According to Daniel Ives, global head of technology research at Wedbush Securities, the US- China agreement is once again creating a bull market environment for tech.
“If you are a tech investor, this is a dream scenario,” Ives noted on CNBC’s “Worldwide Exchange.”
On Monday, the U.S. and China announced that they would temporarily reduce tariffs on each other for 90 days. Following the news, Wall Street’s three major indexes surged sharply on the same day, with the S&P 500 marking its highest level since early March.
READ ALSO: 10 AI Stocks in Focus Amid U.S.–China Tariff Pause and 10 AI Stocks Making Moves This Week.
The U.S. said it will cut tariffs imposed on Chinese imports to 30% from 145% while China said it would cut duties on U.S. imports to 10% from 125%. Investors saw this as a big positive surprise.
“It’s a relief rally because there was a lot of anxiety and angst about tariffs between the U.S. and China. They are going to scale it down to much more reasonable levels so the fall-out from tariffs will probably be more manageable and limited.”
-John Praveen, managing director at Paleo Leon in Princeton, New Jersey.
“No one had these low China tariff rates on their bingo cards. This is a big positive surprise. Risk remains that tariffs go back up from current levels as the pauses end, though taking worst-case scenarios off the table is reassuring.”
-Jeff Buchbinder at LPL Financial.
Unfortunately, the rally in US stock futures paused as investors focused on a key inflation report and lingering economic concerns.
“The challenges are not over. The de-escalation was a lot stronger than even the best hopes, but you have to remember that the US economy still faces average of effective tariffs of more than 13%.”
-Frederique Carrier, investment strategy head at RBC Wealth Management.
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).
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. On May 13, the company announced that it will participate in the 2025 National Restaurant Association Show, set to take place from May 17-20 in Chicago, IL. SoundHound AI will be showcasing its end-to-end, omnichannel voice AI platform. The platform will demonstrate seamless ordering and support across front-of-house, back-of-house, and off-premise channels, comprising drive-thru, phone, kiosk, in-vehicle systems, and any other connected devices.
The company will display its Dynamic Drive-Thru, presenting a live demo from Burger King UK, along with Smart Ordering, an AI-powered phone ordering solution. Other things on display include Smart Answering, a fully automated phone assistant, and Employee Assist, an AI coach that instantly answers to restaurant staff on the job. SoundHound AI will also showcase its groundbreaking in-car voice ecommerce platform, allowing customers to order takeout from their car’s infotainment services.
“The National Restaurant Association Show is a key moment for us to demonstrate how voice AI is reshaping restaurant operations. From the drive-thru to behind the counter, and even behind the wheel, our solutions increase speed, sales, and employee and consumer satisfaction.”
-Ben Bellettini, SVP of Restaurant Sales at SoundHound AI.
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. On May 13, Raymond James analyst Simon Leopold initiated coverage of the stock with an “Outperform” rating and set its price target at $41. The analyst said that the company is a “near pure AI play.”
“Super Micro, doing business as ‘Supermicro,’ has emerged as a market leader in AI-optimized infrastructure. AI platforms now comprise nearly 70% of Supermicro’s revenue, and is also expanding its share of the branded AI server market. The company combines its engineering and manufacturing scale to compete. Tariffs and technology transitions (e.g., NVIDIA’s Hopper to Blackwell processors) present intermediate-term challenges, but AI projects represent a long-term secular driver.”
Leopold has dubbed Super Micro a “market leader in AI-optimized infrastructure,” despite disappointing results for the fiscal third quarter. The analyst believes that the company will expand its market share and experience more growth in hyperscale AI infrastructure. Furthermore, he noted that the ramping of Nvidia’s Blackwell platforms is a catalyst.
“While recent lumpiness tied to product transitions and limited enterprise services constrain valuation, we believe SMCI’s 25%+ revenue [compound annual growth rate] and expanding U.S. footprint support a re-rating.”
8. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 63
Dell Technologies Inc. (NYSE:DELL) provides IT solutions, including servers, storage, networking, and personal computing devices, to businesses and consumers worldwide. On May 13, Raymond James raised the firm’s price target on the stock to $144 from $139 and kept an “Outperform” rating on the shares. The firm has noted a push out of AI platforms and a pull-in for PCs behind the rating. The analyst told investors in a research note how the AI transition between GPU generations has been witnessing delays, whereas checks suggest that upcoming tariffs have led to earlier PC purchases. It believes Dell has the potential to achieve stronger growth beyond 2025 as AI transitions from training to inferencing, leading to wider enterprise adoption.
7. 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 13, Yik Ban Chong from Phillip Securities maintained a “Buy” rating on the stock with a price target of $120.00. Yik Ban Chong’s buy rating is a reflection of AMD’s strong potential and resilience despite the challenges that it is facing. The company’s robust sales of MI300X chips, EPYC server CPUs, and Ryzen CPUs have led to revenue and profit figures in line with expectations for the first quarter of 2025. Its client PC segment has also demonstrated remarkable growth, maintaining over 50% year-over-year revenue growth for four consecutive quarters.
This growth can largely be attributed to record average selling prices for client CPUs and market share gains in AI PC chips. The company’s second quarter guidance for 2025 also remains strong despite potential revenue impacts from recent U.S. export controls on AI chips to China. Moreover, with major tech companies ramping up their capital expenditure to expand data centers, AMD’s EPYC CPUs and MI325X GPUs are expected to see a boost in demand. Together with AMD’s stabilizing gaming and embedded businesses, all these factors contribute toward a positive outlook for the stock.
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. On May 13, UBS reiterated the stock as “Underweight.” The firm said it’s standing by its underweight rating on the EV maker.
“Available TSLA April sales data shows no signs of upward inflection from Q1. Of the 3 major markets we track, TSLA deliveries are trending down 18% y/y and 49% m/m. It’s still early, but the weak start implies risk to Q2 consensus deliveries.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $307 implies a 7.8% upside, however, the Street-high target of $470 implies an upside of 41%.
5. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 162
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce. On May 12, Bradley Sills from Bank of America Securities maintained a “Buy” rating on the stock with a price target of $350.00. Sills’ buy rating stems from the company’s steady growth in its Sales Cloud business.
He noted how Sales Cloud is an important component of Salesforce’s growth strategy, and that factors such as increased adoption of its AI-powered platform Agentforce and upselling opportunities with Revenue Cloud and Industry Cloud could boost growth from a steady 9-10% to a sustainable 12%.
Being the core of Salesforce’s CRM platform, Sales Cloud has the potential to lead the market. The company is also likely to experience significant industry growth on the back of its integrated platform, business intelligence capabilities, and AI innovations.
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 its iPhone and MacBook product lines. On May 13, the company unveiled new accessory features set to come later this year. From its Accessibility Nutrition Labels offering detailed information for apps and games on the App Store to the new Magnifier app for Mac for users who are blind or have low vision, these new features will allow technology to be easily accessible to everyone. Other announcements that have been revealed by the company include Accessibility Reader, a system-wide reading mode, along with updates to Live Listen, Background Sounds, Personal Voice, Vehicle Motion Cues, and more. The company is leveraging the power of silicon, along with innovations in artificial intelligence and on-device machine learning, to achieve new levels of accessibility for its users.
“At Apple, accessibility is part of our DNA. Making technology for everyone is a priority for all of us, and we’re proud of the innovations we’re sharing this year. That includes tools to help people access crucial information, explore the world around them, and do what they love.”
-Tim Cook, Apple’s CEO.
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 Tuesday, May 13, was for Nvidia Corporation. Wells Fargo analyst Aaron Rakers maintained a Buy rating on the stock and set a price target of $185.00.
According to Rakers, Nvidia is likely to experience a positive demand trajectory for its Blackwell platform. Even though there are challenges due to the China H20 ban, Rakers believes that the company has adequately mitigated these risks in their model.
Moreover, Nvidia holds a dominant position in the data center market, which is why the analyst expects year-over-year revenue growth. He has also cautioned that the market hasn’t fully estimated the impact of the H20 ban and inventory provisions, which is why gross margins may be lower than street expectations.
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, investment firm Wedbush removed Alphabet stock from its “Best Ideas” list due to growing investor uncertainty about the long-term impact of AI on its core business. It quoted “the volatility in Alphabet shares introduced by the uncertainty relating to the impact of AI on its business model” as a primary factor for removing the stock from its list.
Even though the firm believes that the company will eventually establish its resilience to the emergence of AI, the process “will take time and potentially leave the shares at a discount to fair value.” Due to this uncertainty, it could cause the stock to trade below what the firm believes is fair value. The firm currently estimates it at $220 per share.
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $200 implies a 25% upside, however, the Street-high target of $250 implies an upside of 56%.
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 13, Amazon Web Services (AWS) and AI-powered CX solutions provider Nice announced a strategic collaboration agreement (SCA) to revolutionize how businesses deliver customer service through integrated AI, cloud, and automation technologies. CXone Mpower, NICE’s AI-powered platform for customer service automation, will be available in AWS Marketplace as part of this collaboration. Together, the CXone Mpower’s AI platform and AWS AI/ML services like Amazon Bedrock will help unify and streamline complicated workflows and allow organizations to deliver better experiences. The collaboration will further allow both Nice and AWS to achieve easy access to enterprise-grade AI solutions, quicker deployment cycles, and scalability.
“NICE’s customer experience expertise combined with AWS’s cloud and AI capabilities creates a powerful relationship that helps businesses transform their operations. By bringing CXone Mpower to AWS Marketplace and deepening our technical integration, we’re making it simpler for organizations to implement intelligent automation at scale, ultimately delivering better experiences for their customers while achieving greater operational efficiency.”
-Chris Grusz, Managing Director, Technology Partnerships, AWS.
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