In this article, we will take a detailed look at the 10 AI Stocks Investors Are Monitoring After Tariff Shock.
The tariff wars and a potential slowdown in AI spending threw water on investors’ AI trade plans and outlook. However, many analysts believe the broader outlook of the industry is still strong.
Ben Bajarin, Creative Strategies CEO, in a latest program on CNBC explained why he is still bullish on the Jensen Huang-led AI giant:
“I think when you look at the technology roadmap … in terms of what they’re doing with Grace Blackwell and Blackwell systems going forward, it’s going to be very, very hard for others to compete. I think they were extremely bullish about how much of the industry—not just the traditional, you know, cloud servers but AI factories and this entirely new infrastructure—and how it is being kind of redeveloped for the AI era. Like, it’s not being built on other things. And so I think when you look at the ecosystem that’s grown around them, they’re deeply entrenched. It doesn’t have any sign of that changing.”
Bajarin said that he sensed “frustration” in Jensen Huang’s tone as the executive feels Wall Street is not modeling the growth potential his company’s AI products truely have.
“And he seems to think that nobody is modeling that in or really understands it. So there’s the—we kind of have a sense of what they’ll sell just product-wise here in 2025, which is where I agree with you. Hard to surprise to the upside to move the stock, but I think he is signaling people don’t understand the magnitude of this opportunity. And I think that’s worth unpacking because there is a lot of growth ahead.”
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For this article, we picked 10 technology stocks Wall Street is closely watching these days. With each stock, we have mentioned the number of hedge fund investors. 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).
10. Palantir Technologies Inc (NASDAQ:PLTR)
Number of Hedge Fund Investors: 41
Doug Clinton from Intelligent Alpha said in a latest program on Schwab Network that while he believes Palantir Technologies Inc (NASDAQ:PLTR) is an “incredible” company, the stock’s valuation is hard to justify. The analyst said his AI models
“We use AI to do stock analysis and our portfolio management. We don’t currently own Palantir so AI, at least our models, don’t like Palantir enough to own it. As a human stock investor and someone who’s very interested in AI-related stocks, I would say I neither love it nor hate it, nor am I sick of it. I think that it’s an incredible company. They’ve had tremendous business momentum—right, 50% year-over-year growth in the US. The issue is it just trades at 50 times revenue, and that’s a hard multiple to justify.”
Baron Asset Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q4 2024 investor letter:
“Two software stocks that the Fund did not own, Palantir Technologies Inc. (NASDAQ:PLTR) and AppLovin Corporation, each gained more than 100% and accounted for 52% of the Benchmark’s gain during the quarter. At year end 2024, Palantir was valued at approximately 200 times its expected 2024 earnings, while AppLovin was valued at 80 times. The market cap of each exceeded $100 billion, and the two stocks represented nearly 8% of the Index. Neither company met our criteria for investment. The total impact on relative performance from Palantir and AppLovin was about 7 times higher than we have seen historically for two securities that are unique to the Benchmark, showing just how unparalleled the event was and something that we believe is unlikely to be repeated.”
9. HubSpot Inc (NYSE:HUBS)
Number of Hedge Fund Investors: 63
Steve Koenig from Macquarie explained in a latest program on Schwab Network the new growth catalysts for HubSpot Inc (NYSE:HUBS) amid the company’s new AI features and pricing strategy:
“What’s going to continue to differentiate them is simply their business strategy, their focus on a unified simple product to use with all the CRM pillars: sales, service, marketing, commerce, particularly strong in marketing. A unified product that’s easy for smaller and midsize companies to deploy, and I think we’ve seen good interaction with that. That’s, I think, that’s continuing.
They add more subscription revenue every year than the year before. That’s been going on for three years. We think that growth vector is going to continue. And lastly, I would just say catalysts this year include kind of stabilization. We’ve seen some downgrade activity over the last couple years, and I think there’s less pressure on downgrades now. That’s pretty clear, and they’re making a pricing model change, which effectively is going to end up raising their prices a bit across the customer base. So, I think all those things can contribute to significant revenue upside this year, which we would see as the most likely catalyst for outperformance.”
Artisan Mid Cap Fund stated the following regarding HubSpot, Inc. (NYSE:HUBS) in its Q3 2024 investor letter:
“Along with Dexcom and Celsius, a notable trim in the quarter wasHubSpot, Inc. (NYSE:HUBS). HubSpot is a leading cloud-based customer relationship management software provider for small-to-medium businesses. The stock was a top performer in 2023 as it meaningfully improved its profitability after several years of heavy investment. However, as we mentioned earlier in this letter, the environment for cloud software providers has been challenging in 2024 as macroeconomic pressures have impacted customer spending. Our long-term conviction remains intact, but we reduced the position due to near-term uncertainty. Meanwhile, we are encouraged by the company’s efforts to leverage AI advances to help internally (e.g., more efficient software development) and externally (e.g., new agent-based apps to help customers extract more value out of its products).”
8. Crowdstrike Holdings Inc (NASDAQ:CRWD)
Number of Hedge Fund Investors: 74
Nathaniel Bradley from Datavault AI said in a recent program on Schwab Network that Crowdstrike Holdings Inc (NASDAQ:CRWD) has strong tailwinds amid the demand for its cybersecurity products.
“Few companies have such prevailing winds at their back as CrowdStrike has. This is a, you know, a situation with the fishing attacks and the malware attacks and any small to mid-size business has to throw up their hands at this point and look to larger corporations to provide packages that are affordable in providing these cybersecurity threats and putting them down. When you look at the opportunity behind Crowdstrike, it’s in a basket of organizations that have focused around, you know, creating this opportunity for investors in participating in the process of securing AI and making AI a force to be reckoned with in the future is going to require it to be safe and secure.”
TimesSquare Capital Management U.S. Focus Growth Strategy stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q4 2024 investor letter:
“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, systems that improve productivity or efficiency for their clients, and others that are growing their shares of corporate IT budgets. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cybersecurity solutions. Its unified platform offers cloud-delivered protection of endpoints, cloud workloads, identity, and data. The company delivered solid fiscal third quarter results that exceeded the high end of guidance and boosted its share price by 22%. Notably, there was resilient gross revenue retention that highlights CrowdStrike’s best in class product offering. New business win rates remained consistent and trending upwards. Following its mid-July outage, many customers have upgraded to the Falcon Flex program, which enables them to adopt a broader product offering.”
7. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Brad Gerstner, Altimeter Capital founder & CEO, was recently asked during a program on CNBC about his Tesla Inc (NASDAQ:TSLA) position and what he thinks about the company amid rising stock declines. The fund manager said he still believes Tesla is in a position to benefit from the autonomous driving trend. However, he believes the company will have to execute and compete on pricing and convenience.
“We do know that Tesla is going to launch a really great solution, but to your point, Josh, if they don’t have speed of pickup in Austin when they launch in June, and if they don’t have the lowest price, then there is no market for them, right? It’s about price and it’s about convenience, but we’ve seen Waymo gain tremendous market share in Los Angeles and San Francisco. The net promoter scores are even higher than a ride with a human in them, right? We see parents all over San Francisco that are getting their kids to after-school activities in Whos with no drivers. They actually prefer it to an Uber with a driver. So I believe that autonomy is here. I believe that, you know, the technological challenge of full self-driving has been cracked. I think Tesla is in a great position on that, but they have to execute.”
JDP Capital Management stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) is new core position that I wrote about in 2024 Half Year Letter. The stock was up 115% in 2024. We benefited from the June 2024 timing of our purchase, buying after the stock had declined about 30% in the first part of the year.
We repurchased TSLA at a time when the market had [again] become overly bearish based on slowing vehicle orders despite the company having just achieved a breakthrough in Full Self Driving (FSD v12). If you haven’t had a chance to experience the most recent Full Self Driving software (FSD 13.3) I suggest you try it for yourself. If you’ve had a Tesla for a while, you know that the trajectory of FSD improvement has been nothing less than astounding.
It has become clearer to me that Tesla’s leadership position in the infrastructure layer underpinning mega-trends in robotics, smart vehicles and battery storage will unlock earnings growth that we can ride for years. Similar to AWS or the iPhone, Full-Self-Driving and Optimus will enable new business models to be built across a wide range of industries over time…” (Click here to read the full text)
6. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Investors: 116
Steve Koenig from Macquarie said in a recent Schwab Network program that Salesforce Inc (NYSE:CRM) Agentic AI technology has started to be applied to several use cases, but it’s a couple of years until we see mass deployment and monetization of this technology.
“To get it deployed among customers and to get the mass market adoption that Salesforce is looking for, there are a lot of hurdles, and one of them is trust among customers. Things like personally identifiable information not being surfaced to the major LLM companies are key concerns.
There are also factors like budget and aligning executives at large companies. Lastly, there are technical issues, such as these agents surfacing blind spots in the data. For example, a customer might be inquiring about an order, but the agent doesn’t have access to a legacy order management system that sits on-premise or at a data center the customer manages.
All these things are issues that have to be resolved when agentic AI rolls out. These companies are working on it and making progress, but it’s going to take more like two years, not two quarters, before we see significant monetization.”
Parnassus Growth Equity Fund stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q4 2024 investor letter:
“Salesforce, Inc. (NYSE:CRM) reported third-quarter results that exceeded analysts’ expectations, as the integration of AI technology across the customer relationship management software company’s product offerings has driven robust growth in new deals.”
5. Uber Technologies Inc (NYSE:UBER)
Number of Hedge Fund Investors: 136
Brad Gerstner, Altimeter Capital founder & CEO, said in a latest program on CNBC that he believes the rise of autonomous driving poses a challenge to Uber Technologies Inc (NYSE:UBER) business. However, the fund manager praised the company for forging new partnerships to benefit from the new trend.
“I was a longtime and large shareholder of Uber, and starting in the spring of last year, when we saw full self-driving, you know, 12.3 and then by the end of the year 12.9, we just knew autonomy was here.
And, I have a new Tesla Model S I bought in December. It drives me everywhere. I tweeted about it the other day; I don’t touch the steering wheel. I think it’s quite extraordinary. In fact, I think Faber tweeted something or said something on air that got tweeted over the weekend about how he experienced it.
And so, I’m absolutely convinced Robo-taxi is coming. It’s coming from Tesla and it’s coming from others around the world and many in China, that Uber is partnering with around the world.
And I think this does pose a risk fundamentally to the Uber business model.”
Hardman Johnston Global Equity Strategy stated the following regarding Uber Technologies, Inc. (NYSE:UBER) in its Q4 2024 investor letter:
“During the quarter, we initiated three new positions in Lennar Corporation, Bank of America Corp., and Uber Technologies, Inc. (NYSE:UBER). Uber is a leading platform company that facilitates ride-hailing, food delivery, and freight booking services, which each represent large and underpenetrated markets. Uber is active in more than 10,000 cities and approximately 70 countries globally, and Uber is a market leader with more than 65% market share in nearly all ride-sharing regions in which it operates. Uber should continue to benefit from secular tailwinds, product innovation, expansion, and network effects. The cross-selling of the Uber One membership program should drive both loyalty and engagement. International markets represent half the business and continue to be an important growth driver. Overall, we see sustained healthy topline growth for the company over the next three years with some insulation to global economic trends.”
4. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Erik Woodring, an analyst at Morgan Stanley, said in a latest program on CNBC that while the impact of the latest tariffs on Apple Inc (NASDAQ:AAPL) is not yet clear, he sees an impact on the company’s volumes and margins if the iPhone maker has to raise its prices:
“How much of an impact is that going to have? We just don’t necessarily know. There’s a lot of unknowns right now. This is a time where we as analysts try to do our best to make predictions about whether it’s volumes, pricing, or margins. But at the end of the day, I think there has to be, even for a company like Apple, a pretty significant cut simply because the great unknown still exists.
When you look at the way stocks are moving today and think about us as consumers, if my iPhone, my MacBook, or any other product is 15, 20% more expensive, am I really going to buy it, or am I going to wait and determine if maybe there is some relief in the future? You just don’t know that.”
Apple’s last quarterly results were helped by Services revenue in the latest quarter, but the key challenges haunting the company remain as they were. Many analysts believe that just a few AI apps would not be enough to trigger a broader upgrade cycle for iPhone. Apple is dealing with currency headwinds as the stronger US dollar is expected to reduce top-line growth by 2.5% next quarter. For Q2 FY2025, management expects overall revenue to grow in the low to mid-single digits. Apple’s stock is trading at a premium valuation, with a price-to-earnings ratio of 39-40x, a price-to-free-cash-flow ratio of 33-34x, and a PEG ratio exceeding 3x. Upcoming quarters would be difficult for Apple and its current valuation is not justified.
Columbia Seligman Global Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The fund maintained a position in Apple Inc. (NASDAQ:AAPL) throughout the quarter through the release of the company’s new iPhone 16 in September. Company leaders were excited about the release of the new model, as this is the first model that will feature enhanced AI capabilities through the Apple Intelligence features. Sales for the first few weeks in October and November trailed behind year over year sales from the iPhone 15, as availability of Apple Intelligence was not compatible with all iPhone models. Apple announced a partnership with OpenAI that has allowed the integration of ChatGPT into the Apple ecosystem, separate from the core Apple Intelligence features. This partnership highlights continued progress from Apple to introduce AI capabilities into its products and we expect the iPhone 17 to have even more expansive AI capabilities, increasing potential demand for the new model that is on track to be released in 2025.”
3. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Brad Gerstner, Altimeter Capital Founder & CEO, said in a latest program on CNBC that he is adding to his NVIDIA Corp (NASDAQ:NVDA) position despite having a “bomb shelter” market posture.
“Remember we entered today in kind of bomb shelter positioning. We had puts on the NASDAQ, we had a tremendous number of shorts, and we were sitting in a lot of cash. We only had 50% of our long book even positioned in the market. So we’re dramatically outperforming on a day like today. So we’re going from the bomb shelter to simply, you know, our safety positioning. And that means adding about 15% of net exposure, and we’re adding it in the areas that we believe we’re continuing to see secular growth. And as you know, the growth and the demand for GPUs is off the charts. You hear it from OpenAI, you hear it from Google, you hear it from Elon, you hear it from others. I know there’s a debate about that, but that’s the side of the debate that we’re on.
And then, although we saw these tariffs announced yesterday, we also saw a list of exceptions. And one of the list of exceptions, wise exception, is semiconductors. And I think the reason that semiconductors are being excepted is because for us to charge a tariff on our own chips, right, which are fabricated in Taiwan because they can’t be fabricated in the United States—we don’t have the fabs yet—TSMC, who he mentioned in his speech yesterday, has committed to massive investments as a result of the president’s policy in Arizona to build cutting-edge fabs. But right now, he gave them an exception because we know if we increase the cost of these chips that we design to our own companies like Meta, like Google, like Microsoft, like OpenAI, we’re only shooting ourselves.”
Nvidia is facing challenges at several levels. Competition is one of them. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC’s 3nm capacity, which could limit Nvidia’s access to these chips. Why? Because Nvidia also uses TSMC’s 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offer alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia’s offerings. Apple is reportedly working with Broadcom to develop an AI server processor. Intel is also trying hard to get back into the game with Jaguar Shores GPU, set to be produced on its 18A or 14A node.
Harding Loevner Global Developed Markets Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2024 investor letter:
“For the full year, the composite’s underperformance was primarily due to poor stock choices in the US. NVIDIA Corporation (NASDAQ:NVDA), which we sold in the first quarter and repurchased in the fourth quarter, caused almost two-thirds of the strategy’s underperformance. We were hurt by our underweight as NVIDIA’s stock price soared during the first half of the year on the insatiable demand for the company’s graphics processing units (GPUs), which enable generative Al computing.
After ASML’s disappointing outlook led industry valuations to compress, we added a strong company back to the portfolio-NVIDIA.
There were two main reasons we sold NVIDIA last February (after holding the stock for more than five years). First, its biggest customers-data-center behemoths Amazon, Alphabet. Meta Platforms, and Microsoft-have been designing their own custom semiconductor chips, called application-specific integrated circuits (ASICS), that could eventually erode NVIDIA’s dominance. Second, it was unclear to us whether the adoption of Al by large enterprises will be as fast and meaningful as the optimistic views suggested…” (Click here to read the full text)
2. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 160
LikeFolio’s Landon Swan said in a latest program on Schwab Network that Alphabet Inc (NASDAQ:GOOG) is facing challenges when it comes to AI because people prefer to get instant answers to their questions from AI models, resulting in fewer clicks. The analyst shared some data that shows Google still surpasses other search destinations by wider margins, but the gap is narrowing fast.
“People, you know, when they want an answer to a question, they’ve discovered that Google gives you ads and people that are good at SEO, but maybe not the answer that you want, and GPT always gives you the answer that you want or at least it makes you feel that way. Sometimes it hallucinates, but what’s interesting is, you know, Google’s kind of got this problem where they started to adapt to that by putting an AI answer at the top, but that’s creating a click problem for them because when you go to Google and ask a question, you either get the answer that you’re looking for in the AI and you don’t need to click on something, which is what they need you to do. They need you to click on things so they can make money, or their AI didn’t answer it well enough, so you go somewhere else and leave them and go to GPT or somewhere else.
So they’ve got a tough situation here. However, as I always point out, they’ve got such a lead on the userbase side that if they can solve this problem, they’re good to go, and this is going to look like the steal of a century at $150.”
Alphabet’s search business is under threat from AI. However, its Gemini model has an edge over competitors because of the huge ecosystem Alphabet already has. For the end user, it’s easier to switch from traditional search to Gemini instead of moving to a completely new app like ChatGPT or Perplexity. So far, AI competition hasn’t dented the company’s search revenue.
In the fourth quarter, Alphabet’s operating margin rose 32%. YouTube ad revenue jumped 14% and Cloud revenue skyrocketed by 30.1%. Google raked in $12.8 billion in FCF, marking a roughly 215% growth compared to the same period last year, despite heavy investments in AI. The stock has a forward (2026) P/E ratio of 20.8x, which makes it about 22% cheaper than the average company in its sector.
The market has been ignoring Alphabet Inc (NASDAQ:GOOGL)’s key secondary businesses and the stock remains undervalued despite concerns around AI search and regulatory onslaught.
Alphabet Inc (NASDAQ:GOOGL)’s secondary ventures in AI, autonomous driving, and other areas are making solid progress, especially in the Waymo robotaxi segment. Waymo has shown notable progress. Waymo vehicles now average about 30.6 autonomous rides per day—substantially higher than Uber’s average of 4.18 rides per driver daily, based on Uber’s 31 million daily trips and 7.4 million drivers last quarter. This performance underscores Waymo’s competitive edge in autonomous ride volume compared to traditional ride-hailing.
Burke Wealth Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
Alphabet: We parted ways with long-term holding Alphabet during the fourth quarter. We’ve owned Alphabet since the inception of the Focused Growth strategy so obviously, the company has many positive attributes that we admire. That remains the case. We have long contended that Google search is the best business in the world. However, developments over the past couple of years on the competitive front (generative AI search) and the regulatory/legal front have put the sustainability of Google’s search monopoly at legitimate risk for the first time since Microsoft launched Bing in 2009. We cut our weighting in Google in half last year as we wanted to take some time to better assess the threat of generative AI driven search to its business model. To be fair, this emerging threat has been something more akin to a gathering storm than a tornado. Capital continues to flow into the space both from start-ups and the Microsoft/Open AI collaboration. Thus far, this has not resulted in a material erosion of market share but it is certainly something requiring continued monitoring….” (Click here to read the full text)
1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Investors: 286
Ron Westfall from The Futurum Group said in a latest program on Schwab Network that Amazon.com Inc (NASDAQ:AMZN) will see a negative effect of tariffs and its AWS business will also see an impact amid a global slowdown in spending:
“I think there are some alarm bells here, and a lot of it relates to the macroeconomic factors that we’re seeing. For example, Delta and Walmart executives have indicated that they’re seeing some soft spending, particularly on the consumer side, and that can impact Amazon. And that’s linking to the guidance that they provided for Q1 of ’25. Instead of the analyst expectations of $158 billion being fulfilled, they are projecting in the range of $151 billion to $155 billion.
So what’s behind this soft spending trend? I think a lot of it is that there’s still uncertainty about inflation—will it remain tame? And also tariffs, you know, the big headline grabber right now. And we’re seeing, for example, the proposals to implement 10% tariffs to 25% tariffs on China, and this would impact Amazon more than other tech companies because, for instance, 25% of Amazon sales are of products that are made in China, and up to a third of products that are sold on Amazon are through third-party resellers using made-in-China products.
So you can buy all these factors together, and it’s also impacting AWS, their cloud computing unit, and the fact that enterprise spending is also being impacted by these same factors. We can see a dial-back that’s across the board, and thus dampen Amazon’s stock expectations in the very near term.”
Harding Loevner Global Developed Markets Equity Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q4 2024 investor letter:
“During the quarter, we benefited from strong stocks within the Communication Services and Consumer Discretionary sectors. In Consumer Discretionary, Amazon.com, Inc. (NASDAQ:AMZN) reported strong third-quarter results. Revenue increased by double digits, led by growth in advertising and Al products, while the company’s operating margins also hit an all-time high of 11%. The key reasons for the higher margins were that its international e-commerce operations turned profitable, and there was faster growth in its high-margin cloud-computing business.”
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN), our conviction lies in the belief that under the radar 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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