Major AI Stocks Surge as Industry Investment Reaches New Heights

Investment in artificial intelligence (AI) is reaching unprecedented levels, with major technology companies allocating billions of dollars to enhance their capabilities. The ongoing surge in AI spending has sparked discussions regarding the potential for an industry bubble. Some experts remain optimistic, citing substantial capital investments that could drive long-term growth.

Anneka Treon, Global Head of Private Banking, Wealth Management and Investment at ING, emphasized the continued opportunities in the sector. She stated, “We continue to see opportunity because ultimately, AI bubble or not, it boils down to real dollars being spent on real capex with a very long runway of funding ahead.”

In contrast, Jared Bernstein, former Chairman of the Council of Economic Advisers under President Biden, expressed concerns about soaring asset prices, suggesting that a bubble is a likely outcome. He noted, “You’ve got to account for future earnings… that divergence between credibly, plausible, expected future earnings and this level of investment certainly looks bubbly.”

Despite the mixed sentiments, Larry Fink, CEO of BlackRock, defended the significant investments, suggesting they are essential for maintaining a competitive edge in the AI arms race. He indicated that while there will be winners and losers, a diversified portfolio can mitigate risks associated with the volatility in this sector.

As this landscape evolves, investors are keenly observing AI stocks that are popular among hedge funds. Research indicates that mimicking the top picks of successful hedge funds can yield substantial returns. In the second quarter of 2025, hedge fund data revealed notable interest in several AI stocks, which are outlined below.

Top AI Stocks Capturing Investor Attention

1. **Tempus AI, Inc. (NASDAQ:TEM)**
Number of Hedge Fund Holders: 27
On October 20, analyst Kyle Mikson from Canaccord Genuity reiterated a Buy rating for Tempus AI with a target price of $110.00. The firm believes that the company’s strategic acquisitions, including Ambry, will enhance its AI capabilities and drive long-term revenue growth.

2. **HP Inc. (NYSE:HPQ)**
Number of Hedge Fund Holders: 51
On October 22, JPMorgan downgraded HP from Overweight to Neutral, setting a price target of $30.00. Analyst Samik Chatterjee noted that HP is facing challenges as it transitions from a favorable PC cycle, with rising memory costs impacting margins.

3. **Astera Labs, Inc. (NASDAQ:ALAB)**
Number of Hedge Fund Holders: 56
On October 20, Barclays analyst Tom O’Malley downgraded Astera to Equal Weight with a price target of $155.00. The firm expressed concerns regarding the adoption of its UALink product, indicating a shift in market dynamics towards Ethernet solutions.

4. **Atlassian Corporation (NASDAQ:TEAM)**
Number of Hedge Fund Holders: 64
On October 22, Canaccord Genuity maintained a Buy rating with a price target of $230.00. The firm highlighted Atlassian’s successful transition of Data Center customers to Cloud deployments and its strategic acquisitions aimed at bolstering AI adoption.

5. **Core Scientific, Inc. (NASDAQ:CORZ)**
Number of Hedge Fund Holders: 78
On October 23, Roth analyst Darren Aftahi upgraded Core Scientific to Buy with a price target of $23.50. The firm anticipates no deal with CoreWeave and views Core Scientific’s potential in high-performance computing as a key growth driver.

6. **AppLovin Corporation (NASDAQ:APP)**
Number of Hedge Fund Holders: 109
On October 22, Deutsche Bank initiated coverage with a Buy rating and a price target of $705.00. The bank praised AppLovin for its leading position in mobile advertising technology, projecting strong future growth.

7. **Oracle Corporation (NYSE:ORCL)**
Number of Hedge Fund Holders: 124
On October 21, UBS reaffirmed its Buy rating with a price target of $380.00. The firm noted positive feedback from Oracle’s AI World event, indicating strong customer intentions to increase investments in Oracle products.

8. **Apple Inc. (NASDAQ:AAPL)**
Number of Hedge Fund Holders: 156
On October 21, Wedbush reiterated an Outperform rating with a price target of $310.00. The firm anticipates strong demand for the new iPhone 17 lineup, projecting that Apple will exceed Wall Street’s revenue estimates in the upcoming earnings report.

9. **Alphabet Inc. (NASDAQ:GOOGL)**
Number of Hedge Fund Holders: 219
On October 22, Citizens maintained a Market Outperform rating with a price target of $290.00. The firm highlighted AI enhancements as key growth drivers for Google’s search functionality and cloud services.

10. **Microsoft Corporation (NASDAQ:MSFT)**
Number of Hedge Fund Holders: 294
On October 22, UBS retained its Buy rating with a price target of $650.00. Analysts expect Microsoft’s Azure cloud business to continue delivering substantial revenue growth, with projections of 39% growth in the most recent quarter.

As the AI sector continues to evolve, investors remain vigilant in identifying potential opportunities. The impressive performance of these stocks underscores the growing importance of AI in the global technology landscape, driving both innovation and investment across various industries.