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.
8. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 105
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors. On April 8, Analyst Joseph Moore of Morgan Stanley maintained a “Hold” rating on the stock and retained the price target of $90.00. The firm considers the sale of Marvell’s Automotive Ethernet business to Infineon for $2.5 billion as a positive move. Regardless, this segment isn’t a major part of Marvell, which is concentrated more on AI opportunities in networking and ASICs. The firm said that the divestiture, although beneficial, doesn’t significantly alter the company’s profits. The firm has therefore assigned a hold rating, signaling caution as investors remain focused on Marvell’s data center business. This segment is expected to be key for future growth.
7. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On April 9, Morgan Stanley reiterated the stock as “Overweight,” stating that it’s sticking with its top pick, Tesla.
“Our OW rating and $410 price target are underpinned by our belief that Tesla’s capabilities in key areas of physical AI including data, robotics, energy storage, compute, manufacturing and space/comms/networking/infrastructure offer growth and margin opportunities that greatly exceed those of the traditional EV business which is under pressure.”
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On April 9, KeyBanc reiterated the stock as underweight Key lowered its price target on the stock to $170 per share from $200 and said there’s too much uncertainty.
“We remain UW AAPL and lower our PT to $170 PT on a lower valuation multiple.”
The firm has talked about uncertainty when it comes to tariffs and the impact they will have on Apple’s pricing and consumer demand. Apple is currently navigating a complex global market environment.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On April 8, KeyBanc reiterated the stock as “Overweight” with a price target of $190.00. It stated that it’s standing by the stock after a series of supply chain checks despite challenges in the semiconductor sector.
“While disappointing, we feel comfortable with our NT estimates in part due to the revenue recognition dynamics with NVDA selling into EMS [electronic manufacturing services], and we ultimately believe these NT issues are transient in nature. We’d recommend investors continue to own NVDA.”
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOG) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses. On April 8, Google announced that it has started to make AI Mode available to millions more Labs users in the U.S. Google’s AI Mode in Search helps people ask new questions and connects them with the vast content and perspectives across the web. The AI Mode is also getting a multimodal search upgrade, powered by Lens and Gemini. This update allows it to understand images and enables users to ask questions about what they see. It uses Gemini to understand the entire scene and get a response, along with links to learn more.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. Over the weekend, rumors began to spread against the company on platforms such as Reddit and X that Meta has artificially inflated benchmark scores for its forthcoming Llama 4 large language model. Meta’s VP of AI, Joelle Pineau, has firmly denied these manipulations during a presentation at an AI conference in Paris. Pineau, head of artificial intelligence research at Meta, noted that the company is dedicated to transparency and reproducibility. Reuters has previously reported that Pineau plans to depart Meta in May.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On April 8, analyst Keith Weiss from Morgan Stanley maintained a “Buy” rating on the stock and has a $530.00 price target. Weiss’s buy rating stems from its strong positioning in the rapidly growing GenAI sector and leadership in cloud services. CIOs are continuing to choose Microsoft for cloud solutions despite macroeconomic uncertainties impacting IT budget growth expectations. The firm noted that 35% of CIOs expect the company to capture the biggest incremental share in GenAI spending by 2025. They continue to favor Microsoft’s cloud infrastructure and platform services, and it is a big player in the AI/ML space.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On April 8, the company announced Amazon Nova Sonic, a new foundation model which enables more human-like voice conversations in AI applications. The innovation, aimed at simplifying the nuance and complexity of human conversation, integrates both speech understanding and speech generation into a single model. The voice model is now available via a new API in Amazon Bedrock, streamlining the development of voice applications, such as customer service call automation and AI agents across a broad range of industries.
“Nova Sonic takes a new approach to solve these challenges. Instead of using different models, it unifies the understanding and generation capabilities into a single model. This unification enables the model to adapt the generated voice response to the acoustic context (e.g., tone, style) and the spoken input, resulting in more natural dialogue. Nova Sonic even understands the nuances of human conversation, including the speaker’s natural pauses and hesitations, waiting to speak until the appropriate time, and gracefully handling barge-ins.”
While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some 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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