Markets were cheering the latest US-China trade deal, after which the two countries will significantly reduce tariffs on each other’s imports for 90 days. The deal practically negates all bear cases modeled by Wall Street analysts based on the impact of tariffs.
Sylvia Jablonski, Defiance ETFs CEO and CIO, called the deal a “game changer” during a program on CNBC.
“I think both countries probably saw a little bit of the demise of what would be here with a non-tariff deal as the data came in. You had a lot of complaints around China across all sectors and then in the US, retailers were reaching out to President Trump and saying that shelves are empty and, you know, a lot of panic about semiconductor software companies. I think that this is really a game changer for both countries, and the big message here is that both countries, it sounds like, decided that they really don’t want to decouple, and, you know, make America great might also mean that, you know, China stays.”
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
For this article, we picked 10 stocks currently making moves amid the latest earnings season. With each stock we have mentioned the latest hedge fund sentiment. 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. Alaska Air Group Inc (NYSE:ALK)
Number of Hedge Fund Investors: 28
Jim Cramer in a latest program on CNBC commented on Alaska Air and said the stock could go lower:
“First off, it’s really well run, so don’t take this the wrong way. But the airlines are wrong to own right here because people think we’re going into a travel recession. I think you’d still go lower.”
Diamond Hill Mid Cap Strategy stated the following regarding Alaska Air Group, Inc. (NYSE:ALK) in its Q4 2024 investor letter:
Other top contributors in Q4 included Alaska Air Group, Inc. (NYSE:ALK), Webster Financial and Liberty Media-Formula One. Shares of regional airline Alaska Air rose in the quarter as management provided more details about the company’s recent acquisition of Hawaiian Airlines, which investors received positively.
9. Palantir Technologies Inc (NASDAQ:PLTR)
Number of Hedge Fund Investors: 41
Paul McCarthy from Kisco Capital recently analyzed Palantir Technologies Inc (NASDAQ:PLTR) shares from a technical perspective during a program on Schwab Network and said that the stock could see a pullback in the long term:
“I think afterwards, you’ll see a longer pullback. There may be a consolidation period, possibly a time for the company to grow some revenues into their valuation. Maybe some longer-term investors will start to come back into the stock. But it’s just been a tremendous, meteoric rise. To me, it does look like a five-wave impulsive pattern. Investors are probably signaling that for the long term, this is probably just the first five waves up and that there will be more upside in the coming years. However, it’s clear we’ve kind of pulled forward a lot of the valuation, just given the multiples that the stock’s currently trading at.”
Palantir’s valuation is concerning for many. Its revenue growth is expected to slow over the next two years, with estimates suggesting a 22% YoY growth rate, potentially bringing revenues to around $4 billion by fiscal 2026. If Palantir Technologies Inc (NYSE:PLTR) can improve margins by 100 basis points annually, it would be able to generate about $1.5 billion in adjusted operating income by FY26, with a present value of $1.3 billion when discounted at 8%. Applying an S&P 500-like growth multiple of 2.5 to 2.75 times earnings, Palantir Technologies Inc (NYSE:PLTR) would have a P/E of 46, translating to a price target of $27.
Ithaka US Growth Strategy stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q1 2025 investor letter:
“From the front-lines of warzones to Fortune 500 enterprises, Palantir Technologies Inc. (NASDAQ:PLTR) builds software to address high-level action items, respond to defense and security concerns, and improve organizational efficiency. The company offers a number of software products from data analysis and curation (Palantir Gotham and Foundry) to a cloud-based operations software (Apollo). The company rose to popularity, in part, due to several government contracts (~55% of revenues) arising from recent and continuous global conflicts. In addition to creating generative AI defense solutions for governments across the globe, commercial customers (~45% of revenues) have flocked to the company’s security and data analysis solutions to monitor and analyze business data and protect sensitive information. The stock’s rise in the quarter was due to a strong earnings report that beat Street expectations as well as investor excitement with regard to the company’s ability to further monetize its AI product across its growing customer base.”
8. Kimberly-Clark Corp (NYSE:KMB)
Number of Hedge Fund Investors: 45
Jim Cramer was recently asked about Kimberly-Clark. Here is what he said:
“I think you go down to 4.5% because right now that’s the operative level. They did not make the quarter. I was a little bummed out. Let’s wait till it goes lower.”
7. Reddit Inc (NYSE:RDDT)
Number of Hedge Fund Investors: 52
LikeFolio ‘s Megan Brantley explained during a program on Schwab Network why Reddit Inc (NYSE:RDDT) stands out among other social media platforms when it comes to the ads business:
“Reddit is in a unique position versus a lot of other companies that we often compare it to, just because of how its platform is designed and how consumers are using it. I would compare Reddit most closely to Pinterest in terms of having a captive audience of consumers who are searching for a very specific topic, have a specific objective, and are looking for more information. But Reddit may even be better because it’s so text-based versus image-based, and I think that’s part of the reason why we’ve seen such traction in Reddit’s advertising.
At least whenever we look at Reddit—I don’t have this chart for you, but I do have a stat—I looked at Reddit and Snapchat because we just saw that report out of Snapchat, and we saw a bit of an underwhelming advertising report. When we look at visits to Reddit’s ad platform specifically just in the last two weeks, we have those up about 80% on a year-over-year basis, which is really strong. Snapchat’s were down about 30% in the same period. So I think there’s a bit of a divergence, and a lot of that has to do with the fact that when consumers go to Reddit, they’re looking for recommendations. Ads don’t feel quite so intrusive as they might on other platforms where ads can interrupt what the consumer is trying to do.”
With over 80 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. As of 2023, users posted 16 billion comments on the platform, according to the company. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models. Reddit Inc (NYSE:RDDT) has a licensing agreement with Alphabet Inc.’s Google worth $60 million to help train large language models. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years. The company generated approximately $20 million from AI content deals last quarter and expects to exceed $60 million by year-end. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years.
Munro Global Growth Small & Mid Cap Fund stated the following regarding Reddit, Inc. (NYSE:RDDT) in its Q4 2024 investor letter:
“Key contributors to performance over the quarter were Reddit and AppLovin (see stock story on page 5). Reddit, Inc. (NYSE:RDDT) delivered a strong set of results, demonstrating impressive revenue growth and expanding operating margins. As the world grapples with misinformation and AI-generated content, we continue to view Reddit’s position as a unique platform hosting the largest volume of human conversations globally becoming increasingly valuable.”
6. Palo Alto Networks Inc (NASDAQ:PANW)
Number of Hedge Fund Investors: 64
Guy Adami from CNBC recently said while commenting on cybersecurity stocks that Palo Alto Networks Inc (NASDAQ:PANW) is a “best of breed” stock.
“I mean the secular shift to this has been in place for the last five or six years without question. The problem across the space, some more than others, has been valuation concerns, and when news is bad, they take these out to the woodshed. But in the meantime, all these names are in play. I think Palo Alto is best in breed, but other names work too.”
5. Crowdstrike Holdings Inc (NASDAQ:CRWD)
Number of Hedge Fund Investors: 74
Jim Cramer in a latest program on CNBC said that Crowdstrike is “terrific.”
“I think for the long term it’s terrific. We had to take some profits out of it too because it just got too big, but I think George Kurts is delivering an amazing product and I think he’s got a lot to say. He’s giving a speech tonight. I think Crowdstrike Holdings Inc (NASDAQ:CRWD) is terrific.”
Aristotle Atlantic Large Cap Growth Strategy stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q1 2025 investor letter:
“CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cybersecurity products and services that offer endpoint protection and threat intelligence solutions, enabling customers to prevent damage from targeted attacks, detect advanced malware and search all endpoints. The company’s open cloud architecture enables it and third-party partners to rapidly innovate, build and deploy new cloud modules that can provide customers with enhanced functionality across a myriad of use cases.
We see the cloud cybersecurity market as positioned to experience strong growth over the next few years, driven by continued migration from on-premises to cloud-based architecture. We believe CrowdStrike can benefit from this trend due to its early-mover advantage, multiple product offerings and native integrations with leading cloud platforms. The increasing threats from state-sanctioned cybercriminals using high-performance computing and AI necessitate higher spending on advanced cybersecurity products. The total addressable market (TAM) is projected to grow significantly over the next four calendar years. Additionally, CrowdStrike’s cloud-native architecture and unified platform approach provide competitive advantages, resulting in high customer retention and widespread adoption of multiple modules.”
4. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Steve Westley from The Westley Group said in a latest program on Schwab Network that Tesla Inc (NASDAQ:TSLA) may not have hit the rock bottom yet and pointed out the key problems visible in the company’s Q1 report.
“I mean Tesla’s had the quadruple whammy this quarter. No new product, no date for the $25,000 Tesla a lot of people are looking for in delayed uh launch of the new cheaper Model Y. They’ve got a polarizing brand, US sales down 13%, sales in Europe down 43% — that’s a lot. Huge and growing competition from BYD and the other Chinese were coming out there with lower cost vehicles, and FSD is late, paused rollout in China, no approval yet in Austin. Those are four pretty big problems to solve.”
Westley said that Tesla Inc (NASDAQ:TSLA) is facing declines when the overall EV industry is seeing growth:
“Look, this is a big miss on deliveries — 337,000 versus 380,000 estimate. Lat Q1 actually down. 19.34 billion, less than anybody expected. But what really stands out here is Tesla’s revenues are down 13%, but rest of the world EV gains are up 29%. That’s hard for the alleged market leader to explain. Share price again dropped 50% from December — that’s a loss of $800 billion. Punch line: it’s a rough quarter for Tesla, and they may not have hit rock bottom yet.”
The analyst is right. Even if Elon Musk increases his focus to fix the company’s problems, it would take a lot of effort to come out of the demand crisis. For example, in California, the largest U.S. market for electric vehicle adoption and sales, Tesla sales fell about 12% year over year in 2024, causing its market share to drop from 60.1% in 2023 to 52.5% in 2024. Was it because Californians are buying fewer EVs? No. Californians purchased more than 2 million electric cars during the year, almost double when compared to the past two years.
Things aren’t looking good for Tesla in Europe, either. For example, in Germany, Tesla delivered just 1,429 new cars in February, down 76% from the same month last year. In contrast, battery-electric vehicle (BEV) registrations surged 30.8% during the month.
Aristotle Atlantic Large Cap Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q1 2025 investor letter:
“The underweight in Tesla, Inc. (NASDAQ:TSLA) contributed to performance in the first quarter of 2025. Tesla’s automobile sales declined in the quarter, in part due to factory changeovers that were required for updates to the company’s best-selling vehicle, the Model Y. This resulted in slower sales volume in the quarter. Competition from China’s BYD is causing market share losses for Tesla in several non-U.S. markets. The CEO’s position as an advisor to President Trump has damaged Tesla’s brand image among a cohort of traditional electric vehicle buyers.”
3. Advanced Micro Devices Inc (NASDAQ:AMD)
Number of Hedge Fund Investors: 107
Ryan Patel from Drucker School of Management of Claremont Graduate University said while talking to Schwab Network that Advanced Micro Devices Inc (NASDAQ:AMD) has more room to grow and the stock remains under the radar:
“You’ve seen a lot of movement. Cathie Wood’s ARK—came and made an investment. I think you see a lot of the analysis. You know, you think of even year to date, they’re pretty—you know, the last couple weeks, I think they’re up 5 to 6%. I think their earnings was great. They just go fly underneath the radar, right? Like you just mentioned, when you compare AMD to Nvidia, there’s always still a lot of room to grow in those aspects until people realize it.”
Advanced Micro Devices (NASDAQ:AMD) bulls believe the market should stop comparing the company’s chips with Nvidia and focus on its data-center growth and its competitive edge over other players like Intel. Advanced Micro Devices (NASDAQ:AMD)’s strong growth in the data center segment is indeed impressive, driven by Instinct GPU shipments and strong sales of EPYC CPUs. Advanced Micro Devices (NASDAQ:AMD) will continue to benefit from organic growth catalysts in this segment despite the competition from Nvidia. According to Goldman Sachs Research, global data center demand could surge by 160% by 2030. In the U.S., data centers are projected to use 8% of total power by 2030, up from 3% in 2022. McKinsey estimates that adding the required U.S. capacity will need over $500 billion in infrastructure investment by the decade’s end.
Artisan Global Opportunities Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q4 2024 investor letter:
“Among our top detractors were Advanced Micro Devices, Inc. (NASDAQ:AMD), Novo Nordisk and Danaher. Shares of AMD declined in Q4, which capped off a frustrating year of stock performance that did not seem to match its fundamental progress. Regarding its AI opportunity, the company accomplished everything we had hoped for over the past 18 months. It successfully entered the market with its MI300 graphic processing unit (GPU) chip and raised its latest 2024 AI-related revenue guidance to $5.0 billion from $4.5 billion. However, its shares have experienced weakness for two primary reasons. First is the emergence of custom AI accelerator chip solutions from Broadcom and Marvell (a Q4 buy) as alternatives to the GPU solutions from NVIDIA and AMD. While this competitive threat is more significant than we had initially anticipated, we continue to be excited about AMD’s opportunity moving forward. We believe the AI-related market will grow to $400 billion–$500 billion in the next three years (compared to $100 billion in 2024). We expect that NVIDIA’s market share will fall from ~90%in2024to60%–80%overthesameperiodasitcedes market share to AMD (from5%in2024to10%–20%) and custom accelerator solutions (from 5% in 2024 to 10%–20%). Under these assumptions, we expect AI GPUs to double AMD’s total 2024 sales. Second is cyclical struggles within other areas of its business. While data center revenues have more than doubled over the past two years, the gaming business is down more than 60%, and embedded (specialized chips found in various industrial and consumer products) is down20%.As its data center business continues to grow and the cyclical areas of its business bounce back, we expect AMD to deliver stronger earnings growth.”
2. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
CFRA’s Angelo Zino said in a latest program on CNBC that Apple Inc (NASDAQ:AAPL) not providing guidance after its latest quarterly results was “disappointing”
“I’d say also on the guidance side of things, they didn’t provide any guidance for services and to me that’s a little bit disturbing and disappointing because of the fact that, you know, they historically are able to provide guidance on services. It’s typically a very good, visible business for them, but just given some of the uncertainties out there—whether it be tariff related or whether it be related to uncertainties from a regulatory perspective—I think they decided to hold back on providing that type of guidance.”
Apple Inc (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.
Investors had hopes from the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.
Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.
Columbia Seligman Global Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The fund maintained a position in Apple Inc. (NASDAQ:AAPL) throughout the quarter through the release of the company’s new iPhone 16 in September. Company leaders were excited about the release of the new model, as this is the first model that will feature enhanced AI capabilities through the Apple Intelligence features. Sales for the first few weeks in October and November trailed behind year over year sales from the iPhone 15, as availability of Apple Intelligence was not compatible with all iPhone models. Apple announced a partnership with OpenAI that has allowed the integration of ChatGPT into the Apple ecosystem, separate from the core Apple Intelligence features. This partnership highlights continued progress from Apple to introduce AI capabilities into its products and we expect the iPhone 17 to have even more expansive AI capabilities, increasing potential demand for the new model that is on track to be released in 2025.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Ivan Feinseth from Tigress Financial said while talking to Schwab Network that NVIDIA Corporation (NASDAQ:NVDA) rivals cannot catch up to it because the company is always far ahead of them:
“I think the tech sector will continue to lead the market higher, and collectively it is companies like Nvidia. And Nvidia has—you know, nobody is going to catch Nvidia. Every time somebody else, whether it’s Huawei, AMD, anybody else, comes up with their newest GPU, Nvidia is already way ahead. They have the, um, Blackwell Ultra coming out in the second half of this year. They got, um, a new processor coming out in 26 and 27. They are so far ahead of everybody else. And for the most important inferences and AI platforms and applications, you’re going to want to run the fastest and best chip because—processor—because that gives everybody their competitive advantage. Remember, all these companies are competing on this AI front, and they’re not going to cut costs because cutting costs could risk their leadership or position or competitive advantage.”
Nvidia is facing challenges at several levels. Competition is one of them. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC’s 3nm capacity, which could limit Nvidia’s access to these chips. Why? Because Nvidia also uses TSMC’s 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offers alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia’s offerings. Apple is reportedly working with Broadcom to develop an AI server processor. Intel is also trying hard to get back into the game with Jaguar Shores GPU, set to be produced on its 18A or 14A node.
Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2025 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the undisputed leader in accelerated computing, with dominant market share in Graphics Processing Units (GPUs) powering AI workloads across data centers, edge devices, and emerging platforms. Its end-to-end ecosystem—from silicon to software (CUDA, networking, and AI frameworks)—creates high switching costs and a widening competitive moat. With secular demand for AI infrastructure still in its early innings, Nvidia stands to benefit from sustained topline growth and strong operating leverage. In early January, a little known Chinese AI company, DeepSeek, released its large language model (LLM), DeepSeek-R1, to an unexpecting world. This model was purportedly trained on very few high-end Nvidia chips and was highly efficient when compared to other leading models. This release set off a chain reaction where investors have had to grapple with the idea that the world may not need as many GPUs as previously thought, which hampered the Nvidia buy case and sent the P/E multiple down to its cheapest level in the past 5 years.”
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, our conviction lies in the belief that under-the-radar 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 NVDA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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