We recently compiled a list of the 10 AI Stocks Making Waves on Wall Street. In this article, we are going to take a look at where Tower Semiconductor Ltd. (NASDAQ:TSEM) stands against the other AI stocks.
The United States’ lead in artificial intelligence technology has become questionable after the release of DeepSeek’s AI models. As a direct consequence, the US Commerce Department is now looking into whether the Chinese company used US chips that were not allowed to be shipped to China in the first place. Last week, DeepSeek’s AI model and its free assistant, which the company claimed used less data and power than US models, wreaked havoc in the tech world and resulted in a massive broad market sell-off.
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Investors began questioning the sustainability of the huge investments in AI made by leading tech giants and the significant power demand from power-hungry data centers. DeepSeek’s emergence led to worries that cost-effective AI solutions would erode market share and US tech companies’ profitability. Consequently, a rout sparked that wiped around $1 trillion off U.S. technology stocks.
DeepSeek has claimed that its chatbot performs on par or better than Microsoft-backed OpenAI at a fraction of the cost. However, a report published by NewsGuard has revealed that the chatbot achieved only 17% accuracy in delivering news and information. It further revealed that it repeated false claims 30% of the time and gave vague or useless answers 53% of the time in response to news-related prompts, raising doubts about the claims it initially made.
While clarity on these models is yet to be achieved, the current restrictions on companies such as Nvidia have been in place to stop the most sophisticated chips from reaching China and restrict the country from taking the lead in AI. According to a source reported by Reuters, however, organized AI chip smuggling to China has been tracked out of a few countries, including Malaysia, Singapore, and the United Arab Emirates.
In this regard, Singapore’s trade ministry noted that there is no reason to believe that DeepSeek obtained any export-controlled products from the country. It further noted that it has always upheld the rule of law and acted decisively against those who disobey the rules.
“We expect U.S. companies to comply with U.S. export controls and our domestic legislation. Our customs and law enforcement agencies will continue to work closely with their U.S. counterparts.”
– Singapore’s Trade Ministry
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 close-up of a modern semiconductor chip, intricately wired and gold plated.
Tower Semiconductor Ltd. (NASDAQ:TSEM)
Number of Hedge Fund Holders: 26
Tower Semiconductor Ltd. (NASDAQ:TSEM) is an independent semiconductor foundry. Its specialized semiconductor technologies fit the growing demands of AI applications. On February 3rd, Wedbush analyst Matt Bryson initiated coverage on the stock with an “Outperform” rating and a target price of $60. The firm said that it is bullish on the semiconductor company, specifically talking about the company’s recent outperformance, longer-term opportunities in specialty technologies, and its beneficial diversified geographical footprint. However, the firm sees some mixed near-term demand signals but the recent decline in valuation accounts for the risk. Overall, Wedbush is focused on TSEM’s longer-term growth opportunities.
Overall TSEM ranks 7th on our list of the AI stocks that are making waves on Wall Street. While we acknowledge the potential of TSEM 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 timeframe. If you are looking for an AI stock that is more promising than TSEM 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.