The United States recently issued guidance threatening companies not to use advanced computer chips from China, including Huawei’s Ascend AI chips. However, China has now urged the country to “immediately correct its wrongdoings” and stop “discriminatory” measures against it.
A spokesperson for China’s Ministry of Commerce has said that the United States has abused its export control measures. He said that the country has imposed stricter restrictions on Chinese chip products based on unfounded allegations, further explaining how the said restrictions contain discriminatory measures and tend to distort the market.
The U.S. Commerce Department had issued the guidance last week, with its Bureau of Industry and Security stating that “these chips were likely developed or produced in violation of U.S. export controls.”
“The U.S. has been abusing export control measures, imposing stricter restrictions on Chinese chip products under unfounded accusations… China firmly opposes this… Trying to trip others won’t make oneself run faster.”
-The Chinese Ministry
Opposing the unilateral bullying from the US’s end, the Chinese spokesperson said that the restrictions have infringed upon the legitimate rights and interests of Chinese companies. The country has been accused of undermining the preliminary trade agreement reached in Geneva, Switzerland.
The spokesperson further urged the country to work with China to jointly safeguard the consensus concluded in the Geneva talks.
“If the United States continues to cause China substantive harm, China will take resolute measures to safeguard its legitimate rights and interests.”
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).
12. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 27
SAP SE (NYSE:SAP) is a leader in ERP software that leverages artificial intelligence to enhance its enterprise resource planning (ERP) solutions. SAP Sapphire, one of the most significant annual events in the tech and business world, is happening now in Orlando, Florida. On May 20, SAP took the conference stage to announce major AI innovations centered around its Joule AI assistant, aiming to boost business productivity by up to 30%. Joule now includes an action bar powered by WalkMe to track user behavior across apps and the ability to offer itself as a proactive AI assistant that can anticipate needs.
A collaboration with Perplexity now allows it to draw on data to solve complex business problems too. Meanwhile, SAP has also introduced an expanded library of Joule Agents that can work across systems and lines of business to “anticipate, adapt, and act autonomously”. The company has also introduced an operating system for AI development that revolutionizes how enterprises build, deploy, and scale AI solutions. New intelligent applications in SAP Business Data Cloud use real-time business data to simulate outcomes and guide decision-making. SAP has also entered into a partnership with Palantir to facilitate joint customers’ cloud migration journey and modernization programs.
“SAP combines the world’s most powerful suite of business applications with uniquely rich data and the latest AI innovations to create a flywheel of customer value. With the expansion of Joule, our partnerships with leading AI pioneers, and advancements in SAP Business Data Cloud, we’re delivering on the promise of Business AI as we drive digital transformations that help customers thrive in an increasingly unpredictable world.”
-SAP CEO Christian Klein.
11. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 47
Fortinet, Inc. (NASDAQ:FTNT), a cybersecurity company, provides enterprise-level next-generation firewalls and network security solutions, leveraging artificial intelligence across its cybersecurity products. On May 20, KeyBanc analyst Eric Heath reiterated an “Overweight” rating on the stock with a $115.00 price target. Even though Fortinet has been operating in a complex macroeconomic environment, feedback for April and the beginning of May has been predominantly positive. Even though a few concerns were raised by partners regarding recent turnover within Fortinet’s go-to-market (GTM) team, the overall sentiment about Fortinet’s market position and growth prospects remains positive. The report ended with a positive note on the industry-wide refresh cycle, specific end-of-service refresh opportunity, and its unique strategy in expanding into Secure Access Service Edge (SASE).
“Following Fortinet’s mixed 1Q earnings results & commentary, we caught up with a handful of channel contacts, and the feedback on the month of April and into May has generally been positive. Further, despite the dynamic macro, channel feedback on pipeline and the outlook for the end-of-service refresh opportunity also remains constructive. There were, however, a couple partners that expressed some caution of recent turnover among Fortinet’s GTM team that is causing execution to not be as strong as it maybe otherwise could be. Separately, following Fortinet’s 10-Q filing, we are lowering our services revenue estimates to now decelerate throughout 2025 as opposed to our prior model that had modest acceleration. As a result, we are now 0.5% below the midpoint of revenue guidance. Our recent channel conversations keep us positive on the broader industry firewall refresh cycle underway, the Fortinet end-of-service refresh opportunity, and Fortinet’s differentiated GTM & product strategy to be successful expanding into SASE, if some incremental caution on GTM execution. Reiterate Overweight and $115 price target.”
10. 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 20, Evercore ISI analyst Amit Daryanani reiterated an “Outperform” rating and decreased the price target to $120.00 from $145.00. Daryanani cited Dell’s strategic positioning in the growing AI market as a reason for the rating update. Owing to its expertise in next-generation AI architectures, the company is now focusing on cost-effective on-premises AI solutions. These solutions are becoming more cost-effective when compared to public cloud options.
Dell has also recently made a few announcements at their annual user conference, such as its new AI-powered servers and enhanced AI managed services. These innovations underscore its position as a comprehensive provider for enterprise AI infrastructure needs. The company’s newly introduced advanced PowerEdge servers and AI PCs using the latest NVIDIA and AMD technologies enhance its ability to seamlessly integrate into existing enterprise data centers. All in all, Daryanani believes that Dell stands to gain from the increasing momentum in enterprise AI.
9. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 64
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On Tuesday, May 20, Palantir announced entering into an AI-powered partnership with Divergent Technologies, Inc. to revolutionize on-demand advanced manufacturing. The agreement aims to provide access to Divergent’s advanced manufacturing system through Palantir’s Warp Speed platform for defense and commercial applications.
Through the partnership, Palantir will be able to offer its defense and commercial customers seamless access to Divergent’s digital manufacturing capabilities, such that they will be able to proactively identify emerging supply chain vulnerabilities in production environments and rectify them. DAPS is an AI-driven end-to-end engineering design and manufacturing system that develops faster to develop, cost-effective, and higher-performance structures.
“Divergent is a trailblazer in the new industrial revolution that is sweeping the US. The Divergent Adaptive Production System is a mind-bending example of what’s possible when the world’s most advanced software fuses with the world’s most advanced manufacturing. We are proud to support Divergent’s innovative operations with Warp Speed as it scales in ambition and impact.”
-Shyam Sankar, Palantir CTO.
8. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 70
MongoDB, Inc. (NASDAQ:MDB) provides a general-purpose database platform worldwide that integrates operational, unstructured, and AI-related data to streamline building applications. On May 20, Loop downgraded the stock to “Hold” from Buy and decreased the price target from $350.00 to a new target of $190.00. The firm said AI tailwinds are emerging more slowly than expected for the software company.
“We are downgrading our rating on MDB from Buy to Hold and lowering our PT from $350 to $190.”
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. One of the most notable analyst calls on Tuesday, May 20, was for Advanced Micro Devices, Inc. Wells Fargo analyst Aaron Rakers reiterated an “Overweight” rating on the stock with a $120.00 price target.
The rating update highlights AMD’s recent sale of ZT Systems’ manufacturing operations to Sanmina for approximately $3.0 billion. The sale has been slightly below the firm’s expectations of $3.5 billion. Meanwhile, AMD had bought ZT Systems earlier this year for about $4.6 billion. AMD has also entered into a strategic partnership with Sanmina to support new product introductions related to AMD’s cloud rack and cluster-scale AI solutions.
The company is particularly focusing on rack-scale offerings with the Instinct MI400-series GPUs, which are expected to arrive in the second half of 2026. According to industry reports, the company may unveil an MI450 IF128 cluster, enabling communication at rates greater than 1.8TB/s unidirectional bandwidth per GPU package. More information is awaited at the upcoming AI event on June 12. The analyst also highlighted Nvidia’s recent NVLink Fusion launch, an innovation that tends to open up the NVLink ecosystem for integration with hyperscale semi-custom silicon and CPUs.
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 20, Morgan Stanley reiterated the stock as “Overweight” with a price target of $410. The firm said the market may have been overly optimistic about Tesla’s automotive business, failing to account for competition, particularly from China. The firm highlighted Chinese electric vehicle (EV) manufacturers, particularly Xiaomi’s latest offerings in the EV market. It further noted how competition is going to influence international markets and is a key driving factor behind Tesla’s strategic focus on autonomy.
“We find market expectations around Tesla’s near-term automotive business remain too high and do not fully reflect the quantum of incremental capacity and competition coming out of China, ultimately having an impact in international markets.”
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 20, Morgan Stanley reiterated the stock as “Overweight.” The firm said it’s sticking with the stock heading into earnings next week.
“Low investor expectations, matched with achievable targets and an undemanding multiple yield limited downside, framing a positive risk/reward. OW.”
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. On May 20, Taiwan’s Foxconn, the world’s largest contract electronics maker, announced its plans to build an artificial intelligence center with Nvidia. Per a Reuters report, Foxconn said that the center will be built in phases and is targeted to have 100 megawatts of power.
Speaking at Taipei’s annual Computex trade show day after Nvidia’s announcement that it will build a giant AI supercomputer in Taiwan in partnership with Foxconn, Foxconn Chairman Young Liu said that the AI data center will require massive power and will be built in phases. Depending on power availability, some of it will be planned in the southwestern city of Kaohsiung, and others in other cities across Taiwan.
“This AI data centre is targeted to have 100 megawatts of power. We know that power is a very critical resource in Taiwan. I don’t want to use the word ‘shortage’. So it will take a few steps to reach 100 megawatts. We’ll start with 20 megawatts … then add another 40.”
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. One of the most notable analyst calls on Tuesday, May 20, was for Alphabet Inc. BMO reiterated the stock as “Outperform” with a $200 price target. The firm said its survey checks of fears over Alphabet search competition are unwarranted.
“Fears that Google Search will be disrupted by AI Search competitors are overblown, as users report higher levels of loyalty to Google and satisfaction with Google’s AI Overviews. Reiterate Outperform and $200 Target Price.”
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. One of the most notable analyst calls on Tuesday, May 20, was for Microsoft Corporation. Analyst Kash Rangan reiterated his “Buy” rating on the stock and lifted his price target by $70 to $550. Rangan noted that the four-day Build conference has reinforced his confidence in the company’s artificial intelligence investments.
“We believe these investments help position Microsoft at the forefront of developer tool ecosystem (seeing some of the most promising early GenAI adoption) and help establish a robust and interoperable ecosystem for agentic AI. This will not only support consumption of AI compute on Azure, but adoption of Microsoft’s platforms and applications, all of which become richer and more dynamic with standardized, interconnected tools.”
-Rangan wrote in a Monday note to clients.
He further highlighted Microsoft’s Model Context Protocol as a “major evolution” in Microsoft’s AI ecosystem. The Protocol enables developers to integrate AI models and external systems. Moreover, Microsoft’s GitHub Copilot and Copilot Studio were pointed out as two other impressive parts of the company’s rapidly scaling AI business.
Two other catalysts are the Azure AI Foundry platform for AI agents and the focus on scaling its Azure cloud regions and data centers.
“We continue to believe that as Gen-AI moves from the Infrastructure layer to the Platform/Application layers, Microsoft is well positioned to capitalize on this shift, wherein a more capital efficient and higher margin recurring revenue model could become a reality, just as it did during the on-prem to cloud transition.”
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 20, Amazon Web Services, Inc. and SAP announced a new AI Co-Innovation program to help partners develop generative artificial intelligence applications and agents tailored to their ERP workloads. Announced at the SAP Sapphire event, the collaboration will allow combining advanced generative AI technologies with enterprise resource planning (ERP) data from critical systems to solve real-time business challenges such as optimizing delivery routes and predicting potential impacts to supply chain operations.
“AWS and SAP’s long-standing partnership has helped customers accelerate their cloud journey and unlock more value from their business data. Our AI Co-Innovation Program is a significant next step that will give organizations the security and flexibility to build generative AI applications with Amazon Bedrock that can analyze and act on their most critical SAP data. This will help customers transform decades of business information into actionable insights while accelerating their path to becoming more agile, data-driven organizations.”
-Ruba Borno, vice president of Specialists and Partners at AWS.
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 have limited downside risk. If you are looking for an AI stock that is more promising than AMZN and that has 100x upside potential, check out our report about this cheapest AI stock.
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.
