Global technology and chip stocks surged on Monday following the news of a tariff pause between the US and China. The two countries have agreed to pause the majority of tariffs on each other’s goods for an initial 90-day period.
This surprising breakthrough comes after a weekend of trade negotiations in Geneva, Switzerland. The negotiations were conducted by officials from the two countries. In a joint statement, both sides recognized “the importance of a sustainable, long-term, and mutually beneficial economic and trade relationship.”
READ ALSO: 10 AI Stocks Making Moves This Week and 10 AI Stocks on Wall Street’s Radar Right Now.
Previously, trade tensions between two of the world’s largest economies resulted in disrupted supply chains and businesses. Investors were very concerned about the impact on major tech stocks, particularly those with exposure to China. However, they are now breathing a sigh of relief after talks between the US and China led to a temporary pause on “reciprocal tariffs”.
Daniel Ives, global head of technology research at Wedbush Securities, said that the agreement to suspend most tariffs on each other’s goods was a “best-case scenario.”
“This is clearly just the start of a broader and more comprehensive negotiations, and we would expect both these tariff numbers to move down markedly over the coming months as deal talks progress.”
He further said new highs for the market and tech stocks are now on the table.
“With US/China clearly on an accelerated path for a broader deal we believe new highs for the market and tech stocks are now on the table in 2025 as investors will likely focus on the next steps in these trade discussions which will happen over the coming months. This morning is a huge win for the bulls and a best case scenario post this weekend in our view.”
The tariff revisions that have been agreed on will be imposed by May 14. Trump’s 20% fentanyl-related levies on China will stay, but each side has agreed to lower “reciprocal” tariffs on the other by 115 percentage points for 90 days.
According to the joint statement, this means that the US will temporarily lower its overall tariffs on Chinese goods from 145% to 30%. Meanwhile, China will cut its levies on American imports from 125% to 10%.
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 Q4 2024.
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).
Stocks chart
10. SoundHound AI, Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 11
SoundHound AI, Inc. (NASDAQ:SOUN) is a voice artificial intelligence company offering voice AI solutions to businesses. The stock has surged 18% on Monday following news of the tariff pause and a rating update from HC Wainwright.
Analyst Scott Buck reiterated a “Buy” rating on the stock and set a price target of $18.00. The firm’s rating reflects SoundHound AI’s potential for growth amid macroeconomic challenges. Even though the company slightly missed its revenue estimates for the first quarter of 2025, its revenue guidance reaffirmation should alleviate investor concerns, the analysts noted.
SoundHound AI holds the potential to generate efficiencies and cost savings for businesses, positioning it well to capitalize on new business opportunities. The company’s restaurant business has also shown considerable success, now spanning over 13,000 locations and generating a major chunk of annual recurring revenue. Overall, the firm is optimistic about the company’s potential to grow organically.
9. Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 39
Astera Labs, Inc. (NASDAQ:ALAB) is engaged in the design, manufacture, and sale of semiconductor-based connectivity solutions for cloud and AI infrastructure. On May 12, Morgan Stanley upgraded the stock to “Overweight” from Equal Weight and set a price target of $99.00. The rating update has been issued based on anticipated growth in AI spending and new product launches. The firm said shares of the AI semiconductor company are compelling.
“We have maintained optimism on Astera’s prospects since the IPO, but have been somewhat valuation sensitive at the higher end of the range. We think this is a good entry point as AI enthusiasm comes back to the group and ALAB posts strong numbers.”
8. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 63
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On May 12, BofA raised the firm’s price target on the stock to $150 from $125 and kept a “Buy” rating on the shares.
The analyst told investors in a research note how many companies continue to announce AI initiatives, product developments, and integrations. However, underneath all such marketing and fanfare, the AI tools are often found to be merely “ChatGPT-wrappers.”
“We see PLTR as the market definer for organizations leveraging AI to drive accelerated tangible results.”
On the contrary, they assert how Palantir’s value is creating “outcome-focused bespoke AI-enabled products, at scale,” noting how the speed and magnitude at which the company is deploying products and converting customers is incrreasing. They added that Defense and Commercial markets are both in the “infancy of unlocking real value via AI.”
7. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 85
Snowflake Inc. (NYSE:SNOW) is a cloud-based data storage company providing a data analysis, storage, and sharing platform. On May 12, Monness analyst Brian White maintained a “Buy” rating on the stock and set a price target of $230.00. White emphasized Snowflake’s strong execution, improved efficiency, and innovation behind his optimism. Even though there is slow growth ahead, the company is expected to meet its earnings targets. Moreover, upcoming events such as the Snowflake Summit focusing on AI offer optimism for future performance.
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. Tesla, along with Amazon, led the “Magnificent Seven” Big Tech stock surge today after the US and China announced a temporary trade war truce, with Amazon shares surging 7.2% while Tesla’s jumped 6.8%.
Tesla has also been in the limelight lately after its self-driving endeavors managed to draw attention from analysts. Many of these analysts believe that autonomous tech could play a central role in the company’s growth plans. Goldman Sachs analyst Mark Delaney reiterated a “hold” rating for Tesla, whereas Piper Sandler analyst Alexander Potter maintained a “buy” rating with a $400 price target.
Both analysts have highlighted Tesla’s Full Self-Driving Software as a reason behind their optimism. Potter believes that even though the current FSD requires human intervention, the company may be preparing for a safer version before the Austin service launch.
5. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 161
Broadcom Inc. (NASDAQ:AVGO) is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets. Chipmakers Nvidia (NVDA) and Broadcom (AVGO) each gained about 4% following the news of the tariff pause on Monday.
On May 11, both Broadcom and Nvidia were chosen by Bank of America Securities’ analysts as their “Top Picks” on the back of an anticipated surge in global AI capital expenditures in 2025. The firm noted that even though first-quarter global AI hyperscaler spending came in at $92.0 billion, slightly below expectations of $93.8 billion, many hyperscalers have appeared to have shown an intent to keep spending on AI in the coming quarters. This is despite concerns of slowing spending in the long run.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company known for its consumer electronics, particularly iPhones and MacBooks. The stock is rising steadily today, May 12, on the tariff pause news update. On the same day, Morgan Stanley reiterated the stock as “Overweight” with a price target of $235. The firm said it sees a mixed picture on Apple Services, which includes the App Store, but that it’s sticking with the stock on the back of possible catalysts ahead such as improving U.S/China trade relations and its developers conference.
“Is Apple’s Services business more vulnerable than ever, or are recent Services concerns overblown? We believe both are true today.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. One of the most notable analyst calls on Monday, May 12, was for Nvidia Corporation. UBS reiterated the stock as “Buy” and lowered its price target on the stock from $180 to $175. The firm said it’s sticking with Nvidia ahead of earnings later this month.
“We expect Q/Q growth to reaccelerate in C2H [calendar] and see F2027/C2026E EPS of nearly $5.90 versus most investors now thinking low $5s. Net, we maintain Buy rated of the stock, but on lower estimates we cut our PT from $180 to $175.”
Nvidia also garnered attention from Wedbush following the recent trade tariff pause between China and the US. Analyst Dan Ives said Nvidia is the biggest winner of the pause in the near-to-medium-term.
“They are going to be one especially given the China tariffs…and we’ll see what happens with the H20.”
-Ives, referencing Nvidia’s AI chip subject to export controls.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOG) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses. On May 12, D.A. Davidson reiterated the stock as “Neutral,” stating that the company should be broken up. The analyst, Gil Luria, called for a complete Alphabet breakup in a report following two Department of Justice antitrust cases against Alphabet. The first case focuses on the internet search business while the other on its advertising business.
“We believe the only way forward for Alphabet is a complete breakup that would allow investors to own the business they actually want — the top competitors to NFLX, AWS/ Azure, TTD and UBER/TSLA. We remain NEUTRAL rated, but would see GOOGL as the top mega cap pick if it proceeded with a complete break up”
Federal judges have ruled that Google-parent Alphabet has illegally used monopoly-building techniques to dominate online advertising and search. A key part of the ruling focused on multibillion-dollar payments Google makes to Apple, with the DOJ requesting that Google be forced to sell its Chrome browser and take other measures.
Investors have also been worried about Google’s search business amid the artificial intelligence-driven competition coming from ChatGPT and others, with the company deploying AI Overviews in the U.S. in mid-2024.
“Google Search ad revenue growth could persist well past the point the business is damaged since advertisers still don’t have an alternative. Only after Apple switches defaults and ChatGPT comes in and ChatGPT turns on ads, will we see the impact on revenue. That may take several quarters, which means the overhang is not going away.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On May 12, Bank of America reiterated the stock as “Buy,” stating that Amazon’s use of robotics will only continue to grow and that it sees plenty of room for growth.
“Amazon’s robotic efforts thus far have been mainly focused on fulfillment, which represents around 17% of Amazon’s total costs (and 15% of total revenues). We believe delivery could be another area of material cost savings, with shipping costs representing another 17% of Amazon total costs.”
While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
Hedge Fund Resource Center