The race toward artificial intelligence supremacy is intensifying, and it seems that independency is emerging as a key focal point. In the latest news, The Financial Times has reported that China chipmakers are fast-tracking their initiatives to triple the country’s output of artificial intelligence chips in 2026.
The main goal, as claimed by the report, is to reduce the country’s dependency on US chips. If China succeeds in this effort, it will be able to successfully counter the looming threat of US export controls, as well as alleviate national security concerns.
According to the report, Huawei is planning to begin production at a plant that will specifically make AI chips by year end. Moreover, there are two more facilities set to launch in 2026.
The report has highlighted that the combined output from the three potential plants may surpass the current production capacity at China’s chipmaker Semiconductor Manufacturing International Corporation (SMIC).
SMIC itself plans to double manufacturing capacity for 7 nanometre chips next year. According to the report, Huawei is its largest customer.
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 Q2 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).
10. Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 59
Elastic N.V. (NYSE:ESTC) is one of the 10 AI Stocks Hit with New Analyst Ratings. On August 26, TD Cowen analyst Andrew Sherman lowered the price target on the stock to $85.00 (from $90.00) while maintaining a Hold rating. The lower price target comes ahead of the company’s print due on August 28.
The firm has updated its model ahead of its quarterly results, anticipating a beat and raise. Moreover, given the new CFO, the company will likely guide conservatively.
“Expecting Modest Beat & Raise; ESTC reports on 8/28. We expect a beat & raise given new CFO likely guided conservatively. Our partner checks remain mixed, citing fine renewals but competitive factors & AI risks. Our partner survey down-ticked w/ 67% met/beat vs. 86% last qtr, though pipelines looked better. At 4.3x EV/Sales we see low expectations but a return to Cloud upside is needed.
Shares are -14% since reporting 4Q (IGV +5%). Sentiment seems relatively bearish & valuations at ~4.3x EV/CY26E Sales & ~20x EV/FCF shares trade at a discount to 10-15% comps at ~5x. Reiterate Hold & lower PT to $85 (~4.5x EV/CY26E Sales).”
Elastic N.V. is a search AI company offering cloud-based solutions.
9. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 82
Intel Corporation (NASDAQ:INTC) is one of the 10 AI Stocks Hit with New Analyst Ratings. On August 25, TD Cowen analyst Joshua Buchalter reiterated a Hold rating on the stock with a $20.00 price target following the announcement that the US government is taking a stake in the chipmaker.
According to the firm, the finalized agreement with the Trump administration on previously signed CHIPS Act and Secure Enclave funding is seen to be positive. This is because the company seems to be in a favorable political position now.
However, the firm pointed out that Intel isn’t receiving any meaningful net new capital, and that the company’s issues are technical and competitive. These issues aren’t such that funding alone can resolve them.
It also believes it is difficult to be confident about Intel’s future both in the short and long-term. The challenges weighing in on the company are going to take their due time to resolve, and solid proof such as earnings or cash flow will take time to show up.
“Net, it remains difficult for us to gain confidence in the immediate and long-term path forward. Roadmaps and customer confidence are not (re)built overnight, and the strategy seems very much in flux. That said, Intel’s market breadth and extensive intellectual property assets across compute, combined with now more closely aligned incentives with the White House, cannot be fully counted out yet, and there are likely ways to monetize its collection of assets for shareholders. We think the near-term and long-term overhangs on the narrative will likely be an overhang until more tangible metrics (e.g., earnings, FCF) begin to inflect to support valuation…which we think remains a long ways away.”
Intel Corporation (NASDAQ:INTC) designs and sells computing hardware, semiconductor products, and AI-driven solutions for various industries.