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.
8. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 43
Teradyne, Inc. (NASDAQ:TER) creates automated test systems and robotic solutions, specializing in AI-powered technologies for semiconductor evaluation, wireless testing, and manufacturing operations.
On January 21, Morgan Stanley downgraded Teradyne (NASDAQ:TER) to Underweight from Equal-weight, cutting the price target to $117 from $121. The firm noted that Teradyne has lost market share to Advantest, especially in HPC and DRAM, while growth in its key markets like smartphones and NAND has stalled. The firm doesn’t expect this trend to reverse through 2025-2026 and believes the company’s and Wall Street’s growth expectations are overly optimistic. Despite growth in AI ASIC and Apple, these developments aren’t enough to significantly impact the broader test market. Morgan Stanley forecasts slower revenue growth for Teradyne and expects the company to lower its 2025-2026 targets in its upcoming earnings report.
7. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 52
Digital Realty Trust, Inc. (NYSE:DLR) provides data center services that ensure secure and efficient connections to global data networks while tackling the challenges of Data Gravity.
On January 15, Deutsche Bank upgraded Digital Realty (NYSE:DLR) to Buy from Hold, raising the price target to $194 from $185. The firm highlighted strong demand from AI, hyperscale, and enterprise sectors, along with ongoing space and power constraints, which are expected to maintain a favorable pricing environment. The analyst also noted Digital Realty’s improved future growth visibility and its ability to manage its balance sheet, successfully securing funding through various channels despite challenges from prolonged high interest rates.
6. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 68
Intel Corporation (NASDAQ:INTC) develops and produces hardware tailored for AI, such as processors, accelerators, and solutions for performance enhancement. On January 21, Citi analyst Christopher Danely reduced Intel’s (NASDAQ:INTC) price target from $22 to $21 while maintaining a Neutral rating ahead of Q4 earnings. The firm anticipates lower semiconductor estimates for Q4, impacted by reduced expectations from analog companies and weaker demand in the PC, automotive, and industrial sectors. However, demand from data centers, AI, and communications is expected to remain strong. Citi also expects inventory restocking in the analog space due to a 30% sales decline.
5. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) focuses on wireless communication technologies, heavily investing in AI, 5G, and IoT solutions. On January 17, Barclays analyst Tom O’Malley lowered Qualcomm’s price target from $200 to $185, maintaining an Overweight rating. In the firm’s 2025 outlook for semiconductors, it views AI as a key factor, focusing on stocks with proprietary serializer/deserializer technology. Barclays remains cautious about cyclical semiconductors, analog, PC, and handset sectors, believing recoveries in these areas will take longer to develop.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven technologies, offering platforms for data centers, self-driving cars, robotics, and cloud computing.
On January 21, UBS noted that Nvidia (NASDAQ:NVDA) has shown little movement since its last earnings report, partly due to supply chain concerns and uncertainty surrounding Blackwell server rack production. Despite these issues, UBS has a Buy rating and a $185 price target and is confident that Nvidia will report strong Q4 results and Q1 guidance, and sees worries about a potential Blackwell slowdown as exaggerated.
Analyst Timothy Arcuri stated that Blackwell chipset and compute board yields have improved, with revenue for Blackwell expected to reach approximately $9 billion in January, up from a prior estimate of $5 billion. Supply chain capacity could support up to $14 billion, though Hopper revenue is anticipated to decline in January. UBS maintained its forecast of $42 billion in revenue for FQ4 2024, including $38 billion from the Data Center segment, and $47 billion for FQ1 2025.
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) offers AI-powered solutions across multiple platforms, enhancing cloud services, business collaboration tools, and consumer products, while also prioritizing AI research advancements.
On January 15, Google announced that it has expanded its collaboration with The Associated Press (AP) to enhance the Gemini app by incorporating real-time information, according to a January 15 media report. The AP will provide a feed of up-to-date news to improve the app’s results, particularly for users seeking current information. This partnership builds on their long-standing relationship, which has included working together on Google Search and other services. Google aims to leverage AI to support journalism and empower news organizations, furthering its efforts to explore AI’s potential in the media industry.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) focuses on AI through advanced cloud services, AI-based business solutions, and advanced language processing and computing technologies.
On January 14, Microsoft (NASDAQ:MSFT) and Pearson announced a strategic partnership to address the global challenge of preparing workers for the AI-driven economy. The collaboration will combine Pearson’s expertise in learning and assessment with Microsoft’s AI and cloud technologies to help reskill workers. They will provide AI-powered products and services aimed at employers, employees, and learners, focusing on personalized learning and certifications. The partnership will also introduce new AI credentials and tools, expand Microsoft’s certifications, and improve Pearson’s use of Microsoft 365 Copilot for its workforce. This initiative aims to equip people with the skills needed for future careers in an AI-driven world. Microsoft’s executive vice president and chief commercial officer, Judson Althoff commented:
“The speed and scale of today’s AI innovation present an opportunity for organizations across industries to accelerate AI Transformation. As AI investments increase, the demand for training and support to enable effective and responsible use of AI has never been greater. We are thrilled to partner with Pearson to help global enterprises develop learning experiences that empower employees with the AI skills needed to help advance their careers and achieve more.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) plays a significant role in AI development, applying the technology to enhance shopping experiences, entertainment, and operational productivity. Moreover, it has also invested significantly in the development of technology.
On January 17, BMO Capital analyst Brian Pitz raised Amazon’s (NASDAQ:AMZN) price target to $265 from $236, keeping an Outperform rating. The firm expects AWS to grow faster in 2025, with a 20% increase over the previous 17%, driven by Bedrock helping companies use more IT and AI services. The analyst also mentioned that AWS’s biggest customers could move more of their work to the cloud. In retail, BMO’s checks show strong demand for Amazon’s Same-Day/Next-Day delivery, which could lead to more frequent purchases and increased cash flow.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) 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 AMZN 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.
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