Investors Eye 12 AI Stocks Amid Market Volatility Concerns

Technology stocks, particularly in the artificial intelligence (AI) sector, are under increased scrutiny as investors express concerns about a potential “AI bubble.” The unease intensified after hedge fund investor Michael Burry, known for his role in the film *The Big Short*, placed a significant bet of $1.1 billion against the prices of major AI stocks like Nvidia and Palantir. This has led many to reconsider their investment strategies in the tech sector.

In contrast, Arnaud Girod, the head of economics and cross asset strategy at Kepler Cheuvreux, argues that healthcare stocks may serve as a protective measure against a potential correction in AI stocks, which he predicts could happen in 2026. Girod stated on CNBC’s *Squawk Box* that healthcare is positioned favorably due to easing tariff risks and supportive drug pricing policies, alongside demographic trends such as aging populations and rising obesity rates.

Girod emphasized the need for investors to target businesses that are resilient to AI disruption while also capable of leveraging AI for enhanced efficiency and innovation. He noted that the recovery of pharmaceutical stocks could gain momentum as these long-term trends regain importance.

The article identifies twelve AI stocks currently attracting attention on Wall Street, selected based on comprehensive analysis of news articles, stock evaluations, and hedge fund activities. As of the third quarter of 2025, these stocks are particularly favored by hedge funds, indicating their potential for growth.

Investing in stocks that hedge funds favor can be a lucrative strategy. Research indicates that mimicking the top stock picks of successful hedge funds can lead to market outperformance. For instance, a quarterly newsletter focusing on this strategy has reportedly returned 427.7% since its inception in May 2014, significantly surpassing benchmark returns by 264 percentage points.

Key AI Stocks to Watch

1. **International Business Machines Corporation (NYSE:IBM)**
Number of Hedge Fund Holders: 66
On December 5, Erste Group upgraded IBM from a “Hold” to a “Buy” after a strong third-quarter performance and improved financial guidance. The company expects revenue growth exceeding 5% for the full year, along with a revised free cash flow projection of around $14 billion.

2. **Coherent Corp. (NYSE:COHR)**
Number of Hedge Fund Holders: 78
On December 5, Raymond James raised its price target for Coherent to $210.00 from $180.00, maintaining a “Strong Buy” rating. Analysts are optimistic about the company’s AI capabilities, anticipating that its technology is underappreciated in the market.

3. **Salesforce, Inc. (NYSE:CRM)**
Number of Hedge Fund Holders: 119
Following a mixed earnings report on December 4, UBS reiterated a Neutral rating for Salesforce with a price target of $260.00. Revenue growth of 8.6% was noted, but the company’s guidance for continued growth remains cautious.

4. **Tesla, Inc. (NASDAQ:TSLA)**
Number of Hedge Fund Holders: 120
On December 4, RBC reiterated its “Outperform” rating for Tesla, foreseeing significant potential in the humanoid robotics market. Analyst Tom Narayan estimates that Tesla’s robot division could be valued at approximately $640 billion by leveraging advancements in AI.

5. **Oracle Corporation (NYSE:ORCL)**
Number of Hedge Fund Holders: 122
Ahead of its earnings report on December 10, RBC Capital maintained a “Sector Perform” rating with a $310.00 price target. Analysts are focused on Oracle’s long-term AI and cloud strategy, despite recent investor caution.

6. **Apple Inc. (NASDAQ:AAPL)**
Number of Hedge Fund Holders: 166
On December 5, CLSA raised its price target for Apple to $330.00. Analysts note strong iPhone sales and potential AI advancements, particularly in improving the Siri voice assistant.

7. **Broadcom Inc. (NASDAQ:AVGO)**
Number of Hedge Fund Holders: 183
With an “Outperform” rating and a price target of $435, Mizuho analysts are optimistic about Broadcom’s position as a key player in the AI chip market, especially with upcoming earnings reports.

8. **NVIDIA Corporation (NASDAQ:NVDA)**
Number of Hedge Fund Holders: 234
Analysts at Bernstein reaffirmed an “Outperform” rating on December 5, citing NVIDIA’s strong positioning in the data center space. The average price target of $250 suggests significant growth potential.

9. **Alphabet Inc. (NASDAQ:GOOGL)**
Number of Hedge Fund Holders: 243
On December 5, Pivotal Research raised its price target to $400.00. Analysts highlight Alphabet’s strong cash flow and AI capabilities as major growth drivers.

10. **Meta Platforms, Inc. (NASDAQ:META)**
Number of Hedge Fund Holders: 273
Following potential cuts to its metaverse investments, Mizuho reiterated an “Outperform” rating with a price target of $815.00. Analysts foresee a rally in Meta shares as the company shifts focus toward AI investments.

11. **Microsoft Corporation (NASDAQ:MSFT)**
Number of Hedge Fund Holders: 312
On December 5, Barclays maintained an “Overweight” rating with a price target of $625.00. This rating follows the announcement of price increases for Microsoft 365 subscriptions, reinforcing the company’s strong position in the enterprise AI market.

12. **Amazon.com, Inc. (NASDAQ:AMZN)**
Number of Hedge Fund Holders: 332
On December 5, KeyBanc maintained an “Overweight” rating with a price target of $303.00. Analysts express confidence in Amazon’s AI growth prospects following the AWS re:Invent conference.

Investors are encouraged to approach the AI stock market with caution as potential volatility looms. However, these twelve companies are positioned to leverage their AI capabilities and adapt to changing market dynamics. As the industry evolves, strategic investments in these stocks may offer opportunities for growth while navigating the uncertainties of the tech sector.