According to a state media report, China’s President Xi Jinping has pledged “self-reliance and self-strengthening” to develop artificial intelligence in China. The country is eagerly competing with the United States for supremacy in the AI arms race. Xi has stressed that China should be leveraging its “new whole national system” to push forward with the development of AI.
“We must recognise the gaps and redouble our efforts to comprehensively advance technological innovation, industrial development, and AI-empowered applications.”
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With the emergence of DeepSeek and other artificial intelligence models that have followed, many experts are of the belief that China has already covered much of the AI development gap it had with the United States.
“We must continue to strengthen basic research, concentrate our efforts on mastering core technologies such as high-end chips and basic software, and build an independent, controllable, and collaborative artificial intelligence basic software and hardware system.”
-Xi Jinping.
Xi is also of the belief that AI shouldn’t be a “game of rich countries and the wealthy. Rather, he believes in more international governance and cooperation on AI.
In his recent visit to Shanghai, he underscored China’s leading role in the “Global South,” calling for more innovation, support for AI startups, and stronger global influence in technology. He also urged the city to expand its exploration of AI models and noted that more supportive policies for the technology should be rolled out.
Visiting the Shanghai-based New Development Bank, a multilateral lender of BRICS member nations, he affirmed how China is ready to strengthen project cooperation with the bank and share development experience with other member countries. The visit underscores Xi’s commitment to positioning China as the leader of the Global South.
“China wants to offer an alternative to the world against the U.S.-dominant global order.”
– Alfred Wu, a China expert at National University of Singapore.
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
10. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 43
Arm Holdings plc (NASDAQ:ARM) is a semiconductor and software design company that designs and manufactures semiconductor technology and other related products. On May 8, JPMorgan reiterated the stock as “Overweight” and adjusted the price target to $150 from the previous $175. The firm said it’s sticking with Arm following earnings on Wednesday. The optimism in the stock stems from Arm’s strong financial performance, while the revised projections reflect the increased trade and tariff uncertainties expected in the second half of the current calendar year.
“Our Overweight rating is based on Arm’s strong leadership profile in semiconductor compute architecture and it being well positioned to intercept the increasing demand for higher performance compute capabilities while optimizing for energy efficiency.”
9. Super Micro Computer Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 45
Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures high-performance server and storage solutions for data centers, cloud computing, AI, and edge computing worldwide. On May 7, Needham resumed the stock as “Buy” and set a price target of $39. This move marks their renewed interest in the stock following a period of suspended coverage due to financial uncertainties that the company was facing. The firm believes that the worst that has happened to the company is behind it. It also noted how SMCI has a robust positioning in markets for artificial intelligence and high-performance computing, as well as leadership in liquid-cooled data center technology.
“With filing risks behind the company, along with an attractive valuation, we are stepping off the sideline and resuming coverage with a Buy.”
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 7, Citi raised the firm’s price target on the stock to $115 from $110 and kept a “Neutral” rating on the shares. The analyst told investors in a research note how Palantir has delivered a “strong beat/raise” in Q1 with upside across most metrics. With Q1 typically signifying a slower quarter in software, and despite a tough macro environment, the company’s “robust results further solidify” its artificial intelligence momentum. Regardless, the firm sees the stock as priced for “beyond perfection.”
7. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 70
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors, focusing heavily on data centers. On May 7, Cantor Fitzgerald downgraded the stock to “Neutral” from Overweight and cut its price target to $60 from $125. Cantor expressed concerns regarding its future custom silicon business and key client defections.
“While we believe the meaningful sell-off of MRVL shares since peaking in January reflects loss of Trainium Gen3 AMZN, we do not believe it reflects loss of MSFT Maia Gen3 — which we are hearing will happen from our industry checks.” Cantor wrote.
It explained how Amazon’s shift of some of its next-generation Trainium chips to another supplier, Alchip, may mean that Marvell’s custom silicon designs may lose traction. Meanwhile, Microsoft is believed to be transitioning its Gen3 Maia chips to Broadcom. Besides this, the firm also said it doesn’t like Marvell management delaying its investor day.
“We had hoped to hear about new potential wins at the coming Investor Day, but with mgmt delaying the event, we suspect there is not too much good news to share.”
6. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 83
Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products. On May 7, Bank of America reiterated the stock as “Buy” and increased its price target from $136 to $138. The Wall Street bank says it’s sticking with the stock after its earnings on Tuesday. The company has delivered robust results for the quarter and is well-positioned to capture additional market share, supporting revenue growth over the long term.
“We believe the results are another data point that it is positioned to be a share gainer in a $50bn observability [total addresable market], driving long-term durable revenue growth.”
5. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 94
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide. On May 7, Morgan Stanley lowered the firm’s price target on the stock to $98 from $112 and kept an “Equal Weight” rating on the shares. The firm believes Micron stock has a balanced risk-reward profile in the current market environment. Moreover, the analyst told investors in a research note how the firm’s checks in DRAM are turning “remarkably positive in recent months,” and even though tariff pull forwards are a factor, “they are not the only thing driving pricing strength.”
4. 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 7, Bank of America upgraded the stock to “Buy” from Neutral and lifted its price target to $120 from $105. The firm sees “multiple growth cylinders” for the stock following earnings on Tuesday.
“We rate AMD Buy. It serves a multi-hundred billion addressable market opportunity in PC, server, high-end gaming, deep-learning and related markets where AMD has less than 30% value share currently. While AMD’s data center accelerator products are still 1yr behind leader’s roadmap, we see continued demand for a stable second source alternative in GPUs and potentially share gain opps as AMD narrows the product/systems gap. On the CPU front, we see continued share gains against the incumbent.”
-Analyst Vivek Arya
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On May 8th, Baird reiterated the stock as “Outperform.” The firm said it’s standing by shares of the tech giant.
“Apple still benefits from a strong eco-system, strong cash flow and dominant high-end market position. We believe executing on AI will be critical to improving the investment narrative, and expect more at WWDC next month.”
Analysts on Wall Street have a consensus price target of $228.65 on AAPL stock, which implies an upside of 16% from current levels.
2. 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 Thursday, May 8th, was for Nvidia Corporation. Bernstein reiterated the stock as “Outperform,” stating that Nvidia’s datacenter opportunity remains robust.
“The datacenter opportunity is enormous, and still early, with material upside still possible.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $160 implies a 35.85% upside, however, the Street-high target of $235 implies an upside of 100.3%.
1. 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 8, Wells Fargo reiterated the stock as “Overweight.” The firm anticipates Alphabet to move aggressively into AI search.
“We believe the time to debate changes in search behavior has come to a close. Expect Google to more aggressively exploit its distribution advantage, pushing AI Search in the main search bar. Expect disruption to follow, but better sooner than later.”
While we acknowledge the potential of GOOGL 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 GOOGL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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