The Trump administration may soon abandon the tiered approach to accessing advanced AI chips and replace it with a global licensing regime with government-to-government agreements. Developing such a structure would likely conform to President Donald Trump’s broader trade strategy of making deals with individual countries. The US would then have an easier time leveraging the American-designed chips in negotiations.
“There are some voices pushing for elimination of the tiers. I think it’s still a work in progress.” — -Wilbur Ross, who served as Commerce secretary during the first Trump administration.
Changes to the Biden-era rule will potentially limit global access to AI chips and the tiers that previously helped determine how many advanced semiconductors a country could obtain.
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Provided that the plans to change these rules follow through, these US chips would have the power to steer trade talks. The rule, known as the Framework for Artificial Intelligence Diffusion, was issued by the U.S. Department of Commerce in January. Companies must conform to its restrictions starting on May 15.
Other possible changes being considered in the Trump administration include a lower threshold for an exception to licensing. Currently, orders under the equivalent of about 1,700 of Nvidia’s H100 chips do not count toward country caps. Rather, the government needs to be notified of the order with no licence necessary.
The administration is considering making the cutoff orders under the equivalent of 500 H100 chips. All of these possible changes by the Trump administration aim to make the rules stronger yet simpler. However, a few experts are of the belief that removing the tiers would make the rule even more complicated.
Many companies and the industry as a whole don’t approve of the rule in the first place, stating that limiting access to chips would provoke countries to buy from China instead. Seven Republican senators even sent a letter to Lutnick, the United States Secretary of Commerce, in mid-April to have the rule withdrawn. The letter stated that the restrictions would incentivize buyers, especially in Tier 2 countries, to turn to China’s “unregulated cheap substitutes.”
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.
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10. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 42
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On May 5th, Mizuho upgraded the stock to “Outperform” from Neutral and set a price target of $26, down slightly from $28. The firm sees an attractive risk/reward for the energy company. It also cited growing demand for alternatives to conventional power sources.
“We upgrade to Outperform as we see asymmetric risk/reward upside from marginal orders from utilities or other large load customers.”
It also said that it “sees potential for Bloom’s multiple to expand toward GEV’s on future large customer/data center deal announcements.”
9. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 96
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications. On May 5, Bank of America reiterated a Neutral rating on the stock with an associated price target of $105.00. The firm said that it is sticking with its neutral rating on the stock heading into earnings on Tuesday. Despite expectations of a strong quarter backed by robust server CPU sales and gains in desktop PC market share, AMD is set to face major challenges in the upcoming quarters.
In particular, China’s restrictions on AMD’s MI308 products are anticipated to lead to a substantial sales headwind and a decline in gross margins for the second quarter. AMD also faces strong competition from NVIDIA and custom-chip manufacturers, particularly in the AI GPU market where its offerings aren’t as particularly strong. The company’s market share in the PC segment may also plateau amid strong competition.
“Maintain Neutral on AMD’s consistent execution, reasonable valuation and attractive compute market exposure, offset by strong competitive headwinds.”
8. 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. On Monday, May 5th, Jefferies reiterated the stock as “Hold” with a price target of $300. The firm said it’s standing by its hold rating on the stock. The firm acknowledged that “TSLA and its mission are bigger than CEO Musk,” but governance issues and leadership style are fueling volatility. Nevertheless, the company’s operating performance and strategic positioning support its future prospects.
“TSLA is now regaining some tech initiative with June’s Robotaxi launch in Austin, but its edge may be scalability over technology as AV initiatives accelerate elsewhere. Having returned to a $1trn valuation, the shares give TSLA the benefit of the doubt on 152/107x 2025/26 PE.”
7. 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. One of the biggest analyst calls on Monday, May 5th, was for Broadcom Inc. Melius reiterated stocks such as Broadcom, Nvidia, IBM, and Microsoft as “Buy,” stating that the firm is standing by a slew of tech stocks.
Even though earnings for Nvidia and Broadcom are weeks away, quite a few analysts are now happy that Big Tech companies are continuing to spend billions of dollars on developing artificial intelligence. In particular, Melius Research analysts said that they are “relieved” after the March-quarter earnings that have come out so far since capital expenditures from hyperscale companies were “unwavering, which underpins any investment case for so many stocks we cover.”
“We are reiterating our buy ratings on Microsoft, Nvidia, Broadcom and IBM. We think Apple will eventually get through the tariff noise and revamp its iPhone line-up. However, a reacceleration in services is what it is really needed to get the stock going.”
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On May 5th, Morgan Stanley reiterated the stock as “Overweight”. The firm said it’s sticking with Apple following its quarterly 10-Q report.
“We share 4 observations from Apple’s 10-Q: (1) we see clear evidence of component/finished goods pull-forward in F2Q, (2) Advertising, App Store and Cloud continue to drive Services growth, (3) Op margins reached a 10 year high, and (4) Apple does not rule out raising prices to mitigate tariffs.”
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 186
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells advanced chips used in artificial intelligence applications. On May 2nd, Morgan Stanley named Taiwan Semiconductor a top pick, stating that the robust artificial intelligence capex from Meta and Microsoft caused it to make TSM a new top idea. The firm has assigned an Overweight rating to the stock, with a price target of NT$1,288.
“Today, with the robust AI capex guidance from Meta and Microsoft we move TSMC back to our Top Pick.”
4. 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 biggest analyst calls for Monday, May 5, was for Nvidia Corporation. Melius reiterated stocks such as Broadcom, Nvidia, IBM, and Microsoft as “Buy,” stating that the firm is standing by a slew of tech stocks.
Despite earnings being weeks away, analysts are quite reassured that Big Tech companies are still eager to continue spending billions of dollars on the development of artificial intelligence. In particular, the firm noted that upside in capex spending for this year and 2026 “is even more important now” for Nvidia because the company’s business in China has been curbed again by the Trump administration’s restrictions on its H20 chips.
The curb could cost the company more than $15 billion in annualized revenue. However, Nvidia “could see support as the year progresses from the hyperscaler purchases and from others like CoreWeave and Elon Musk’s companies”.
Nvidia is also seeking transparency on the Biden administration’s “AI-diffusion” rule, anticipated to go into effect in the coming weeks.
“We are optimistic Trump’s team will make the rule simpler but are growing more concerned that it will take a similarly restrictive approach that companies like Nvidia will need to navigate,” The firm sees revenue upside for the April quarter” coming from sales of its H20 chip in China that occurred before the new rules went into place.
Analysts also expect that the company saw “brisk sales” of its new Blackwell chip to U.S. hyperscale cloud providers. It further noted that the H20 ban could cause a $4 billion to $5 billion sequential hit to revenue for Nvidia in the July quarter.
“As a result, Nvidia’s sales may be flattish [sequentially] in the July quarter but then return to almost double-digit [quarter-over-quarter] growth in October and January due to Blackwell deliveries into Hyperscalers and Tier 2 clouds.”
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On May 5, Argus Research analyst Joseph Bonner maintained a “Buy” rating on the stock and set a price target of $725.00.
The company recently reported its Q1 results with revenues and earnings topping street estimates. Meta reported sales of $42.3 billion and earnings of $6.43 per share, compared to the consensus estimates of $41.3 billion and $5.22, respectively.
Momentum in its advertising business and artificial intelligence continues to be the largest drivers of current revenues and future expectations for the company.
In particular, CEO Mark Zuckerberg pointed to AI-driven enhancements in ad performance and user engagement, stating that the community keeps growing with more than 3.4 billion people now using at least one of their apps each day.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On May 5, Andy Yu CFA from DBS maintained a “Buy” rating on the stock with a price target of $485.00. Microsoft’s competitive edge stems from its robust product range and extensive market presence. In particular, its cloud-based office productivity software market is projected to grow significantly and bring in major revenue opportunities.
Moreover, Microsoft’s Azure platform is a key growth driver, which is also expected to contribute significantly to the company’s revenue. Its strategic investments in AI and dominance in the cybersecurity space further strengthen its position despite macroeconomic headwinds. The company’s acquisition of Activision is likely to enhance Microsoft’s performance in the PC segment as well. All of these factors contribute to the Buy rating for the stock.
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 5, Baird increased its price target for the stock from $215 to $220, while maintaining an “Outperform” rating. The firm updated its model after Q1 results, where its cloud computing division, AWS, continues to be in significant focus. The company’s advertising sector is also experiencing rapid growth, leading to a positive outlook.
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.
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