The US has always perceived advanced AI chips and equipment as a matter of national security. While preventing exports to China, Russia, Iran, and North Korea, regulations have helped limit the quantity of AI chips that can be shipped to most nations. Nevertheless, they have also granted America’s closest ally unrestricted access to American AI technology.
President Joe Biden’s administration was the most vocal and aggressive in passing regulations that broadly restricted China’s access to cutting-edge chips and the machinery needed to make them. The administration updated the controls every year to make them more stringent and catch nations that might transfer the technology to China.
While the move has helped the US safeguard advanced computing power, it’s presenting unique challenges that, if unchecked, could spell more trouble amid the artificial intelligence boom. The fact that DeepSeek was able to effectively develop its generative AI app despite the U.S. government’s efforts to restrict AI development in China is one such issue cropping up.
Both policy experts and tech companies are increasingly criticizing the rules as they stifle innovation around AI. In addition, there are concerns that AI diffusion rules aim to establish a centrally planned global computing economy, according to a Brookings analysis.
“A decade from now, we will look back and recognize how quixotic it was for the U.S. government of the mid-2020s to attempt to limit the ability of people in 150 countries to perform fast multiplications,” wrote John Villasenor, a nonresident senior fellow at Brookings and professor of electrical engineering, law, public policy, and management at UCLA.
Microsoft has already fired a warning shot, insisting that stringent AI chip export regulations could result in catastrophic results. Its concern comes amid reports China is already taking advantage of the tightened US restrictions on advanced chips and equipment. The country is reportedly urging and wooing other countries to consider its chips as it would be a better partner in the long term amid the growth of AI infrastructure. The company is already warning that the US stands to lose big business as countries shun US chips due to the stringent regulations.
The company is already lobbying the Donald Trump Administration to try to lessen some of the regulations passed in the final days of President Joe Biden’s administration. The rules ended a four-year Biden administration initiative to limit China’s access to cutting-edge chips that could improve its military prowess. The rules also sought to keep the United States at the forefront of artificial intelligence by plugging holes, erecting new barriers to regulate chip flow, and advancing AI worldwide.
That’s not the only company experiencing the impact of stringent AI chip restrictions. The software giant joins Nvidia, which has been vocal against the export controls as they hurt its core chip business.
The request demonstrates how difficult it is for Trump to implement pro-business policies while simultaneously projecting a tough stance against China. Those who supported companies that sold overseas frequently postponed or softened their actions, infuriating the previous administration’s national security officials.
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 in 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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9. Cloudastructure Inc. (NASDAQ:CSAI)
Number of Hedge Fund Holders: N/A
Cloudastructure Inc. (NASDAQ:CSAI) is a software infrastructure company that provides cloud-based video surveillance, storage, analytics, and monitoring products. It also offers AI surveillance, remote guarding, mobile surveillance services, and smart parking solutions. The company’s prospects in the regulatory-driven security market were boosted on the signing of a strategic partnership with a billion-dollar residential developer on February 26.
The deal with a residential developer in the DC metro area paves the way for Cloudastructure Inc. (NASDAQ:CSAI) to implement its AI-powered security solutions in two multifamily properties. The deal also underscores strong demand for the company’s AI-driven system, which features live monitoring, real-time alerts, automated system checks, and video analytics. The fact that the residential developer manages over 4,000 units valued at over $1 billion affirms prospects of significant expansion opportunity and revenue opportunities.
8. Koninklijke Philips N.V. (NYSE:PHG)
Number of Hedge Fund Holders: 12
Koninklijke Philips N.V. (NYSE:PHG) is a leading provider of healthcare technology. It offers diagnostic imaging solutions, including magnetic resonance imaging, X-ray systems, and computed tomography (CT) systems. On February 26, the company moved to strengthen its prospects on MRI solutions with the launch of SmartSpeed Precise.
Powered by AI-driven advancements, SmartSpeed Precise enables up to 3X faster image scanning while delivering 80% improved image sharpness. The dual-AI SmartSpeed Precise technology also cuts scan times by up to 300%. It should establish a strong point of differentiation for Koninklijke Philips N.V. (NYSE:PHG) in a market where consumers are influenced by technological superiority.
“By integrating high performance-enhancing AI engines across our entire portfolio of new and installed helium-free BlueSeal scanners, we are revolutionizing MRI efficiency while reducing environmental impact. These innovations ensure that more patients worldwide can access high-quality imaging, while healthcare providers benefit from more sustainable and cost-effective operations,” said Ioannis Panagiotelis, PhD, Global Business Leader MRI at Philips.
7. F5 Inc. (NASDAQ:FFIV)
Number of Hedge Fund Holders: 37
F5 Inc. (NASDAQ:FFIV) is a software infrastructure company that provides multi-cloud application security and delivery solutions. Its distributed cloud services enable customers to deploy, secure, and operate applications in any architecture. Its application delivery and security solutions are also designed to manage and optimize AI-powered applications. On February 26, the company announced new additions to the VELOS product line designed to support and enhance AI workloads for service providers.
The upgraded VELOS system will come with remarkable features, such as 6.4 billion concurrent connections, 80 million L4 connections per second for firewall security, and 6 Tbps of high-speed L4 throughput. With this upgrade, F5 Inc. (NASDAQ:FFIV) is establishing itself as a crucial infrastructure provider for AI workloads, moving beyond traditional application delivery. The timing is vital as it addresses network issues businesses encounter when scaling AI initiatives.
6. Juniper Networks, Inc. (NYSE:JNPR)
Number of Hedge Fund Holders: 56
Juniper Networks, Inc. (NYSE:JNPR) is a technology company that develops and sells a range of networking products, including routers, switches and software-defined networking solutions. On February 26, the company unveiled a new solution purpose-built for neocloud, traditional SPs and other AI cloud providers.
The AI-powered solution targets cloud providers who are deploying and managing GPUaaS (GPU-as-a-Service) and AIaaS (AI-as-a-Service) offerings. It seeks to address issues related to GPU shortages, rising energy costs and complexity of AI infrastructure management. The solution should strengthen Juniper’s prospects in the multibillion-dollar market segment amid AI adoption in various industries. With the IDC projecting the AI infrastructure market to reach $151 billion by 2027, there are tremendous opportunities for Juniper Networks, Inc. (NYSE:JNPR) to unlock.
5. EPAM Systems, Inc. (NYSE:EPAM)
Number of Hedge Fund Holders: 56
EPAM Systems, Inc. (NYSE:EPAM) is a global provider of digital engineering and cloud AI-enabled transformation services. The company also offers AI-powered solutions that help accelerate digital transformation while assisting businesses in designing, building, and implementing AI solutions. On February 25, the company launched the AI-Native Agency Empathy lab, which helps brands navigate the next frontiers in commerce and harness the power of AI.
The AI native solution addresses the challenges brands and businesses face in markets shaped by artificial intelligence. The solution seeks to empower marketing and digital leaders with solutions to deepen customer engagement and deliver measurable growth results. With the help of AI, businesses should anticipate customer needs and detect the emotional cues needed to design personalized human-centered interactions.
4. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 74
Verizon Communications Inc. (NYSE:VZ) is a telecommunication services company that offers communications, information and entertainment products and services. On February 26, the company achieved a significant milestone of a record-breaking 480 Mbps uplink speed in a successful trial with Erickson and Qualcomm. The milestone was achieved through the combination of TDD carrier component aggregation with C-band spectrum and uplink MIMO technology.
The 480 Mbps uplink speed will greatly benefit time-sensitive applications such as live broadcasting, remote robotics, and healthcare diagnostics. It should also strengthen Verizon Communications Inc.’s (NYSE:VZ) prospects in managing AI-driven workloads amid the rapid 5G network rollout. Additionally, it should unlock new opportunities around industrial automation and generative AI models, as the applications require continuous data uploads for model training and decision-making. Srini Kalapala, Senior Vice President of Technology and Product Development at Verizon, said:
“Emerging applications, such as smart surveillance, industrial automation, augmented reality devices and generative AI models, require massive amounts of data to be continuously uploaded for analysis, decision-making, and model training. Faster uplink speeds, in combination with the other advancements we’ve been introducing into our network, ensure that AI-driven systems can process real-time video feeds, sensor data, and user interactions without lag, improving responsiveness and accuracy. The work we are doing to drive uplink speeds is a key variable that will allow our customers to take advantage of these AI applications on our network.”
3. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 85
Snowflake Inc. (NYSE:SNOW) is a technology company that offers a cloud data warehouse platform that helps users store, analyze, and share data. It also allows users to build AI applications without moving or copying data across different systems. On February 27, the company strengthened its strategic partnership with Microsoft.
The strategic partnership allows the company to deliver OpenAI’s state-of-the-art models to customers in Snowflake Cortex AI. It also represents a significant advancement in the company’s AI capabilities, positioning it to compete in the growing enterprise AI infrastructure market. Likewise, Snowflake remains well-positioned to capture more of the enterprise spending as it offers a unified solution for data storage governance and AI model development.
“We’re expanding our long-standing partnership with Microsoft to deliver the best of OpenAI’s innovations directly to our customers, further advancing our promise to bring easy, efficient, and trusted AI to enterprises around the world. There’s enormous power in our customers being able to use OpenAI models directly in Snowflake’s secure platform, unlocking multimodal, agentic, and conversational AI use cases that drive high impact,” said Christian Kleinerman, EVP of Product, and Snowflake.
2. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 89
Workday, Inc. (NASDAQ:WDAY) is a technology company that provides enterprise cloud applications. Its applications help clients plan, execute, analyze and manage their business and operations. The company confirmed on February 26 that it is inking a strategic partnership with Randstad to enhance how companies find and hire talent.
The partnership will merge Workday’s AI-powered Recruiting Agent with Randstad’s extensive talent network to streamline the hiring process. The integrated solution will allow users access to qualified professionals, AI-driven smart matching, seamless workflow integration, and accelerated hiring processes. Likewise, the solution should help Workday strengthen its competitive edge in the highly competitive and crowded HR technology market.
1. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 110
ServiceNow, Inc. (NYSE:NOW) is a technology company that offers cloud-based solutions for digital workflows. It operates the Now platform for digital transformation, machine learning and robotic process automation. On February 26, the company confirmed the acquisition of the ‘Quality 360’ solution from Advania.
The acquisition marks a strategic expansion in the company’s manufacturing software capabilities. The Quality 360 solution is designed to enhance quality management functionality while providing AI-driven insights for addressing quality issues in manufacturing. The AI-powered solution should help manufacturers identify and resolve quality issues across production and service delivery stages. Quality 360 provides AI-driven root cause analysis, automated issue detection, and structured resolution frameworks.
“ServiceNow’s AI capabilities and scalable platform will empower manufacturers with a proactive, data-driven approach to quality management, helping them mitigate risks and strengthen their competitive edge,” said Hege Støre, Group Chief Executive Officer at Advania.
While we acknowledge the potential of ServiceNow, Inc. (NYSE:NOW) 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 time frame. If you are looking for an AI stock that is more promising than NOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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