The trade war between two of the world’s biggest economies, China and the US, is deepening even further. In a tit-for-tat retaliatory move, China has imposed an 84% tariff on all imports from the US starting April 10. This move comes after Trump’s duties on Beijing, which have now been increased even further to a whopping 145%.
Tech stocks have been plunging in response. Apple, for instance, has been doing the majority of its manufacturing in China, and the trade war is likely going to raise the price of its iPhones. Even though President Trump has confidence that the tech giant can make its phones in the U.S., experts aren’t so sure.
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According to Needham analyst Laura Martin, reshoring iPhone manufacturing may take years and result in the price of iPhones skyrocketing. Similarly, Wedbush analyst Dan Ives has said that an iPhone would cost $3,500 if produced in the U.S.
Nevertheless, President Donald Trump has just announced a 90-day pause on his administration’s “reciprocal tariffs.” These would have affected the company’s production locations in Vietnam, India, and Thailand.
Amid all this chaos, artificial intelligence continues to make leaps and bounds. In recent news, Silicon Valley startup Lightmatter has revealed it has developed a new type of computer chip. This chip is capable of both speeding up artificial intelligence work and using less electricity in the process.
The company is one of the few that seeks to use beams of light to move data between computers, instead of electronic signals. However, the company also believes that it can use these very beams of light to carry out the computation.
“What we’re doing is looking at the future of where processors can go. We fundamentally care about computers, and this is one of the alternative paths. There’s trillions of dollars of economic value that’s behind the idea that computers will keep getting better.”
– Nick Harris, Lightmatter’s CEO
In other news, President Donald Trump has recently told Cabinet members that billionaire Elon Musk will leave his administration role in the coming months. Musk has been the subject of hate after his efforts to cut the federal workforce. His involvement in politics has been hurting his company as well.
“I think he’s been amazing, but I also think he’s got a big company to run … And at some point, he’s going to be going back. He wants to. I’d keep him as long as I could keep him.”
-President Donald Trump.
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 trader on the floor of a bustling stock exchange, surrounded by a sea of monitors.
10. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 42
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On April 9, Redburn Atlantic analyst Skye Landon downgraded the stock to “Sell” from Neutral with a price target of $10, down from $14.50. The firm sees a lot of “uncertainty” around the company’s outlook, and has been questioning its ability to grow earnings at market expectations. It anticipates lower levels of product sales due to worries that its fuel cells may not be able to compete with traditional generation sources for market share in the long term. There is fuel cell competition anticipated in the second half of 2025, likely to put additional pressure on Bloom’s international business.
9. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Fund Holders: 85
Western Digital Corporation (NASDAQ:WDC) develops, manufactures, and sells data storage devices and solutions. On April 10, Benchmark upgraded the stock to “Buy” from hold, stating that the stock’s valuation is compelling.
“Besides valuation there are other reasons why we find the shares of Western Digital attractive: expected double digit y/y growth in data center spending by the major hyperscalers, the AI opportunity, and lower expected interest expense. As such, we are raising our rating to “Buy” with a $55 target price.”
8. 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, Benchmark added the stock to its best ideas list, stating that investors should buy the dip.
“We believe the recent stock pullback and sales declines, while significant, are overblown considering the near-term issues impacting the company and the scope of opportunities around the corner. … We are adding TSLA to Benchmark Best Ideas with a revised PT of $350 ($475 prior).”
7. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 162
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that has gained popularity after it unveiled its AI-powered platform called Agentforce. On April 9, Truist Securities reiterated a “Buy” rating on the stock and maintained a $400 price target. The firm has cited growth drivers like Data Cloud and AI/Agentforce as likely catalysts for future performance. Their analysis revealed a de-risked revenue guidance and strong capital allocation strategy as positive catalysts of future performance.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On April 9, Jefferies upgraded the stock to “Hold” from underperform despite concerns about weak phone demand and tariffs.
“Our base case remains that AAPL would be exempted from U.S. tariffs, given its commitment to invest $500B in the U.S. over the next four years, and our belief that it would make additional manufacturing investment commitment in the U.S. (to make iPhone, for example). However, a rising risk of global recession could further impact already-weak iPhone demand.”
Apple has made a commitment to invest $500 billion in the US, with a significant focus on artificial intelligence development and manufacturing. On this note, the firm is optimistic that the Trump administration will exempt it from tariffs. Regardless, there is a rising risk of a global recession that may impact iPhone demand.
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 9, Daiwa reiterated the stock as “Buy” Daiwa and lowered its price target on the stock by 28% to $115 per share from $160.
“As to Nvidia we suggest our Middle of the Road view and to buy on dips.”
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 9, Google unveiled its seventh-generation artificial intelligence chip named Ironwood, designed to speed the performance of AI applications. Known for “inference” computing capabilities, the chips aim to perform rapid calculations that generate answers in a chatbot or other types of responses.
According to Amin Vahdat, a Google vice president, the Ironwood is designed to run AI applications, or inference, and tends to work in groups of as many as 9,216 chips. Moreover, it claims twice the performance for the amount of energy needed compared with Google’s Trillium chip. Gemini AI models are designed and equipped with the company’s chips.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On April 9, Bank of America reiterated the stock as “Buy” but lowered its price target to $640 from $765 due to growing macroeconomic uncertainty.
The analysts told investors in a research note how they believe that ad spending pressure will materialize due to the latest tariff announcements and other negative headlines. The firm is lowering its ad spend estimates for Meta, which has deeper ad auctions, a higher mix of direct response revenues, and a 2%-3% foreign exchange benefit, by roughly 4%.
Last Saturday, the company unveiled the first models from its latest open-source artificial intelligence software, Llama 4. However, its biggest and most powerful Llama 4 model, the Llama 4 Behemoth model, is still in training and is yet to be released.
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 9, Jackson Ader from KeyBanc maintained a “Buy” rating on the stock with a price target of $575.00. According to Ader, the company maintains significant flexibility in managing its capital expenditures despite all the speculations about reduced AI investments. Data center-related commitments allow the company to adjust its spending strategically. This can ultimately benefit shareholders. These commitments make up for 61.8% of Microsoft’s 2025 non-debt obligations.
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 9, Bank of America reiterated the stock as “Buy” and lowered its price target to $225 per share from $257 due to tariff concerns.
“While Amazon sales seemingly felt little impact from 2018 China tariffs, the widespread (and much larger) 2025 global tariffs are a potential new ballgame for supply chains and costs.”
The firm and other names, such as Mizuho, anticipate that Amazon’s cloud business will face challenges moving forward.
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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