In this article, we discuss 10 AI news making waves on Wall Street.
Semiconductor Trends Show AI as a Key Driver
Chris Caso, a senior analyst at Wolfe Research, discussed key trends in the semiconductor industry in an interview with CNBC. He highlighted TSMC’s strong performance. While the company’s recent results are largely driven by older chips, it is forecasting 25% revenue growth in 2025, with 60% of that tied to AI. Caso noted that AI is the primary growth driver for the industry, while demand for other segments like PCs, handsets, and traditional servers remains sluggish due to inventory build-ups during the pandemic.
Regarding U.S.-China tensions, Caso mentioned that U.S. export controls have effectively limited China’s access to advanced chip manufacturing and AI technologies. He characterized China’s retaliatory actions as attempts to respond where possible.
Broad Market Growth Opportunities with AI Advancements
Joe Davis, Vanguard’s Global Chief Economist, advised against focusing solely on tech stocks to capitalize on AI-driven growth in an article posted on January 14. Instead, he recommends diversifying across the U.S. equity market to capture productivity gains in sectors like healthcare, finance, and manufacturing. Tech stocks, already highly valued, may not provide the best opportunities for growth.
Davis noted that past technological shifts spurred growth across multiple industries, not just their core sectors. If AI’s impact is slower than expected (30%-40% likelihood), fixed-income or value stocks may offer better returns in a low-growth environment. For a balanced strategy, Davis suggested investing in a broad U.S. stock market index fund or working with skilled managers to identify long-term winners, preparing for both AI’s potential and the possibility of slower adoption.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 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).
10 AI News Making Waves on Wall Street
10. GSI Technology, Inc. (NASDAQ:GSIT)
Number of Hedge Fund Holders: 2
GSI Technology, Inc. (NASDAQ:GSIT) develops and markets semiconductor memory solutions, including high-performance and radiation-hardened SRAM products.
On January 17, GSI Technology (NASDAQ:GSIT) was selected by the U.S. Army for a potential contract of up to $250,000 under the DoD Small Business Innovation Research program. The contract will enable GSI to develop advanced edge computing AI solutions using its Gemini-II technology. The project will focus on integrating Gemini-II with AI models for military applications, especially for improving operational efficiency and situational awareness. GSI will also research and validate suitable AI algorithms for the platform to create low-latency, high-throughput solutions. The Gemini-II architecture, which processes data directly in memory, is expected to significantly reduce power consumption and latency while improving processing capabilities, with potential applications in military and commercial sectors.
9. Agora, Inc. (NASDAQ:API)
Number of Hedge Fund Holders: 7
Agora, Inc. (NASDAQ:API) provides real-time engagement technologies, including APIs for voice, video, live-streaming, and AI tools, serving developers globally with platforms for communication and app creation.
On January 16, BofA upgraded Agora Inc. (NASDAQ:API) to Buy from Neutral and raised its price target to $6 from $3.10, as the firm expects demand recovery and positive revenue growth by FY25 along with improved profitability with potential GAAP breakeven, and a valuation close to its net cash level of $3.9 per ADS. The analyst highlighted the growing demand for real-time engagement in customer service, education, IoT, and companion applications, supported by generative AI advancements and Agora’s partnership with OpenAI.
Revenue estimates for FY24-26 were increased by 2-3% due to IoT growth. The price target is based on a 4x forward price-to-sales multiple, reflecting stronger fundamentals but discounted compared to China SaaS peers due to slower revenue growth. Lower costs for OpenAI’s Realtime API are expected to drive broader client adoption and could serve as a potential catalyst.
