ecommerce consumption.
“So the TAM is basically all of e-commerce, but we’ve seen some research that you could get like a 20% bump in e-commerce consumption because of Agentic AI. This is huge news for e-commerce overall, right? We’re talking about trillions of dollars, and it’s amazing news for PayPal Holdings Inc (NASDAQ:PYPL) because they’re part of that group.”
The analyst said that the fact that OpenAI chose PayPal Holdings Inc (NASDAQ:PYPL) shows the payments company’s “durability.”
“Not being there was the fear. So the fact is PayPal is there, and it’s there as one of the first few adopters of it. It’s great news. People that have written PayPal off or didn’t take that into account, we didn’t. We’re very bullish. And so the fact that they chose PayPal as a partner tells you a lot about PayPal’s durability.”
Wedgewood Partners stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its third quarter 2025 investor letter:
“PayPal Holdings, Inc. (NASDAQ:PYPL) was a leading detractor in portfolios during the third quarter despite growing earnings per share +18% and growing adjusted transaction margin dollars +8%. The Company saw double-digit growth in their Venmo-branded revenue as they further expanded their monetization initiatives with merchants and consumers, including Pay With Venmo and the Venmo Debit Card. In addition, the Company has negotiated better economics with its high-volume processing segment, Braintree, which we expect should help accelerate revenue growth later this year and into 2026. Shares continue to trade at depressed multiples as the market has rotated into AI-focused tech and cryptocurrency-related financials. PayPal is being prudent with its investments in both those emerging areas of commerce, partnering with Google in agentic commerce solutions, and also expanding issuance and acceptance of PayPal U.S. dollar stablecoin.”
7. Boeing Co (NYSE:BA)
Number of Hedge Funds Investors: 101
Tim Seymour, founder and Chief Investment Officer of Seymour Asset Management, said in a recent program on CNBC that he is bullish on Boeing for the long term. Here’s why:
“I’m actually long. The most important point here is that the medium- to long-term in Boeing is all about free cash flow generation, and by 2027 there’s probably north of 10 billion in free cash flow. The 777 charges we’re going to see will be a multi-billion dollar charge, which I don’t think really even hits 2025 numbers. So I think for medium- to long-term investors, this is a great call. I think Boeing’s back, I think they’re playing nicely with the regulator, and this current Trump tour around Asia just means a bigger than $500 billion backlog by the time he gets home.”
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.”
6. Advanced Micro Devices Inc (NASDAQ:AMD)
Number of Hedge Funds Investors: 113
Vivek Arya, semiconductor analyst at Bank of America, said in a recent interview with CNBC that the current bull market for AI semiconductor companies could go for a couple of more years or “perhaps even” until 2030.
“The reason is that most infrastructure cycles tend to last for a decade or more. We have seen this with 3G and 4G, and we have the 5G cycle that started. So these cycles can last for a decade or more. And if you look at when ChatGPT started, that was in late 22, so we are just basically in the first three years of what could be a decade-long cycle. Now it’s important to understand why this is happening, and I think why this is happening is that there is this virtuous kind of flywheel that we have where there’s infrastructure spending that is leading to the creation of intelligence, which is being monetized, which is then being fed right back into the deployment of more infrastructure, and I think semiconductors are absolutely in the middle of a lot of those very important building blocks.”
The analyst believes Advanced Micro Devices Inc (NASDAQ:AMD) is one of the top AI semiconductor companies positioned well to benefit from this bull cycle:
“I’m at Nvidia’s show here at GTC. Incredible presentation as is to be expected from their CEO, and I think he laid out a path to almost a half a trillion dollars of demand that they are seeing between calendar 25 and 26. I think what’s really important to understand is how leverable this technology is in so many areas of what people refer to as the real economy. This is industrial, this is healthcare, this is cybersecurity, this is defense, this is automation, this is automotive. So this is not just hyper performance computing in isolation. This actually has the potential to create productivity benefits in vast areas of the economy. So now I think it’s Nvidia, I think it’s Broadcom, it’s AMD. I think these are just exceptionally positioned companies in this environment.”
Macquarie Large Cap Growth Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its third quarter 2025 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD), a US semiconductor company, was also added to the portfolio. The total addressable market for AI chips is vast and in need of a second supplier to complement NVIDIA. We believe AMD is now positioned to supply a competitive, and possibly superior, chip for inference on a price/performance basis. Additionally, its next-generation chip for AI training should be a viable option to supplement NVIDIA supply.”
5. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Funds Investors: 156
Vivek Arya, semiconductor analyst at Bank of America, said in a recent interview with CNBC that the current bull market for AI semiconductor companies could go for a couple of more years or “perhaps even” until 2030.
“The reason is that most infrastructure cycles tend to last for a decade or more. We have seen this with 3G and 4G, and we have the 5G cycle that started. So these cycles can last for a decade or more. And if you look at when ChatGPT started, that was in late 22, so we are just basically in the first three years of what could be a decade-long cycle. Now it’s important to understand why this is happening, and I think why this is happening is that there is this virtuous kind of flywheel that we have where there’s infrastructure spending that is leading to the creation of intelligence, which is being monetized, which is then being fed right back into the deployment of more infrastructure, and I think semiconductors are absolutely in the middle of a lot of those very important building blocks.”
The analyst believes Broadcom Inc (NASDAQ:AVGO) is one of the top AI semiconductor companies positioned well to benefit from this bull cycle.
Polen Focus Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its third quarter 2025 investor letter:
“In early August we initiated positions in both NVIDIA and Broadcom Inc. (NASDAQ:AVGO), after having not owned either company over the past 2½ years following the initial wave of enthusiasm around Gen AI. While we have long admired both companies, their highly cyclical business models have made it extremely difficult to forecast future earnings growth with any degree of conviction. Given our approach of seeking durable and persistent earnings growth that compounds over long holding periods, our concern in holding either was that we would be forced to endure a punishing downcycle within our typical holding period – there is very little room that in a concentrated portfolio of 20-30 companies. In fact, pre ChatGPT, NVIDIA had two punishing down cycles over the preceding five years.
That is specifically what has occurred for NVIDIA and Broadcom. While the sheer magnitude of demand for AI chips, servers and networking equipment was something that we clearly underappreciated, new incremental data points over the past few months lead us to conclude the current boom in AI chips and related hardware will likely continue for the foreseeable future giving us greater conviction over the trajectory of future earnings for both NVIDIA and Broadcom.
Broadcom is the other major player in the AI chip market, the number one provider of custom chips, and currently receives the majority of the remaining 10c of every dollar being spent by enterprises. As Gen AI use cases mature, and as inference workloads become a bigger piece of the compute pie, we expect that custom chips (and Broadcom’s in particular) will account for a larger share of the total market. …” (Click here to read the full text)
