As the US stock markets were catching up with the tech disruption led by cheap Chinese AI models, US President Donald Trump’s decision to impose tariffs against countries, including a 10% tariff on China, is driving market volatility.
On February 4th, the US stock index futures were marginally lower as investors refrained from risky assets after China announced retaliatory tariffs against America. Futures tied to the Dow Jones Industrial Average were down 0.2% or 77 points. Beijing slapped tariffs of up to 15% on US coal imports and 10% higher duties on crude oil, farm equipment, and some cars, effective February 10th.
Trump also announced a 25% tariff on goods from Mexico and Canada but later agreed to a 30-day pause on February 3rd in return for concessions on border and crime from both countries.
Elsewhere, in the world of AI, OpenAI CEO Sam Altman inked a deal with tech giant Kakao in South Korea on February 4th as part of plans to create new alliances after DeepSeek’s impact on the global AI industry.
“We’re excited to bring advanced AI to Kakao’s millions of users and work together to integrate our technology into services that transform how Kakao’s users communicate and connect,” said Altman. However, Altman reportedly admitted at a closed meeting with South Korean AI developers that Open AI “hasn’t found a strategy yet” to respond to DeepSeek.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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8. Knightscope Inc. (NASDAQ:KSCP)
Number of Hedge Fund Holders: N/A
Knightscope Inc. (NASDAQ:KSCP) develops and deploys AI technologies and autonomous security robots that use lasers and advanced sensors to patrol public areas like corporate campuses and malls. These robots can detect suspicious activities and alert authorities in case of security incidents.
On February 4th, Knightscope Inc. (NASDAQ:KSCP) announced it received full Authority to Operate (ATO) through the Federal Risk and Authorization Management Program, enabling broader deployments of the company’s autonomous security solutions across federal agencies. The authorization validates the company’s robust security infrastructure and compliance with the government’s rigorous cybersecurity standards.
7. Onity Group Inc. (NYSE:ONIT)
Number of Hedge Fund Holders: 7
Onity Group Inc. (NYSE:ONIT) is a non-bank financial services firm offering mortgage origination and servicing solutions alongside other financial services like insurance claim collection, loan underwriting, escrow account administration, and e-commerce offerings through its subsidiaries, PHH Mortgage and Liberty Reverse Mortgage.
On February 3rd, Onity Group Inc. (NYSE:ONIT) subsidiary PHH Mortgage announced the launch of an AI assistant through its proprietary LoanSpan client reports and analytics platform called the LoanSpan’s AI assistant (LASI) to help clients access data repositories with ease. The AI assistant can swiftly understand and answer unstructured questions accurately and automate query escalation to the company’s Client Relations team for a better and more secure client experience.
6. FiscalNote Holdings Inc. (NYSE:NOTE)
Number of Hedge Fund Holders: 13
FiscalNote Holdings Inc. (NYSE:NOTE) uses AI in its data services, software tools, and media management solutions to offer advocacy management, policy and global market intelligence analysis, and proposed legislation analysis services. The company’s offerings help clients manage policy, mitigate political and business risks, and address regulatory developments with detailed analytics and insights.
On February 4th, the company announced it regained compliance yesterday with the New York Stock Exchange’s continued listing standards for the minimum share price.
“We are pleased to regain full compliance with the NYSE standards, as was always our expectation, and to have achieved this organically by means of stock performance and appreciation,” said CEO Josh Resnik. “We remain focused on delivering value for our shareholders by driving product-led growth, expanding profitability, and strengthening our balance sheet. We are equally focused on generating results for our customers, including users of our new PolicyNote platform, as they seek essential insights, optimize their workflows, and impact their organizations. We are confident in our plan as we pursue our strategic initiatives for 2025 and beyond.”
5. STMicroelectronics NV (NYSE:STM)
Number of Hedge Fund Holders: 18
STMicroelectronics NV (NYSE:STM) is a semiconductor leader that manufactures and sells microchips and semiconductor products for use in IoT, consumer electronics, and the automotive and industrial sectors. Their proprietary neural processing units and AI suite enable AI on microprocessors, ensure high efficiency in handling AI workflows, and help developers create and deploy ML models on microcontrollers at relatively lower costs.
Today, STMicroelectronics NV (NYSE:STM) and HighTec EDV-Systeme announced they will jointly work to advance automotive functional safety by speeding up the development of safety-critical systems to help make software-defined vehicles safer and affordable. The collaboration will combine ST’s 28nm Stellar microcontrollers and HighTec’s Rust compiler to reduce time-to-market while ensuring strict adherence to automotive safety compliance standards.
4. Axon Enterprise Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 46
Axon Enterprise Inc. (NASDAQ:AXON) is a weapons and surveillance technology firm known for its stun guns, bodycams, and dashcams used by police departments, prison agencies, immigration personnel, and private security globally. The company is also integrating AI in its Axon Evidence software to efficiently manage and store surveillance cam footage data that is helping minimize report writing time, accelerate evidence review and license plate scanning, and ultimately enhance incident response time.
On February 4th, JMP Securities increased Axon Enterprise Inc.’s (NASDAQ:AXON) target price to $725 per share from $610 and retained an “Outperform” stock rating. The brokerage favours the company due to positive industry checks, such as steady sales attainment as well as the company’s product story around improving officer efficiency and measurable time savings, facilitated by the firm’s software solutions. Analysts foresee growing attention and demand for counter-unmanned aerial system/counter-drone products for domestic and military/defense use cases.
3. Juniper Networks Inc. (NYSE:JNPR)
Number of Hedge Fund Holders: 47
Juniper Networks Inc. (NYSE:JNPR) offers networking products and services, including routers, switches, security and network management solutions, firewall solutions, and software-defined technologies to leading service providers, enterprises, and government agencies. The company’s AI-Native Networking Platform, which leverages virtual network assistance and cloud to integrate network components, elevates network performance and user experience. AI products like the Marvis VNA, Marvis Minis, and Mist AI allow the company to reliably identify network issues, troubleshoot outages, and enhance help-desk processes with automated workflows.
Hewlett Packard Enterprise (NYSE:HPE) is planning to acquire Juniper Networks Inc (NYSE:JNPR) in an all-cash transaction for $40 per share to accelerate AI-driven innovation. However, the deal might not go through due to a US Department of Justice lawsuit seeking to block the takeover.
However, Evercore ISI upgraded Juniper Networks Inc. (NYSE:JNPR) to “Outperform” from “In Line” with a $40 stock price target on February 4th, as the brokerage sees two potential scenarios for Juniper going forward, with both resulting in upside to the current share price. Analysts say that if the takeover is successful, Juniper Networks Inc. (NYSE:JNPR) shareholders will end up with $40 per share, or a 15% upside. If Hewlett Packard Enterprise (NYSE:HPE) loses the DOJ trial, the brokerage thinks there are “a host of fundamental levers” that would make Juniper Networks Inc. (NYSE:JNPR) a good stock in 2025.
“With or without HPE offer, we think the stock is likely to work higher,” Evercore ISI stated.
2. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is the largest wireless carrier in the US and offers a wide range of technology, cloud, and communication services. The company is deploying AI solutions across verticals. For instance, Verizon AI Connect enables businesses to deploy AI workloads at scale. Meanwhile, GenAI solutions like the Personal Research Assistant and “Fast Pass” to resolution offerings are improving customer service resolution and response times.
On February 4th, Verizon Communications Inc. (NYSE:VZ) announced the addition of the first AI perk from wireless provider Google One AI Premium. The developments will allow Verizon customers to choose Google One AI Premium as a perk on their myPlan or myHome plan for $10 a month. The new perk will offer access to Gemini Advanced, 2 TB of storage, among other benefits across Google.
1. Autodesk Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 70
Autodesk Inc. (NASDAQ:ADSK) offers a host of software solutions, including 3D design tools used in architecture, engineering, construction, manufacturing, and the entertainment industries. The company is using AI across its products and services to automate documentation, streamline workflows, improve customer experience, and enhance decision-making efficiency while minimizing labor-intensive processes.
On February 4th, BofA hiked Autodesk Inc.’s (NASDAQ:ADSK) to $335 from $325 while reiterating its “Neutral” stock rating. The brokerage applied an EV/EBITDA multiple of 28X of the company’s calendar 2025 EBITDA estimate of $2.65 billion to arrive at its latest price target. Although analysts think the multiple is above the design software peer group average, they view that as warranted by Autodesk Inc.’s (NASDAQ:ADSK) durable business model and favorable margin profile.
While we acknowledge the potential of Autodesk Inc. (NASDAQ:ADSK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ADSK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
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