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Don’t Mind the Tariffs: 3 AI Penny Stocks to Watch in May

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Written by Timothy Sykes Fact-checked by Ellis Hobbs
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As Wall Street battles uncertainty from Trump’s renewed trade war and attacks on the Fed, AI stocks continue to defy the chaos.

The Nasdaq is down, the dollar’s tumbling, and Big Tech has had a worrying few months. But artificial intelligence — especially anything touching automation, quantum computing, or next-gen advertising — is holding strong.

Check out my main AI and quantum computing watchlist here!

We’re seeing breakout earnings, sector rotation, and short squeezes across some of the hottest AI names in the market.

When the market noise gets loud, you need to focus on what’s actually running. And right now, AI is still red hot.

Here are three tickers I’m watching closely right now — a mix of large-cap momentum and small-cap setups with explosive potential.

1. AppLovin Corp. (NASDAQ: APP) — Mega-Cap Trading Like a Penny Stock

Setup: Massive earnings beat, short seller pressure, AI ad tailwinds
Watch for: Consolidation after the earnings spike, as it sets up for the next push

AppLovin just reported EPS of $1.67 vs. $1.44 expected, and revenue up 40% year-over-year. Their ad segment spiked 71%, with EBITDA margins now at a staggering 81%.

Despite ongoing allegations from short sellers and concerns about Apple/Google compliance, the stock surged 17% post-earnings. Strong forward guidance only adds fuel.

Want to get ahead of these moves? Sign up for my NO-COST weekly watchlist here!

AppLovin’s pivot to ad infrastructure — especially in AI-driven programmatic targeting — has bulls loading up. Short sellers got squeezed hard. If the stock holds recent gains, this could grind higher into Q2.

2. Pony.ai (NASDAQ: PONY) — The Chinese Waymo That’s Just Getting Started

Setup: Autonomous driving AI breakout play
Watch for: Breakout above $12 with volume

Pony.ai shocked the market with a 170%* move after unveiling its new Toyota-powered robotaxi fleet in late April. This is a high-spec AI/autonomy combo with China exposure — meaning volatility, but also major upside if the sector rotation continues.

Now it’s partnering with Uber — and exploding.

The chart shows consolidation under the key $12 resistance. If the stock retests that level and breaks out, it could mirror past supernovas we’ve seen this year. Be careful — it moves fast — but if short sellers reload too early, it could squeeze again.

More Breaking News

3. Rigetti Computing (NASDAQ: RGTI) — Quantum Momentum Reboot

Setup: Sector sympathy play with multi-month support
Watch for: Trend continuation off $6–$7 support zone

Quantum computing remains one of the most misunderstood subsectors of AI — and that’s where the opportunity is. RGTI popped in March, pulled back, and now looks ready to rally again.

The stock has strong technical support in the $6–$7 zone. Now it’s back in the $10s.

If it reclaims key levels with volume, I’m watching for a trend-following opportunity. This is a pure momentum play — driven by narrative, not fundamentals. But that’s fine when the setup fits the pattern.

With renewed interest in AI infrastructure (thanks to easing chip export fears under Trump’s revised policy), names like RGTI and QUBT are sneaky contenders.

 

* Past performance isn’t indicative of future results

Sector Tailwinds: Why AI Stocks Are Holding Up

Despite the Fed uncertainty and tariff headwinds, there’s still major capital flowing into the AI space. Cathie Wood’s ARK funds just bought another 100,000+ shares of NVDA and AMD this week, betting on chip demand staying strong even if rules change.

And with Nvidia reporting May 28 and AMD riding a 57% surge in data center sales, traders are positioning early. AI is still viewed as the “next trillion-dollar wave” — and the speculative money is chasing the smaller names too.

Even as the broader indexes slide, AI is holding onto the kind of volatility that made my top millionaire student Jack Kellogg more than $4 million in profits in 2025!

Final Thoughts: Trade the Action, Not the Headlines

Don’t get distracted by macro chaos. Trump’s war on Powell and tariffs are shaking investor confidence, but that just makes hot sectors like AI even more attractive. Volatility is opportunity — if you’re prepared.

Focus on the charts. React to volume. Take singles. Ride the momentum, but respect the risk.

This is a market tailor-made for traders who are prepared. AI penny stocks thrive on volatility, but it’s up to you to capitalize on it. Stick to your plan, manage your risk, and don’t let FOMO drive your decisions.

These opportunities are fast and unpredictable, but with the right strategy, you can make them work for you.

If you want to know what I’m looking for—check out my free webinar here!

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”