Insider Monkey·2025-12-10 17:25Core Insights - The AI sector is experiencing rising valuations and increased capital spending, but caution is advised due to potential overvaluations and market sentiment shifts [2][4] - Bill Gates emphasized that not all high-valuation AI companies will succeed, indicating a competitive landscape [2] - BlackRock's Ben Powell highlighted that the AI infrastructure ecosystem, including chipmakers and energy suppliers, may benefit more from investments than model developers [3] Industry Overview - European regulators are urging caution regarding concentrated exposure among U.S. hyperscalers like Nvidia, Alphabet, Microsoft, and Meta, noting that market sentiment could change if growth expectations stall [4] - The European Central Bank's 2025 Financial Stability Review pointed out the need for differentiation among AI stock picks due to a mix of FOMO-driven investment and solid earnings growth [4] Investment Methodology - The list of the 15 best AI stocks to watch was curated based on financial media, ETFs, and hedge fund interest as of Q3 2025, focusing on stocks with significant upside potential [7][8] Company Highlights - Workday, Inc. (NASDAQ:WDAY) has a hedge fund holder count of 64 and an upside potential of 25.31%, but faces mixed growth signals due to market saturation [9][10] - Block, Inc. (NYSE:XYZ) has a hedge fund holder count of 64 and an upside potential of 37.47%, with sustained momentum in its Square and Cash App ecosystems [14][15] - Nebius Group N.V. (NASDAQ:NBIS) has a hedge fund holder count of 65 and an upside potential of 66.40%, with significant partnerships with Microsoft and Meta driving its growth [19][20]