China’s foreign ministry recently released a video on its social media feeds, complete with a voice-over in American-accented English, comparing the acceptance of U.S. President Donald Trump’s 145% tariffs to “drinking poison”.
“China won’t kneel down, because we know standing up for ourselves keeps the possibility of cooperation alive, while compromise snuffs it out… Imperialists are always arrogant. If they show a bit of reason it’s only because they are forced to do so”
-The narration said.
A Chinese official revealed that Beijing believes yielding or compromising now would only weaken China in the future and that it would authorize Trump to change the terms later. These ongoing tariff riots aren’t superficial, rather, they are a reflection of deeper tensions in the ongoing US-China rivalry, particularly over dominance in emerging technologies such as artificial intelligence.
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In the initial days of the tariff frenzy, former Canadian Deputy Prime Minister Chrystia Freeland had called on President Donald Trump to take the threat of tariffs off the table. She argued that the U.S. will need Canadian energy in the race to achieve dominance in artificial intelligence.
Freeland has deemed the tariffs as “the dumbest trade war in history,” stating how the U.S.-Canada trade relationship is largely balanced when oil, gas, and electricity are excluded. She said that the tariff threat needs to be taken “definitively off the table.”
“You are really lucky that Canada is the country that sells you oil and gas and electricity. We are a much more reliable supplier than, say, Venezuela. And the fact is, particularly with AI, America’s needs for energy are only going to increase.”
-Freeland told CNBC’s “Squawk Box.”
Canada aside, the artificial intelligence boom is being slowed due to the overall global trade war triggered by the Trump administration. Upcoming earnings reports from tech giants and utilities powering the massive data centers will reveal whether tit-for-tat tariffs, particularly between the U.S. and China, are making businesses change their plans for building data centers and other infrastructure.
China plays an important role in the production of AI hardware. It was excluded from a 90-day tariff reprieve earlier. According to analysts, the 145% U.S. tariffs on Chinese goods will sharply increase data center costs if an exemption on electronics is rolled back.
“Much of the electrical infrastructure and data center equipment is manufactured outside of the U.S. In many cases this equipment is in short supply and demand is high globally. Tariffs will likely make this more challenging, especially if foreign suppliers divert this equipment to other markets.”
-Pat Lynch, executive managing director for data center solutions at CBRE, a commercial real estate services firm.
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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12. Vuzix Corporation (NASDAQ:VUZI)
Number of Hedge Fund Holders: 13
Vuzix Corporation (NASDAQ:VUZI) is a multinational technology company engaged in the production of artificial intelligence (AI)-powered smart glasses, waveguides, and augmented reality (AR) technologies. On April 29, the company announced that it has acquired a full R&D and production facility in Milpitas, California, strategically positioning itself in the heart of Silicon Valley. The acquisition will enable Vuzix to scale its development of next-gen waveguide optics, the core tech behind AI-powered smart glasses. The newly acquired site, formerly operated by a major global tech company, already has state-of-the-art ion milling and custom batch processing equipment installed. This advantage will allow Vuzix to ramp up production of compact, high-performance optics immediately. With major tech companies intensifying their efforts toward AI and AR convergence, Vuzix’s move will allow it to play a central role in bringing AI wearables into the mainstream.
“Vuzix continues to drive innovation in waveguide optics and display technology, enabling the development of next-generation AI-powered smart glasses. This facility strengthens our ability to support our partners with the highest-quality waveguide solutions, ensuring they have the technology needed to bring advanced, fashion-forward smart glasses to market. AI and AR are converging rapidly, and Vuzix is positioned to lead the way in this evolution.”
-Paul Travers, President and CEO of Vuzix.
11. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 42
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On April 30, Morgan Stanley analyst Andrew Percoco maintained a “Buy” rating on the stock with an associated price target of $35.00. The firm is highly confident in the demand for Bloom’s fuel cell technology, especially in serving data centers. This is because GPUs and AI investments continue to drive demand for them. Even though there are concerns regarding project timeline delays due to the current macro and policy environment, Percoco still sees upside for the stock. All in all, Bloom holds the potential to capitalize on the market opportunities regardless of challenges.
10. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 45
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and sells modular server and storage solutions. On April 30, Barclays reiterated the stock as “Equal Weight” and lowered his price target to $34 from $39. The firm said that it is sticking with its equal weight rating on the chip computer company following earnings on Tuesday.
“We think prior guidance from SMCI was too optimistic to begin with. There is too much uncertainty on AI server builds with lack of visibility into CY25 as customers go through product transitions.”
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 60
International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products. On April 28, the company announced that it plans to invest $150 billion in America over the next five years to boost the economy and to accelerate its role as the global leader in computing. The investment will include more than $30 billion in research and development, aiming to advance IBM’s American manufacturing of mainframe and quantum computers.
“Technology doesn’t just build the future — it defines it. We have been focused on American jobs and manufacturing since our founding 114 years ago, and with this investment and manufacturing commitment we are ensuring that IBM remains the epicenter of the world’s most advanced computing and AI capabilities.”
-Arvind Krishna, IBM chairman, president and chief executive officer.
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 April 30, Natilus, an aerospace manufacturer of blended-wing-body aircraft, announced that it has partnered with Palantir to advance the production of sustainable aircraft in the U.S. The collaboration will allow the two companies to deploy an AI-based operating system that will help speed up aircraft design, engineering, and production in the US. Natilus is keen on developing a family of blended-wing-body aircraft for commercial use, responding to the constrained access to aircraft components and the need for sustainable operations. Its family of aircraft includes a regional blended-wing-body freighter KONA, and a 200-passenger aircraft, the HORIZON, both of which offer more in terms of fuel consumption, payload capacity, and carbon emissions.
“The U.S. desperately needs a boost in aircraft manufacturing, and Natilus is operating at the forefront of sustainable aircraft manufacturing. We made a commitment to build the first manufacturing facility for the world’s most efficient commercial aircraft here in the U.S. Our success hinges on accelerating our production capabilities, and leveraging Palantir’s AI-driven platform will allow us to transform our manufacturing operations to run more efficiently and meet customer demand for the cargo and passenger markets.”
-Aleksey Matyushev, Co-Founder and CEO of Natilus.
7. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity. On April 30, William Blair analyst Jonathan Ho maintained their bullish stance on the stock, giving a “Buy” rating. The rating update follows the firm’s optimism regarding Palo Alto’s strategic advancements in AI security, particularly its recent acquisition of Protect AI. Protect AI, a leader in AI security, will help Palo Alto tackle the unique security challenges posed by AI and machine learning applications and also enable it to become stronger in the AI security domain. The introduction of new tools, such as Prisma AIRS, a comprehensive AI security platform, and enhancements to SASE offerings, such as Prisma Access Browser 2.0, are further helping Palo Alto maintain its leadership and commitment in cybersecurity. These strategic moves also allow the company to have a first-mover advantage in safeguarding emerging AI technologies.
6. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 110
ServiceNow, Inc. (NYSE:NOW) is a technology company that offers a cloud-based software platform for automating business workflows within an enterprise. On April 30, Erste Group analyst Stephan Lingnau upgraded the stock to “Buy” from Hold. A few days prior, Goldman Sachs reiterated the stock as “Buy” and raised its price target on the stock to $1,150 per share from $1,050 following earnings.
“We reiterate our Buy rating and raise our Price Target to $1,150 on ServiceNow following strong F1Q results with outperformance on all key metrics.”
5. 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 April 30, Morgan Stanley reiterated the stock as “Overweight.” The firm said that it’s sticking with the company as a key player in the race to build humanoid robots.
“Tesla CEO Elon Musk reiterated the company’s plans to produce ‘thousands’ of Optimus robots by year-end (and 1 million by 2030). However, since a material portion of the supply chain still needs to be developed in-house, production may be concentrated near the end of the year.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $307 implies a 10% upside, however, the Street-high target of $470 implies an upside of 69%.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On April 29, Raymond James reiterated the stock as “Outperform” and lowered its price target to $230 from $250. The firm said it’s sticking with Apple ahead of earnings on May 1.
“We reiterate our Outperform rating ahead of F2Q earnings but are lowering FY25/26 EPS and our price target from $250 to $230 on tariff-related headwinds.”
Due to the current macroeconomic challenges, the firm sees Apple potentially raising prices in the US market, which will likely reduce the demand for its products. However, the firm believes any declines are an opportunity to invest given Apple’s robust ecosystem, consistent growth in the Services sector, and the potential of its on-device AI technology.
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 April 30 was for Nvidia Corporation. Seaport initiated the stock at “Sell” due to several negative catalysts.
“Upside appears fully understood, bias is towards downside with concerns about supply chains missteps, deployment delays, growing scrutiny for AI spend by customers and geopolitics.”
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. On April 30, Scotiabank analyst Patrick Colville maintained a Buy rating on the stock and set a price target of $470.00. A few days prior, Goldman Sachs also reiterated the stock as “Buy,” stating that Microsoft is well-positioned for AI ahead of its earnings report on April 30.
“We reiterate our Buy rating while lowering our PT to $450 ($500 prior) as we mark-to-market our multiples.”
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 April 24, Citi reiterated the stock as “Buy” and said it’s sticking with the stock ahead of earnings on May 1.
“While we recognize the visibility challenges from tariffs and macro, Amazon remains a core Internet holding and with shares trading at 25x our ’26E GAAP EPS and 10x our ’26E EV/EBITDA, we reiterate our Buy rating & $225 TP.”
With tariff risks amplifying concerns about economic growth, it is expected that big tech companies such as Amazon may cut back on spending on artificial intelligence infrastructure. This will further offer insights into the outlook for AI demand.
“A slowdown in cloud computing or capex would scream economic caution and speak to recession fears in corporate America. Any cutback in growth is hurtful to valuations, and would be damaging to the overall market. While multiples have come down a lot, we’re not drastically cheap by any historical measure. If we are on a recessionary path, multiples will get a lot lower.”
-Joe Tigay, portfolio manager of the Rational Equity Armor Fund.
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 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 AMZN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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