The uncertain macroeconomic environment is diminishing investors’ readiness to pay high prices for stocks related to artificial intelligence. Despite the continued buzz around the technology, no one seems interested in buying the falling stocks. Fluctuating tariff policies from the Trump administration have concerned Wall Street and disrupted global supply chains. The cost of AI infrastructure has increased drastically, especially for companies relying on imported components.
READ ALSO: 14 AI Stocks Catching Wall Street’s Attention and 9 Trending AI Stocks Making Headlines Today.
The narrative around AI stocks has also begun to change because investors are critiquing that prices have become too expensive, and because there is intensifying competition from Chinese companies developing their own AI offerings.
In the latest news, seven Republican U.S. senators have also sent a letter to U.S. Commerce Secretary Howard Lutnick. The letter urges him to get rid of a Biden administration rule that restricts global access to AI chips before it kicks in next month. The letter claims that the AI diffusion rule will deter U.S. leadership in artificial intelligence, which is why it demands an “immediate action” to halt it. The rule is set to take effect on May 15.
“Every day this rule remains in place, American companies face mounting uncertainty, stalled investments, and the risk of losing critical global partnerships that cannot be easily regained. We urge you to withdraw this rule and propose an alternative that is effective in preventing Communist China from capturing the world market in leading technology without compromising American advantages.”
-The letter, also signed by senators Markwayne Mullin, Ted Budd, Roger Wicker and Eric Schmitt.
It also noted how the rule puts countries into three tiers, with only 18 nations in the Tier 1 group with the easiest access to American technology. Those in tier 2 have to face “arbitrary purchase limits and a cumbersome licensing process.” Meanwhile, it asserted that Tier 3 countries are already “rightly restricted.”
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).
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10. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 63
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On April 14, the North Atlantic Treaty Organization (NATO) Communications and Information Agency revealed it had completed an acquisition of Palantir’s AI-powered Maven Smart System NATO (MSS NATO) the previous month. According to NATO, on March 25, it “finalized the acquisition of the Palantir Maven Smart System NATO (MSS NATO) for employment within NATO’s Allied Command Operations (ACO), marking a significant advancement in the modernization of NATO’s warfighting capabilities.” The agency further revealed how the procurement was quite expeditious, taking only six months to complete. It noted that ACO is expected to use the system within thirty days.
9. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 96
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications. On April 8, KeyBanc analyst John Vinh downgraded the stock to “Sector Weight” from Overweight without a price target amid escalating tariff risks and price competition. With export restrictions likely to limit demand for AMD’s chips from Chinese hyperscalers, the firm believes AMD could face greater competition from Nvidia and a slowdown in the China business.
“China AI demand may not be sustainable and may be at risk, while NVDA is so far ahead with GB200/NVL. We estimate 2025 MI308 GPUs volumes at 300K and reflect the majority of the growth for AMD. Excluding China, there is very little to no growth in AI GPUs this year.”
Vinh further talked about the limited opportunity to gain additional shares in the PC and server market when compared to Intel.
“We believe AMD will be forced to react to INTC’s aggressive price actions in the range of 20-40% on Lunar Lake in order to maintain/regain lost market share to INTC. While the stock is relatively inexpensive, trading at 13x our 2026 EPS estimate, semiconductor stocks rarely work with risk to GMs, which we are increasingly concerned about given the aggressive price cuts by INTC.”