Tech experts strongly believe that the new tariffs could potentially slow down the AI boom.
“The AI Revolution trade would be significantly slowed down by these head scratching tariffs that NEED to be negotiated to realistic levels.”
-Wedbush analyst Dan Ives.
In particular, Ives has noted how “near-term pain” may extend longer due to the time required for manufacturing sites in the US to be built and the transition the workforce needs to be equipped with the necessary skills.
“The cost of labor is unrealistic in the U.S. to ever have semi fabs at scale,”
-Ives, referring to semiconductor fabrication plants.
“We assume tariff negotiations start now otherwise dark days are ahead for tech. … And U.S. consumers pay the price for this. … Not a debate.”
READ ALSO: 9 AI Stocks In Focus: Tariffs and Key Updates and 9 Trending AI Stocks Making Headlines Today.
Even though the Trump administration had promised to maintain the US as a leader in artificial intelligence, the newly introduced tariffs may end up having the opposite effect. This is because they are directly impacting the AI industry.
While the government may want more tech manufacturing in the US, the tariffs are undermining the fact that building and running advanced AI is very much still reliant on hardware made overseas, especially chips.
“This is becoming an explosion of global supply chain disorder and chaos. The ramifications are going to be very long and painful.”
– Jason Hsu, a former Taiwan legislator.
Spectators warn that the tariff war is like a tax on the AI system in the US, making things expensive for American developers. The policy doesn’t make much sense as it tends to threaten the very AI technology that it aims to protect.
Nevertheless, many others in the tech world are still quite optimistic.
“It doesn’t seem to me that, of the things you could stop investing in, AI would be very high on the list. If I were a large industrial manufacturer right now, I’d be looking at ways to change my manufacturing location to lower the cost especially in a climate where there’s already labor scarcity or excessive labor costs.”
-Zack Kass, futurist and former head of OpenAI’s go-to-market strategy.
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.
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).
A financial professional looking at a computer screen, with a graph of stocks increasing in value.
10. 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 8, the company announced the launch of the IBM z17, the next generation of the company’s iconic mainframe. The IBM z17 is fully engineered with AI capabilities across hardware, software, and systems operations and is powered by the new IBM Telum® II processor. The mainframe will deliver significant business value across industries, offering more than 250 AI use cases. These include mitigating loan risk, managing chatbot services, inhibiting retail crime, and more.
“The industry is quickly learning that AI will only be as valuable as the infrastructure it runs on. With z17, we’re bringing AI to the core of the enterprise with the software, processing power, and storage to make AI operational quickly. Additionally, organizations can put their vast, untapped stores of enterprise data to work with AI in a secured, cost-effective way.”
-Ross Mauri, general manager of IBM Z and LinuxONE, IBM.
9. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 95
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On April 8, Wells Fargo analyst Alec Bonello lowered the firm’s price target on the stock to $386 from $538 and kept an “Overweight” rating on the shares. Firm checks reveal healthy mobile game growth in Q1, robust ecommerce customer additions, and mid-single digital ad revenues upside. The firm further revealed that tariffs are likely to impact Q2 e-commerce ad spend, but anticipates the company to stay within its forecast range.
