The newly announced tariffs by U.S. President Donald Trump could have serious consequences for many stocks. The competitive landscape may also change, leading competitors to potentially gain an edge. In particular, investment firm Bernstein has warned of higher uncertainty and downside risk for semiconductor stocks after the new tariff plan. Even though chips remain safe for now, the firm has said that indirect consequences may be significant.
Besides the tariffs in question, another area of concern in the realm of AI is its future potential impact. Big tech firms may be racing ahead to win the AI arms race, but they are ignoring a major area of concern. According to the U.N. Trade and Development agency, the artificial intelligence industry is poised to reach $4.8 trillion in market value by 2033. However, its benefits are expected to remain highly concentrated.
The UNCTAD report reveals that the AI market cap would roughly equate to the size of Germany’s economy. However, there are significant concerns about automation and job displacement. The report warns that AI could affect 40% of jobs worldwide.
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To make matters worse, it has also revealed that artificial intelligence is not “inclusive,” which means that the benefits and economic gains from the technology tend to be “highly concentrated.”
“The benefits of AI-driven automation often favour capital over labour, which could widen inequality and reduce the competitive advantage of low-cost labour in developing economies.”
UNCTAD isn’t the only organization raising concerns over job displacement and income inequality stemming from the advent of AI. IMF has voiced similar concerns in the past, revealing how it may cause polarization within income brackets. Workers who can harness AI are probably going to witness an increase in their productivity and wages, and those who cannot will fall behind.
The report from the IMF revealed AI may impact 60% of advanced economies. In contrast, AI exposure is anticipated to be an estimated 40% and 26% in emerging markets and low-income economies. Overall, AI is expected to worsen income inequality over time. For this reason, it is important that policymakers address the issue proactively in order to protect the livelihoods of those who are vulnerable.
“History shows that new technologies can lead to great gains for our economies but are not without pain for some people and communities. The overall impact will depend highly on social institutions and policies. Policies are needed to help workers adapt to the new reality and to ensure their participation in the benefits arising from technology.”
-Pingfan Hong, Director of DPAD.
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. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 25
C3.ai, Inc. (NYSE:AI) operates as an enterprise artificial intelligence (AI) software company. On April 3, the company announced a customer collaboration with Arcfield, a leading government technology and mission support provider, to enhance AI capabilities for better serving defense and intelligence agencies. The collaboration will leverage C3 Generative AI–powered solutions to enhance digital transformation by accelerating the design, development, and operation of production-grade Enterprise AI applications.
“The future of national security and space mission success will be defined by AI-driven capabilities — and our collaboration with Arcfield represents a significant step forward in applying Enterprise AI to national security and space operations. By combining C3 AI’s proven technology with Arcfield’s deep domain expertise, together, we will transform how defense and intelligence agencies operate, unlocking new levels of speed, efficiency, and resilience to outpace emerging threats and secure mission success.”
-Thomas M. Siebel, Chairman and CEO, C3 AI.
9. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Holders: 40
Five9, Inc. (NASDAQ:FIVN) is a technology company that offers cloud software solutions for contact centers. On April 3, William Blair analyst Arjun Bhatia reiterated their bullish stance on the stock, giving a “Buy” rating. Five9’s potential for growth has led to this optimism. The analyst highlighted how the company has announced a 4% reduction in workforce to focus on artificial intelligence investments and innovation, enabling it to better capitalize on future AI opportunities.
The stock’s valuation is also considerably attractive since it is trading at a discount despite the potential to exceed current growth guidance. Moreover, a promising refresh cycle is likely in the works as enterprises transition from legacy systems to cloud-based solutions. This is based on the company’s initiatives and emphasis on AI adoption in the contact center space. All of these factors support a buy rating for the stock.
8. 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 3, TipRanks reported that William Blair analyst Louie DiPalma maintained their neutral stance on the stock, giving a “Hold” rating on March 27. DiPalma’s rating stems from current and future contracts of Palantir. He noted how a potential contract award for the Next-Generation Command and Control (NGC2) program is a positive sign for the stock, likely boosting its annual recurring revenue.
However, uncertainty looms since it hasn’t been officially announced. Moreover, the company’s close alignment with the US Army’s strategic decisions implies that the company holds solid ground in maintaining and expanding its existing contracts. Nevertheless, the firm has given a hold rating to reflect its cautious approach toward the stock. Even though Palantir boasts revenue growth and strong operating margin projections, the opportunities mentioned depend on future developments and official confirmations.
7. 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 4, JPMorgan reduced estimates for the stock and reiterated an “Underweight” rating on the shares with a $120 price target. The analysts talked about the “unprecedented brand damage” on Tesla stock due to CEO Elon Musk’s increasing political involvement with the Department of Government Efficiency (DOGE).
Previously, many Tesla bulls cited how the Trump administration over the next years would be a “total game changer” for the autonomous and artificial intelligence story for Tesla. However, that narrative has changed quickly. JP Morgan has since reduced estimates for the stock, considering that the company reported Q1 deliveries far below the firm’s “low end estimate.” The firm now expects estimates to decline even further to new, lower estimates. They expect Tesla to report Q1 earnings per share of 36c versus the previous 40c, compared to the recent consensus estimate of 46c.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On April 4, Needham analyst Laura Martin reiterated the stock with a “Buy” rating and a $260 price target. The stock lost around $300 million in market cap amid the new tariffs introduced by the Trump administration. Despite the recent challenges, Martin is optimistic about the stock considering the company’s commitment to significant investment in the United States.
On February 5th, the company committed to a $500 billion pledge over four years to create 20,000 new jobs in engineering, R&D, manufacturing, and AI. This has positioned Apple favorably in the eyes of policymakers, and Wall Street is optimistic that this may increase its likelihood of tariff exemptions. Apple is also considered an iconic brand, which is also why it may secure favorable treatment, as seen in past exemptions granted during the Trump administration. Earnings per share may reduce significantly due to the tariffs, but the market is still factoring in a reasonable chance of exemptions.
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. One of the biggest analyst calls on Thursday, April 3rd, was for Nvidia Corporation. HSBC analyst Frank Lee downgraded shares to “Hold” from buy and cut his price target by $55 to $120 based on limited upside potential.
“We expect Nvidia to deliver YoY sales growth of 62% and EPS growth of 58% in FY26e, while the current FY26e [price-to-earnings ratio] of 23x also does not look demanding to us. However, we now expect to see limited upside potential going forward given limited room for significant earnings upside surprise over the next 1-2 years and potential re-rating headwinds that we think are yet to be fully factored in by the market.”
The advent of Chinese AI startup DeepSeek had pressured the stock earlier which has been lagging the broader market ever since.
“We first upgraded Nvidia to Buy in April 2023 on the back of Nvidia’s strong AI GPU pricing power and product mix being underestimated by the market that we believe has continued for past two years,” he wrote. “However, we now think Nvidia’s GPU pricing power is slowing down as we have seen no significant ASP boost between B200 and B300 GPU or the GB200 and GB300 NVL72 rack architecture.”
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 2, Reuters reported that Alphabet’s Google is replacing Sissie Hsiao, the person who led the development of the artificial intelligence chatbot Bard, now known as Gemini. The company told staff in its AI division about the change.
Josh Woodward, who leads Google Labs and oversaw the launch of popular tool NotebookLM, will replace her. A company spokesperson has confirmed the news, who also said that Hsiao will return to the company after a short break in a new role. According to Demis Hassabis, CEO of Google DeepMind, the move will help the company focus on the evolution of the Gemini app.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On April 3, RBC Capital analyst Brad Erickson maintained a “Buy” rating on the stock and set a price target of $740.00. The analysts are optimistic about the company’s growing market share in digital advertising. Lifting the price target on Meta, Erickson noted that the company’s gain in the ad market will increase this year. In particular, he noted how Meta has been gaining market share compared to rival Google. Concerning return on ad spend and AI performance, RBC said, “META indicated as strongly as we’ve ever heard over GOOGL on a relative basis.”
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 1, RBC Capital Markets analyst Rishi Jaluria added the stock to his “Top Picks” list. Jaluria has an Outperform rating and a $500 price target on the stock. According to him, the market is underestimating Microsoft’s generative AI innovations and that the recent stock underperformance is a good buying opportunity. Azure is also anticipated to grow based on AI trends and capacity expansions. From fiscal 2025 to 2026, the company is expected to maintain a CAGR of 10-15%. It is also likely that Microsoft will tap into new markets such as hyper-automation.
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 4, Eric Sheridan from Goldman Sachs maintained a “Buy” rating on the stock with a price target of $255.00. Sheridan believes that Amazon could see a potential $5 billion to $10 billion annualized operating profit hit from higher first-party merchandise costs due to Trump tariffs.
“We believe that Amazon investors are (and will remain) focused on the potential financial impact of the reciprocal tariffs announced by President Trump on April 2.”
Regardless of the tariffs, Sheridan believes that several strategies can help the company mitigate the effects of the tariffs.
“These potential offsets include negotiating with vendors to avoid having to bear 100% of the higher input costs, increasing prices on certain items for customers, and mix shifts in the vendor base and products sold on the platform towards items that face lower tariffs (or US domestic alternatives).”
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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