In the latest efforts to stop China from getting ahead in the AI race, the Trump administration is considering penalties that would block China’s DeepSeek from buying U.S. technology, reports The New York Times. It has also been reported that the administration is currently debating Americans’ access to its services. DeepSeek, a Chinese start-up that shook up Wall Street a few months ago with its cheaper and more efficient AI models, has had the US taking firm steps to tighten controls and scrutinize tech investments.
A key focus of US export controls has been Nvidia, whose chips were used to build DeepSeek’s AI models. Even though the US had stringent export controls, the AI start-up managed to get hold of thousands of its GPUs, raising concerns about the effectiveness of the said controls. As a result, US officials now aim to prevent the most advanced chips from being sold to China to deter it from having a lead in the AI race.
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The U.S. House Select Committee on China said that “it has sent a formal letter to Nvidia demanding answers about sales to China and Southeast Asia to examine whether and how its chips ended up powering DeepSeek’s AI models—despite U.S. export restrictions”.
With the government tightening its export rules to China, the AI chipmaker has revealed how it would face a $5.5bn (£4.2bn) hit in costs. The company will now require licences to export its H20 AI chip to China, one of its most popular chips.
“The [government] indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China.”
The company also said that federal officials have advised them that the licence requirement “will be in effect for the indefinite future”.
According to Marc Einstein from the Counterpoint Research consultancy, the $5.5bn hit is in line with estimates.
“As we have seen in the last few days and weeks, this may largely be a negotiating tactic. I wouldn’t be surprised to see some exemptions or changes made to tariff policy in the near future.”
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. 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 April 17, the company announced that Anthropic will be leveraging Palantir’s FedStart offering to make Anthropic’s Claude for Enterprise application available to the government sector at FedRAMP High and DoD Impact Level 5 (IL5) security standards. Claude has been designed for organizations requiring secure AI solutions, having the ability to support cross-functional teams in deep work. Palantir’s FedStart is a SaaS offering that allows companies to run their products within Palantir’s Federal Risk and Authorization Management Program (FedRAMP) and Impact Level (IL) accredited environment. It provides a seamless pathway for companies to achieve compliance and offer their products and services to the government. By using FedStart, Anthropic will be able to offer Claude to millions of federal government employees. Claude’s application will be hosted on Google Cloud.
“We built FedStart to accelerate the government’s ability to leverage the best, most innovative technologies as they emerge. By enabling the federal workforce to take advantage of Claude while ensuring strict adherence to the compliance and security requirements for processing U.S. government (USG) data, we are excited to help increase productivity and efficacy across government. Anthropic builds some of the world’s leading AI applications, and we’re thrilled that our FedStart program can support Anthropic’s accreditation journey.”
-Akash Jain, President of Palantir U.S. Government.
9. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 79
QUALCOMM Incorporated (NASDAQ:QCOM) develops wireless technologies, supplies chips for mobile, automotive, and IoT, licenses patents, and invests in emerging tech. On April 17, Citi opened a positive catalyst watch on Qualcomm, stating that it expects a “beat and raise” during earnings and that the low sentiment provides a “reasonable valuation” on Qualcomm shares. It also quotes better-than-expected handset demand, particularly from China.
8. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 83
Intel Corporation (NASDAQ:INTC) designs and sells computing hardware, semiconductor products, and AI-driven solutions for various industries. On April 17, The Financial Times reported that the company has informed its Chinese clients that it will need a license to sell some of its advanced artificial intelligence processors. The report stated that CEO Lip-Bu Tan has elaborated on the conditions on which the chips would require a license for exporting to China. The condition is that the chips have a total DRam bandwidth of 1,400 gigabytes (GB) per second or more, input-output (I/O) bandwidth of 1,100 GB per second or more, or a total of both of 1,700 GB per second or more.
7. 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 April 17, the company announced that it is reshuffling its business segments to focus on artificial intelligence. In particular, it will be concentrating on the AI-linked demand for its memory chips from large-scale cloud providers. The new segment will be called “cloud memory business unit,” and will focus on products used by hyperscalers and high-bandwidth memory (HBM) chips to aid data-intensive AI tasks.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On April 17, Evercore ISI reiterated the stock as “Outperform” with a $250 price target. The firm said it is standing by the stock in the face of tariff headwinds. The firm acknowledged Apple’s heavy reliance on China but also talked about how the company is trying to diversify by shifting some iPhone production to India, and Wearables and Mac production to Vietnam. In the case tariffs move beyond China, the firm believes that it is still unlikely that Apple will begin production in the US.
“Apple’s efforts to diversify its supply chain should help minimize the impact from tariffs that only target China. If tariffs are applied broadly, we think Apple would continue to import and push through relevant price increase to offset the cost inflation along with getting suppliers to share the burden.”
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 April 17, the company struck a bullish outlook for the year based on robust demand for AI applications. The firm said that it is yet to see any change in customer behavior, despite the looming uncertainty over U.S. tariffs. It expects mid-20% growth this year and a doubling of AI revenue. According to Chief Executive Officer C. C. Wei, demand for high-end chips critical to developing artificial intelligence has remained strong.
“We certainly are mindful of the potential impact from all the recent tariff announcements, especially the impact on end market demand. Having said that, we have not seen any change in our customers’ behaviour so far. So we are sticking to our forecasts.”
Wei also said that the company is not getting involved in tariff talks. He further noted that TSMC is not engaged in talks with other companies about joint ventures, technology licensing, transfer or any kind of “sharing”.
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 most notable analyst calls on Thursday, April 17, was for Nvidia Corporation. UBS reiterated the stock as “Buy” and cut its price target from $185 to $180. The price target revision comes after the company warned about exporting graphics processing unit chips to China.
“The bottom line is that we are adjusting both revenue and gross margin estimates lower with F2026 (C2025) revs/EPS now $223.5B/$4.86 and F2027 (C2026) revs/EPS now $256.3B/$6.02. Given the cut to C2026 EPS our PT comes down from $185 to $180.”
3. 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 April 17, Citi reiterated the stock as “Buy”. It is sticking with the stock ahead of earnings next week.
“GOOGL is scheduled to report 1Q25 results Thursday, 04/24, AMC that we believe are likely to be in-line / slightly better than ours and consensus expectations. That said, the focus is on N-T trends and visibility given macro concerns stemming from the reciprocal tariffs and our checks suggest a softer ad environment beginning in March.”
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On April 17, Morgan Stanley reiterated the stock as “Overweight.” The firm believes Meta is best positioned amid the tariff uncertainty.
“Bottom line, we favor scale, performance, and audience bidding over keyword bidding, making META likely the most resilient.”
1. 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 April 17, KeyBanc downgraded the stock to “Sector Weight” from Overweight based on too many negative catalysts building for Microsoft.
“To be clear, this isn’t about calling a quarter or anything like that. We’re not tactically downgrading ahead of the print in a couple weeks due to any single response in our survey of checks; this is more about seeing the data building and validating some worries we’ve had for a while.”
While we acknowledge the potential of MSFT 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 MSFT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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