Investing

AI Chips Are Hard Enough, but Now It's a Tariff-Driven Political Labyrinth

Austin Smith

Published: January 25, 2025 9:15 am

24/7 Wall St. Key Points:

• As U.S. regulations limit access to advanced artificial intelligence technologies for nations like China, therefore altering demand and global market dynamics, AI chip makers like Nvidia Corp. (NASDAQ: NVDA) face geopolitical challenges.
• Companies with continuous cash flow from hosting the infrastructure for AI workloads—such data center providers like Digital Realty Trust Inc. (NYSE: DLR)—are good complementary AI options.
• Ongoing U.S.-China conflicts over intellectual property and technology exports—including artificial intelligence chips and related hardware—may complicate the sector even more and influence future agreements and cross-border sales.
• If you want to profit from AI but don’t want to mess around with chip stocks, take a look at “The Next Nvidia” stocks for some incredible opportunities that could soar in 2025. Click here now to read more. 

Watch the Video

Transcript:

[00:00:04] Douglas McIntyre: So the AI chip industry is gotten very complicated, not because of the business itself, but because it’s now sort of politicized, you know, who can get our AI chips, who can’t get our AI chips. How do you look at that? Walk me through that maze of, well, we’re not just in the AI chip business, we’re in the AI chip business in a sort of tariff driven, competitive. We’re worried about the Chinese world.

[00:00:36] Lee Jackson: Yeah, well, clearly, I mean, one of the things, and this will come back because, you know, Trump is already talking to Xi, and he’s like, look, you know, you rip off our stuff, you, you, you counterfeit all of our stuff, and that’s just not going to happen anymore, and this is one thing that both Biden and Trump, I’m sure, agree upon, is that, you know, we, they just can’t have access to all of our AI, right.

[00:00:59] Lee Jackson: Your protocols, and it’s going to be interesting to see if if they can come to an agreement. It’s like this whole thing with TikTok, Trump is now saying the Supreme Court said no, the band stands. So, unless there’s a buyer that comes in, And ByteDance probably doesn’t want to sell it, but they’re talking like 50 billion, a huge amount. So it’ll be interesting to see how the AI chip and, and just, and even AI hardware and, and data center, stuff works out because it’s the future. It is the future.

[00:01:34] Douglas McIntyre: Now, if you’re an Nvidia shareholder, you might be a shareholder, how do you game this out with the, they’re the, you know, 600 pound gorilla. How do you game this out if you’re looking at something like Nvidia?

[00:01:47] Lee Jackson: Well, I think, and again, I’m no AI expert, we have them, you know, one of our head guys, Eric Bleeker, has got an AI portfolio that everybody can follow, you know, right on our website, and it has, you know, big cap, large cap names, and I think they’ve thrown their own dough into the pot to how it can grow. I think one of the things that is the most important in, in AI is that you want companies that have recurring revenue. You know, and that’s why data centers are good, like digital realty’s, a good AI trade because they, they have constant revenue from these guys that have to have their server farms, their gigantic server farms all around the world. So the recurring revenue theme is, is something to look for, and sometimes it’s on an enterprise level or a hardware level. not just from the chip design level. So it’ll be interesting to see what happens with China on this. Cause you can bet that Trump will be just as firm with the Chinese on this, if not more.