AI Daily: Foreign officials, tech execs urge Trump to rethink AI chip rule

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

AI CHIP RULE: Senior foreign officials and technology companies are asking the Trump administration to rethink the country’s global semiconductor strategy, Mackenzie Hawkins and Jenny Leonard of Bloomberg report. The AI diffusion rule, which restricts the number of AI processors that can be exported to most nations, was unveiled by the Biden administration, but tech giants and US allies have chafed the rules. Several governments and companies are now trying to persuade President Donald Trump’s team to loosen some of the regulations before the deadline for compliance arrives. Publicly traded companies in the space include Nvidia (NVDA), AMD (AMD), Intel (INTC), Marvell (MRVL), Microchip (MCHP), Micron (MU), Qualcomm (QCOM) and Texas Instruments (TXN).

AI BUBBLE IN THE U.S.: Alibaba Group (BABA) Chairman Joe Tsai said the company will recommence hiring following President Xi Jinping’s recent meeting with business entrepreneurs, Kane Wu and Selena Li of Reuters report. Additionally, Tsai expressed concern about some big AI announcements in the U.S., believing it could start to bubble.

MAJOR UPGRADE: Chinese AI startup DeepSeek released a major upgrade to its V3 large language model, intensifying competition with U.S. tech companies OpenAI and Amazon (AMZN)-backed Anthropic. The latest model demonstrates major improvements in areas such as reasoning and coding capabilities compared to its predecessor, according to the report. DeepSeek is a Chinese-built large-language open-source model that claims to rival offerings from Microsoft-backed (MSFT) OpenAI’s ChatGPT and Meta Platforms (META) but using a much smaller budget.

GROWTH ACCELERATION: BofA double upgraded Cloudflare (NET) to Buy from Underperform with a price target of $160, up from $60. The firm identifies two catalysts underpinning growth acceleration. Bofa believes the company offers a differentiated approach to AI and it places a high probability on Cloudflare becoming the leader in AI-as-a-Service, which the firm expects will be the AI consumption method of choice for Enterprises. Cloudflare is gaining momentum in network security, particularly SASE, which should accelerate as firewall refresh cycles near and enterprises look to modernize with software-based security solutions. BofA thinks AI momentum and share gains in security could propel 3-year CAGR to 30% by 2028 versus its previous 25% growth estimate.

IPO FURTHER DELAYED: Cerebras Systems executives were hoping the Trump administration would wave through a national security review that has left the AI chipmaker’s IPO in limbo for months, Reuters’ Echo Wang and Alexandra Alper report, citing five sources familiar with the matter. Instead, the company’s highly anticipated listing has been delayed further as executives wait for the White House to fill key appointments and to wrap up the review by the Committee on Foreign Investment in the United States, said the people. Cerebras, a smaller competitor to industry leader Nvidia in the booming AI chip market, faces risks in going public without clarity on G42’s investment, two of the sources said.

NVIDIA CHIP FLOWS: Malaysia plans to tighten chip rules and says Washington demanded it track high-end Nvidia chips entering the country, over suspicions that many end up in China, violating U.S. export rules, The Financial Times’ Owen Walker and Alec Russell report. Trade minister Zafrul Aziz says he has formed a task force with digital minister Gobind Singh Deo to tighten regulations around Malaysia’s data center sector, which relies on chips from Nvidia. “(The U.S. is) asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips,” Zafrul told the Financial Times.