We recently published a list of 10 AI Stocks Making Waves on Wall Street. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other AI stocks making waves on Wall Street.
The moment of reckoning has arrived: China’s artificial intelligence industry has almost caught up with the US. Moreover, it is more open and efficient too. This is unlike the US’s strategy towards the nascent technology, which it wants to keep largely within its borders. To recap President Donald Trump’s first week in office, it is safe to say that the message towards the community has been simple: Build, build, and build.
When he came to office, Trump immediately rescinded Biden’s sweeping executive order on AI. While AI with fewer guardrails may be terrifying for some, it may be a possible way to expand into new territories and win the race toward AI. In light of this, Trump has recently signed an executive order related to AI to “make America the world capital in artificial intelligence”.
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The President has also announced a joint venture led by SoftBank Group Corp., OpenAI, and Oracle Corp. The “Stargate initiative” will fund billions of dollars worth of AI infrastructure. On the eve of taking office, President Trump said that he would allow “people with a lot of money” to invest in so-called “AI plants” that power data centers for artificial intelligence.
Trump’s actions signal the direction AI policy is going to take under his reign, particularly when it comes to competing with China. Meanwhile, both China and the US are doing everything in their power to win the AI race. Back in September, OpenAI released the world’s first reasoning model, o1, which used a “chain of thought” to answer difficult questions. Other companies soon followed suit. Google developed its own reasoning model called “Gemini Flash Thinking” in December and a few days later, o3 was born.
Keeping a close tab on these developments, China has recently made a mark of its own, igniting panic in Silicon Valley along the way. An AI lab, known as DeepSeek, unveiled a free, open-source large-language model in late December. According to the lab, it took only two months and less than $6 million to build the model, using reduced-capability chips from Nvidia called H800s.
Third-party benchmark tests have revealed how DeepSeek’s model outperformed Meta’s Llama 3.1, OpenAI’s GPT-4o, and Anthropic’s Claude Sonnet 3.5 in accuracy ranging from complex problem-solving to math and coding. If this wasn’t enough, DeepSeek, last Monday, released r1, a reasoning model that has outperformed OpenAI’s latest o1 in several of these third-party tests.
“To see the DeepSeek new model, it’s super impressive in terms of both how they have really effectively done an open-source model that does this inference-time compute, and is super-compute efficient. We should take the developments out of China very, very seriously”.
-Microsoft CEO Satya Nadella
DeepSeek’s r1 is particularly remarkable considering it also had to navigate the strict semiconductor restrictions that the U.S. government has imposed on China. These restrictions had cut the country off from access to the most powerful chips, like Nvidia’s H100s. The development also implies how the AI lab either found a way around the rules or, the controls were simply not as effective as anticipated. Does this mean that Trump’s stance toward fewer guardrails is the way to go? We are yet to find out.
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.
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).
A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that has strengthened its mark in the AI realm by launching Apple Intelligence, its personal intelligence system. On January 24, BofA analyst Wamsi Mohan lowered the firm’s price target on Apple (NASDAQ:AAPL) to $253 from $256 and kept a “Buy” rating on the shares. The rating has been issued ahead of the company reporting fiscal Q1 results. The company will report its results after market close on Thursday, January 30. Even though the firm expects a “strong report” from Apple due to the iPhone 16’s initial demand, it has also lowered its fiscal Q2 iPhone units estimate to 49M from 56M. The analyst cited two reasons for the lowered outlook: a weak macro environment and the prolonged rollout of generative artificial intelligence features. The firm further said investors already know about the weak iPhone sales, reiterating a Buy rating based on Apple’s strong profit margins, future improvements, and robust cash flow.
“Partly due to the weak macro and partly due to the staggered launch of Apple Intelligence features, which we see as yet to gain widespread adoption, we lower our F2Q (March quarter) iPhone units estimate to 49 million (from 56 million),” Mohan wrote.
Overall, AAPL ranks 2nd on our list of AI stocks making waves on Wall Street. While we acknowledge the potential of AAPL 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. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
