According to a recent Reuters report, the U.S. will empower tech giants to act as gatekeepers worldwide in its latest efforts to tighten its grip on global AI chip access. The move aims to effectively tighten restrictions, hindering China’s ability to acquire critical resources for developing its own AI capabilities.
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The scheme, which could be released this month, would require the companies to comply with strict requirements. This involves reporting key information to the US government and blocking Chinese access to AI chips. According to sources, doing so will allow them to offer artificial intelligence capabilities within the cloud overseas without a license.
While the government is keen on making tech giants gatekeepers, news reported by the Financial Times reveals how Blue Whale Capital investment fund has reduced its stakes in major US technology companies amid concerns about the costs of artificial intelligence. Besides one chip-maker tech giant out of the Mag 7, the fund is increasingly less positive on the rest of the Magnificent Seven tech stocks because of spending on AI, as reported by fund manager Stephen Yiu.
Even though tech giants are adamant that their spending is going to pay off in the long run, the move implies how not everyone is easily convinced. Jim Tierney, a growth stock investor at AllianceBernstein, noted how all of these companies, who are reportedly spending huge amounts of money, will have a hit to their profit margins. This hit is going to be even more noticeable in 2025.
In this regard, a report by The New York Times reveals how OpenAI could reportedly see a loss as big as $5 billion. The company’s largest expense comes from the computing power provided by its key partner and major investor, whose cloud services power its products. Analysts have been skeptical of such investments and wonder whether they will be able to garner returns.
Jim Covello, Goldman Sachs’s head of global equity research, stated that to justify a trillion or more dollars of investment, [AI] needs to solve complex problems and enable us to do things we haven’t been able to do before. He further noted that today’s flagship AI models, largely cannot.
Even though generative AI technology has been achieving a lot, such as advancing drug development, generating video clips, and even solving complex problems, making the technology profitable is still a major question. Only time will reveal whether these groundbreaking advancements can justify the immense investments that are pouring into the technology.
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.
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10. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 9
BigBear.ai Holdings, Inc. (NYSE:BBAI) is an artificial intelligence specialist offering AI-powered decision intelligence solutions. On December 16, the company announced that it had entered into a collaboration with Proof Labs Inc to boost cybersecurity for the Department of the Air Force (DAF). The collaboration will deliver an advanced cyber resiliency solution called the Cyber Resilient On-Orbit (CROO) solution to the DAF. Proof Labs was awarded a contract through the AFWERX SBIR to develop the CROO solution, with Big Bear as the sub-contractor. Big Bear.ai’s SpaceCREST technology will be used for the CROO, which is a digital twin system that monitors satellite network cybersecurity.
“This project represents a significant step forward in safeguarding our nation’s space infrastructure. BigBear.ai’s SpaceCREST digital twin capability, further enhanced by custom machine learning and anomaly detection gained through this project, will provide DAF a powerful tool to help combat real-time cyber threats and ensure the resilience of our nation’s critical space assets”.
-Robert Wedertz, Senior Vice President, Federal at BigBear.ai.
9. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 25
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation. On December 16, BTIG raised the firm’s price target on Bloom Energy to $30 from $20 and kept a “Buy” rating on the shares. The analyst told investors in a research note that ever since the 1920s, data centers are driving the biggest transformation of the US power grid. Moreover, U.S. data center capacity is expected to grow at 10% annually over the next five years, which is in turn anticipated to drive the U.S. power demand growth by 2% annually. The firm contends that to meet power needs urgently, some companies are paying more for grid access. This situation has the potential to evolve into an opportunity for Bloom Energy considering Bloom’s customers can go behind the meter with the company’s natural gas fuel cell offering.
