In an unexpected move, China is reportedly telling companies to refrain from using Nvidia’s H20 chips after the chipmaker was recently granted approval to resume shipping.
According to a Bloomberg report, authorities have told companies to avoid using the Nvidia chips, or those from AMD, for government and national security use cases.
Nvidia and similar companies were previously banned from exporting chips to China, but the Trump administration had recently granted approval for selling the chips in exchange for a stipulated percentage of the revenues.
Even though China is now refraining from using the chips for government and national security use cases, Trump has recently called out Nvidia’s H20 chip as being “obsolete.” He also noted that he wouldn’t allow the higher-end Blackwell shipments there without a 30% to 50% decrease in performance.
Over the weekend, a social media account connected to Chinese state media stated that the H20 chips are not “safe.”
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q1 2025.
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. SoundHound AI, Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 18
SoundHound AI, Inc. (NASDAQ:SOUN) is one of the 10 AI Stocks Analysts Are Watching Closely. On August 11, Ladenburg Thalmann analyst Glenn Mattson upgraded the stock from Neutral to Buy with a price target of $16.00 (from $9.00). The rating upgrade comes after Soundhound posted second-quarter revenue well above expectations driven by its large contract wins.
According to the firm, momentum in core verticals is helping offset previous concerns about low-margin contracts from the Amelia acquisition. These are anticipated to be phased out over the next 18 months.
It believes that SoundHound is building a broader platform that may link automotive, restaurant and enterprise customers into a voice-enabled ecosystem. This will in turn create lead-generation revenue streams.
“We upgrade shares to Buy and raise our PT to $16 (from $9). We continue to view Voice as one of the key early applications for AI systems. The company is a leader in this space and is adding significant utility for enterprises looking to adopt AI functionality. The Amelia acquisition still needs further integration but is providing solid benefits in terms of scale, new lead generation, and an entry into the enterprise. While valuation remains elevated, the growth and scale justify that premium, in our view. We now use a 22x multiple on our new 2027 estimate to achieve our $16 PT. This is justified by the rule of 40 peer set found in the body of the report.”
SoundHound AI, Inc. (NASDAQ:SOUN) is a voice artificial intelligence company offering voice AI solutions to businesses.
9. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 24
C3.ai, Inc. (NYSE:AI) is one of the 10 AI Stocks Analysts Are Watching Closely. On August 11, Wolfe Research analyst Gal Munda reiterated an Underperform rating on the stock with a $15.00 price target. The rating affirmation follows the company’s first quarter fiscal 2026 results.
On Friday, the company reported that it sees preliminary revenue of $70.2 million-$70.4 million, an estimated 33% below the midpoint of its previous Q1 guidance for $100 million-$109 million.
The adjusted operating loss will be $57.7 million-$59.9 million, almost twice as bad as the $23.5 million-$33.5 million loss that the company had expected.
Company CEO Thomas Siebel said that sales results during the quarter were “completely unacceptable” but driven by “disruptive effect” of the reorganization and his ongoing health issues.
Wolfe Research noted that it believes F1Q26 results have been a “negative surprise that will likely drive shares materially lower despite the restructuring of the sales organization.”
“In July, the company announced a search for a successor to the CEO, and in the 8-K filing (link to filing here), it did not reiterate guidance, which we viewed as a risk to expectations. We believe F1Q26 results were a negative surprise that will likely drive shares materially lower despite the restructuring of the sales organization. Given the disappointing F1Q26 results, we believe FY26 revenue guidance could be revised significantly lower or potentially pulled entirely. Reiterate UP and $15 PT. “
C3.ai, Inc. (NYSE:AI) is an enterprise artificial intelligence (AI) software company involved in building and operating enterprise-scale AI applications and accelerating digital transformation.
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