Investors are closely watching AI stocks following Nvidia’s $100 billion deal with OpenAI. The deal has raised some concerns as analysts pointed out the risks of vendor financing, where companies lend money to their customers to facilitate product purchases. However, Josh Brown, the CEO of Ritholtz Wealth Management, said in a latest program on CNBC that while the market’s concerns about the Nvidia-OpenAI deal aren’t unfounded, he believes the deal cannot be compared with the vendor financing arrangements of the past.
“I don’t think that’s a perfect comparison. When you need your customers to buy, that doesn’t really sound like what I just described. These investments are going to be made anyway—the data centers will be built out regardless. Whether one player wants a bigger investment than another, it’s not about meeting numbers; strategically, they want to be part of the project. In Nvidia’s case, you’re talking about a $4 trillion company making a $100 billion investment over multiple years, with an obvious ROI attached. If it leads to GPU sales and services revenue, it’s a bit different from previous capex booms. I wouldn’t say concerns are totally unfounded, but it’s not as dire as that rhetoric makes it sound,” Brown said.
Photo by Javier Esteban on Unsplash
For this article, we picked 10 stocks analysts were recently talking about. For 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).
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10. Emcor Group Inc (NYSE:EME)
Number of Hedge Fund Investors: 51
Kevin Mahn, president & CIO of Hennion & Walsh Asset Management, said in a recent program on CNBC that he thinks Emcor is an attractive stock. Here’s why:
“So that seems pretty attractive to me, right? If you look at the S&P 500 right now, it’s trading at a current PE of around 24 and a half. That’s above its five and 10 year averages. So, if you can invest in a company like Emcor, which I consider to be data center in a box, if you will, whose stock’s up roughly 37% year-to-date, over 76% over the last one year, that’s pretty attractive. And let’s not also forget that as of September 22nd, they’re going to be included in the S&P 500 index.”
TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding EMCOR Group, Inc. (NYSE:EME) in its second quarter 2025 investor letter:
“Contributing a 45% return was EMCOR Group, Inc. (NYSE:EME), which provides construction and operational services for mechanical and electrical systems to a broad range of commercial, industrial, utility, and institutional customers. EMCOR reported revenues and earnings that bested expectations with a record high level of remaining performance obligations (outstanding and unbilled work for existing customers) along with a healthy pipeline of new projects.”
9. Wynn Resorts Ltd (NASDAQ:WYNN)
Number of Hedge Fund Investors: 52
Jim Lebenthal, Chief Equity Strategist at Cerity Partners, explained in a recent program on CNBC why he was trimming his stake in Wynn Resorts. The analyst said it’s a “good trim,” and he might buy the stock again on a pullback.
This is a good trim. The stock’s up 70% in a year. It’s up 40% over the last three months. If you want to buy low, you have to sell high. I’m trimming it here. Specifically though, I’m starting to see the 2027 estimates start to go higher meaningfully. And what that tells me is that what I’ve been saying for quite some time—that the Dubai New Resort, the Almar Resort, is now finally starting to be priced into estimates. Finally, it started to show some weakness today and I just decided to trim it, actually cutting it about in half. I’d love it if we get a pullback and I add that right back into it. I do still think it’s a good stock for the long run, but I think in terms of share price, it’s ahead of itself right here.”
Baron Discovery Fund stated the following regarding Wynn Resorts, Limited (NASDAQ:WYNN) in its second quarter 2025 investor letter:
“During the quarter, we established a new position in Wynn Resorts, Limited (NASDAQ:WYNN). Wynn is a luxury resort and casino operator which currently owns integrated gaming properties in Las Vegas, Macau, and Boston. At the start of the quarter, the potential impact of tariffs and a trade war with China weighed on the stock. We took advantage of this weakness by building a position at what we believed were attractive prices. In preview, our analysis showed that we were buying the stock at trough valuation multiples on both the Las Vegas and Macau properties and we were getting the upside from the currently under construction Al Marjan Island project (located in the UAE) for essentially free.
There are a handful of factors that differentiate Wynn from other casino operators and make the stock attractive in our opinion. First, we believe Wynn remains the most differentiated operator in the gaming sector with a premium offering that caters to high-end customers. This focus on premium service enables the company to command higher room rates and gaming revenue per visitor. This also helps to insulate the company during more challenging macro economic periods…” (Click here to read the full text)
8. Deckers Outdoor Corporation (NYSE:DECK)
Number of Hedge Fund Investors: 59
Stephanie Link, CIO at Hightower, recently explained in a program on CNBC why she is buying Deckers Outdoor shares. The analyst mentioned Deckers’ Hoka brand growth and market opportunities for expansion.
“I’m a big believer in Hoka myself personally, but the numbers speak for themselves. It’s growing Hoka about 20% and they’re guiding double-digit growth for the rest of the year for Hoka. UGG actually saw a massive snapback of 19% growth last quarter versus 3% the prior quarter. So they’re seeing brand momentum. That’s what I like to see in retail. They have great global opportunities to gain market share. International last quarter grew 50%. I think they’re just at the tip of the iceberg in terms of international momentum.”
Fidelity Growth Strategies Fund stated the following regarding Deckers Outdoor Corporation (NYSE:DECK) in its Q1 2025 investor letter:
“Underweighting shares of footwear and apparel maker Deckers Outdoor Corporation (NYSE:DECK) also notably helped. The stock plunged in January after the firm’s fiscal-year revenue forecast fell short of Wall Street analysts’ expectations. Despite reporting higher sales in its two crucial brands, UGG® and HOKA®, analysts were concerned about the company’s expansion capabilities amid declining sales in its largest market, the U.S., and other challenges.”
7. International Business Machines (NYSE:IBM)
Number of Hedge Fund Investors: 63
Rich Saperstein, Treasury Partners’ founding principal and CIO, discussed why he likes IBM shares during a program on CNBC. Here is why he likes the stock:
“Roughly 35% of the revenue is recurring. They have 64 billion total in revenue. It’s an AI infrastructure software play. They do AI consulting and also they’re coming out with the nextG mainframe. So uh IBM is one of the sleepers. It’s down 20% after they announced their last earnings. Probably a good company again peripheral right around the core of data center growth and that whole technology sleeve.”
6. Walmart Inc (NYSE:WMT)
Number of Hedge Fund Investors: 105
Michael Gunter, Consumer Edge’s head of insights, recently shared some research data on retail companies during a program on CNBC. The analyst said Walmart is among the retailers seeing new shoppers amid inflation.
Companies like Walmart, Dollar General, Dollar Tree, are seeing an outsized share of their new shoppers, we’re talking in the latest uh fiscal quarter and then continuing into August, coming from high-income shoppers. So, this is this is trade down. It’s relative to their overall customer bases. And it could be that even though high-income consumers are are performing better and holding up better than lower-income consumers with rising asset prices, they’re still looking to manage spending, they’re still looking for deals. And it also is an indication that the efforts that these companies have been putting into attracting high-income consumers with expanding assortments might be working.
5. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Investors: 111
Rich Saperstein, Treasury Partners’ founding principal and CIO, said in a recent program on CNBC that he likes Vistra in addition to some other energy plays.
“The ones we own, Vistra, VST, NRG, these companies are generating 9 and 11% operating cash flows. They’re 70 and 30 billion companies. So they’re small, but they’re redeploying that cash extremely effectively. For example, Vistra’s retired roughly 30% of their float since we started buying it in 2021. So it’s a capital allocation. It’s a demand play, and it supports on a periphery the growth in data centers.”
Carillon Eagle Mid Cap Growth Fund stated the following regarding Vistra Corp. (NYSE:VST) in its second quarter 2025 investor letter:
“Vistra Corp. (NYSE:VST) is an integrated electricity and power generation company. As a result of increasing forecasts for future power demand growth, largely brought on by the rapid growth of artificial intelligence, the company’s shares have continued to climb on investors’ expectations for future power prices. A tailwind for the stock has been Vistra’s potential to announce future power purchase agreements (PPAs) with large technology companies to satisfy the outsized power requirements of their artificial intelligence endeavors.”
4. Oracle Corp (NYSE:ORCL)
Number of Hedge Fund Investors: 124
Tyler Radke, Citi’s co-head of U.S. software equity research, said in a recent program on CNBC that Oracle’s stock was not expensive even after its post-earnings rally amid strong revenue growth. The analyst was expecting further “surprises” from Oracle in an upcoming event.
“I mean what’s crazy about this move, I mean our numbers for revenue and EPS for FY28, which is two years out, they went up by 25 to 30%, right? And so you look at this move in the shares up today almost 40% on a valuation basis that it’s actually not that much more expensive than it was earlier this week and certainly pre-market when we upgraded it the shares were up only about 25%. So our view is I mean you’re going to see revenue growth for Oracle at a consolidated level approach 50% in a few years out which is really unheard of at this scale. We think there’s going to be a lot more exciting news to come whether that’s additional contracts. They talked about more bookings coming in the next few months closing in on half a trillion of RPO and then they have their AI world conference next month in Las Vegas where we think they’re going to give additional surprises on margins. And so stepping back, yeah, the shares are up a lot, but they’re trading at kind of a mid-30s earnings multiple on our numbers for FY28, which is right about where we value Microsoft. So I still don’t think the stock is particularly stretched here.”
Loomis Sayles Growth Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its second quarter 2025 investor letter:
“Oracle Corporation (NYSE:ORCL) is a leader in the enterprise software market with a strong market position in database, infrastructure and application software, and cloud-based software and services. We believe the company’s competitive advantages include its large and experienced direct sales force, a founder-driven management team that reinvests relentlessly to maintain a leading intellectual property (IP) portfolio and differentiated product suite, and a large installed base of clients with high switching costs where it consistently achieves renewal and retention rates in the mid-90% range. We believe Oracle is well positioned to benefit from the continuing growth in data storage and enterprise application software, as well as the shift to cloud-based solutions.
A long-term fund holding, Oracle reported strong quarterly financial results that were above management guidance and consensus expectations on most measures, including remaining performance obligation (RPO) bookings, a forward-looking measure of revenue. As a result, the company expects revenue growth to accelerate and raised its guidance to at least 16% revenue growth in its 2026 fiscal year, driven by cloud growth in excess of 40%. Oracle is the world leader in its largest business segment, enterprise database software used in customer on-premise IT environments. However, the company continues to focus on transitioning its business from a traditional on-premise, up-front software licensing and maintenance revenue model to a cloud computing subscription-based model where software revenue is recognized over the life of the client’s contract. While there has been pressure on year-over-year overall revenue comparisons during this transition, which started over a decade ago as Oracle released cloud versions of its applications and infrastructure software, as up-front license revenue shifts to subscription revenue, we have long expected this to lead to faster growth over time due to a higher customer lifetime value as the transition progresses. We believe the cloud model also allows Oracle to monetize its services and technology more efficiently and yield savings to the customer… (Click here to read the full text)
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 156
Laura Martin from Needham said in a program on CNBC earlier this month that Apple is losing its ability to raise prices and the company is “not innovating.” The analyst warned that it would become difficult for the company to maintain its installed user base.
“They’ve gone on to defense. If you don’t have innovation, you can’t raise price. And as the genius that just spoke said, they aren’t raising price. One model has a $100 increase. That’s bad because they’re including a lot of cool stuff. What we heard is 90 minutes of cool stuff they’re including for no price increase or sneaky price incluses on memory. That’s all bad. That’s because they’re not innovating. And by the way, their major competitor called Android is backed by Google Gemini’s LLM. So they’re going to be able to raise prices faster or if Google decides on Android not to raise prices, it’s going to have a better product in two or three years while Apple sits around and doesn’t innovate. So it will get ever more expensive for Apple to maintain its installed base of customers.”
Apple can only do so much in innovation to revolutionize its iPhone each year. A UBS survey shows that the iPhone upgrade cycle has reached 35 months in the US. A separate report from Consumer Intelligence Research Partners says about 63% of iPhone users keep their smartphones for more than two years. Apple is losing its pricing edge as it has to put a cap on its price tags to compete in key markets like China. Samsung, Xiaomi and other companies can launch advanced hardware and software features to compete with Apple and keep the company under pressure in Asia.
Renaissance Large Cap Growth Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its second quarter 2025 investor letter:
“Apple Inc. (NASDAQ:AAPL) declined in the quarter. Despite reporting solid operating results, the stock came under pressure over concerns about decelerating iPhone sales, China growth headwinds, and underwhelming details for Apple’s long-awaited AI strategy. Tariffs were also an unexpected negative surprise, with Apple quantifying a sizable $900M cost impact. Moreover, the latest development in the Apple vs. Epic Games lawsuit resulted in a ruling that Apple had violated an earlier injunction, questioning Apple’s absolute control over its App Store.”
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 235
Altimeter Capital’s Brad Gerstner, in late August, talked about the impressive results of Nvidia on CNBC and explained why the company is benefiting from AI inference. Gerstner said at the time that the world is supply-constrained when it comes to compute.
“Think about this stat a year ago: Google per month was doing about 9 trillion tokens a month in terms of inference generation, compute generation. Today it’s 980 trillion tokens. So from 9 trillion to 980, it’s a 100x increase in a year. You have to compute in order to do that. So the world is massively supply constrained when it comes to compute. They’re 50. You know, he said yesterday the world will continue to grow at 50%. So think about this. If you grow and people ask them, are you going to grow at 50%? He said, well, I think we’re going to maintain market share. So the consensus for next year is 250 billion of data center revenue. If they grow up 50%, that’s going to be closer to 300 billion or closer to eight bucks a share, right. And $200 at eight bucks a share. You know, is about 25 times. So below market multiples in terms of PE. So here’s a company that I think is hitting on all strides.”
Nvidia’s latest deal with OpenAI and Intel, along with Oracle’s partnership with OpenAI are showing signs that companies are continuing to spend a fortune on compute, and AI demand won’t slow down anytime soon. But can NVDA shares keep gaining?
Nvidia’s Hopper Infrastructure and now Blackwell form the core of AI infrastructure for LLM training and inference. But Nvidia’s growth is slowing compared to previous quarters amid competition and capex spending limitations from major companies. In the recently reported quarter, Nvidia’s annual revenue growth came in at 56%, compared with nearly 100% YoY growth in the past.
With its strong position in the data center market and rising demand, Nvidia is likely to keep growing, though not at the same pace it has in the past. Increasing competition from major companies like Broadcom is also expected to impact Nvidia’s margins in the long term.
Nvidia recently impressed the market by signing an AI infrastructure deal with Intel. Nvidia will invest $5 billion in Intel. Jensen Huang said the deal would open up $50B in TAM for both companies in the data center and PC business.
Analysts believe the deal would allow Nvidia to take market share from AMD in the data center and PC business and diversify away from Arm-based designs.
Brown Advisory Large-Cap Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:
Information Technology was the largest detractor from relative performance during the quarter. The strategy’s underweight to NVIDIA Corporation (NASDAQ:NVDA) and not owning Broadcom (AVGO) were the two largest detractors during the period. NVIDIA (NVDA), a market leader in advanced graphics processing units, rebounded after a first quarter marked by a lower gross margin outlook, which was attributed to short-term complexities in ramping up Blackwell production, and a broad-based decline in AI infrastructure stocks. The company’s most recent quarterly earnings were modestly ahead of consensus expectations, and management expects gross margins to increase by year-end as yield and throughput on Blackwell racks continue to improve.
1. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 260
Mitchell Green, Lead Edge Capital founding partner, said in a program on CNBC early August that Meta Platforms is one of the best stocks to play the AI trade. The analyst highlighted the company’s active user count and margins.
“We’re sitting here today and after yesterday’s, you know, earnings pop. Facebook is a $2 trillion company growing. What did earnings grow yesterday? I think topline grew like 20 or something like that. So, not only are they seeing they’re making investments, but they’re seeing margins increase as well. You know, the DAU count at Facebook is absolutely incredible. I think you play the best way to play AI is go buy the big hyperscalers yourself. And and they’re not crazy expensive on an earnings.”
META stock is up by about $5 since the analyst’s comments. The stock is up 26% so far this year.
Meta Platforms Inc (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.
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.
First Eagle Global Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its second quarter 2025 investor letter:
“Meta Platforms, Inc. (NASDAQ:META)—the parent company of Facebook, Instagram and WhatsApp, among other social-media platforms—reported strong revenue and earnings growth during the quarter, driven by increases in both ad impressions and price per ad. The company continued to aggressively invest and hire in AI, even as it develops its core advertising businesses. We believe these results demonstrate Meta’s ability to focus on both profitability and efficiency in conjunction with ongoing investments in the core ad business, the metaverse and other AI applications.”
While we acknowledge the potential of META to grow, 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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