We recently compiled a list of the Top 10 AI News Updates Trending on Wall Street. In this article, we are going to take a look at where Semtech Corporation (NASDAQ:SMTC) stands against the other AI stocks.

The battle for supremacy on artificial intelligence development and innovation is heating up. While the US appears to have an edge on fundamental AI research and technology, China is also hitting the mark with breakthroughs in efficiency and accessibility. Just days after the US touted a $500 billion Stargate project aimed at strengthening its edge with the construction of data centres; France has also made it clear it is ready to join the big boys club amid the AI boom.

President Emmanuel Macron has reiterated that France’s artificial intelligence sector is to receive a $112.6 billion private investment, which underscores the spending spree around revolutionary technology.

Macron’s $112.6 billion plan is a great thing for the European AI ecosystem, according to Victor Riparbelli, CEO of the British AI startup Synthesia. However, he added that more is required to make sure the continent can compete with tech giants like the U.S. and China.

“We need to set the right foundations for Europe to thrive as an ecosystem. It’s great that we invest more in infrastructure. I don’t think it’s the sole solution to the problem. There are lots of other things we need to worry about as well. But what I think is really great, is there’s political will to actually do something,” Riparbelli said on CNBC.

While Chinese AI startup DeepSeek has shown it is possible to develop AI models while spending the least amount possible, countries and tech giants are not showing any signs of going slow on AI capital expenditure. Companies are spending billions of dollars on data centres, advanced semiconductors, equipment, and power sources as the AI arms race heats up.

CNBC reports that tech giants are poised to spend close to $325 billion combined, on AI technologies and data center build-outs in 2025. It will be a significant improvement from the $230 billion spent in 2024. Amid the high AI spending spree, tech giants expect it to result in a boon in their cloud offerings, expected to be major growth drivers in the future.

“On the Capex part, it’s important to remember that we employ a hybrid kind of approach where we do things internally and we have certain partners that we do business with externally where the Capex would appear in their respective businesses,” CEO Tim Cook said on an earnings call last year.

Even though the spending spree triggers worries of a potential bubble in the AI space, it’s also given rise to unique investment opportunities. Companies exposed to the development of data centres, clean sources of power, AI equipment, and solutions have been on the roll despite the recent DeepSeek scare.

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.

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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Semtech Corporation (NASDAQ:SMTC)

Number of Hedge Fund Holders: 32

Semtech Corporation (NASDAQ:SMTC) designs, develops, manufactures, and markets analog and mixed-signal semiconductors and advanced algorithms. It is one of the companies pivoting to artificial intelligence as a growth driver. Likewise, its CopperEdge product has been integrated into Nvidia’s Blackwell platform due to its ability to reduce noise and lower costs and power.

On the other hand, analysts at Stifel reiterated a Buy rating on the stock on February 10th but cut their price target to $70 from $75. The price cut comes on Semtech Corporation (NASDAQ:SMTC) predicting lower-than-expected revenue from its CopperEdge products, which are mostly used in data centre and artificial intelligence applications for active copper cables.

According to the company’s forecast, CopperEdge’s revenue for the fiscal year 2026 will fall short of the $50 million minimum that was previously anticipated. Semtech has stated that they do not expect a surge in sales over the next 12 months or so because of modifications to rack architectures and recent feedback from a particular server rack customer.

Overall SMTC ranks 6th on our list of the AI stocks that are trending on Wall Street. While we acknowledge the potential of SMTC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

Disclosure: None. This article was originally published at Insider Monkey.