OpenAI has previously been dependent on Nvidia for its chip supply, but it looks like it may not be for long. As reported by Reuters, the artificial intelligence startup is all set to develop its first generation of in-house artificial intelligence silicon.
According to sources, the startup is finalizing the design for its first in-house chip in the next few months. It then plans to send it for fabrication at Taiwan Semiconductor Manufacturing Co in a “taping out” process.
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This training-focused chip will be used as a strategic tool to strengthen OpenAI’s negotiating leverage with other chip suppliers. If all goes smoothly, the company will be able to mass-produce its first in-house AI chip and potentially test an alternative later this year.
Meanwhile, big tech companies have struggled to produce satisfactory chips over the years. Nevertheless, DeepSeek has raised questions about whether fewer chips will be needed in developing powerful models in the future.
Google DeepMind boss Demis Hassabis has recently dismissed DeepSeek’s claims that its popular chatbot and AI model is using far less money than US rivals.
DeepSeek “seems to have only reported the cost of the final training round, which is a fraction of the total cost.”
– Hassabis told Bloomberg Television
He also stated that DeepSeek’s emergence doesn’t upend the economics of AI development.
“We don’t see any new silver bullet technologies. DeepSeek is not an outlier on the efficiency curve.”
-Hassabis said at the Artificial Intelligence Action Summit.
The Chinese startup has reportedly spent around $5.6 million on computing costs to train its models. OpenAI and Microsoft are currently investigating these claims, searching if anyone tied to DeepSeek has obtained data from OpenAI through a process known as distillation.
According to Hassabis, DeepSeek seems “to have relied on some Western models to distill from”.
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.
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10. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 47
Fortinet, Inc. (NASDAQ:FTNT) is a cybersecurity company that provides enterprise-level next-generation firewalls and network security solutions, leveraging artificial intelligence across its cybersecurity products. On February 10, Susquehanna raised its price target for the stock to $110 from $90 and kept a “Neutral” rating on the shares. The firm has cited Fortinet’s solid Q4 driven by strength in its hardware business, and it is also positive about the growth potential from its upcoming refresh cycle. In particular, FortiGate firewalls, which are next-generation firewalls backed by FortiGuard AI-Powered Security Services, are expected to reach end-of-support status in 2026. Approximately 25% of Fortinet’s installed base—around 650,000 units—will reach end-of-support by 2026. The impending refresh cycle is anticipated to generate $400–$450 million in additional revenue from these upgrades over two years.
“FTNT reported a solid [fourth quarter] driven by strength in its hardware business, and management remains optimistic about the growth potential from its upcoming firewall refresh cycle. That said, the company expressed some caution with regards to the outlook due to tariff uncertainty and impacts of a new US administration taking over. While we like the company, its market opportunity, and large looming firewall refresh cycle, the risk/rewards appears balanced at current levels.”
-Analyst Shyam Patil wrote in a note to clients.
9. monday.com Ltd. (NASDAQ:MNDY)
Number of Hedge Fund Holders: 49
monday.com Ltd. (NASDAQ:MNDY) develops software applications globally, offering a cloud-based Work OS for creating work management tools. On February 10, the company reported financial results for its fourth quarter and fiscal year ended December 31, 2024. Not only did the company report better-than-expected results, but it also gave solid guidance as the firm’s artificial intelligence (AI) solutions helped boost demand. For fiscal fourth-quarter 2024, the company reported a revenue growth of 32% year-on-year to $268 million, beating the analyst consensus estimate of $261.37 million. Meanwhile, its adjusted EPS of $1.08 beat the analyst consensus estimate of $0.79. For full year 2025, the company has predicted revenue of $1.208 billion to $1.221 billion, with the midpoint above estimates of $1.208 billion.
“2024 was a remarkable year for monday.com, reflecting our rapid product innovation and focus on go-to-market execution, driving strong demand across customers of all sizes. We are proud to have further expanded our product suite with monday service, which is already seeing rapid adoption from both existing and new customers. As we look to 2025, we are excited to double-down on our AI efforts, with a focus on AI Blocks, Product Power-ups, and our new Digital Workforce of AI Agents. We believe AI can be a game-changer for our customers, giving them the ability to transform their workflows and scale faster than ever before.”
-monday.com co-founders and co-CEOs, Roy Mann and Eran Zinman.
8. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On February 10, Wedbush analyst Michael Pachter maintained their bullish stance on the stock and gave a “Buy” rating. The firm is optimistic about the stock considering its shift in mobile ad spending. In particular, Apple’s IDFA changes have been particularly helpful for Applovin, redirecting ad dollars towards mobile games. IDFA, or Identifier for Advertisers, helps advertisers target and track users in apps on iOS devices. These changes disrupted traditional mobile advertising, with Applovin figuring out a way by integrating data-driven strategies with robust AI and a focus on contextual advertising. In particular, the company’s AppLovin’s AI-powered ad technology, AXON 2.0, considerably boosted ad performance and doubled the number of installs compared to competitors without increasing overall spending. This allowed it to capture a significant share of the mobile games ad market. The firm further noted that Applovin’s financial outlook remains robust and that its software platform is seeing strong contribution margins. With potential expansion into e-commerce ads, there is room for additional revenue growth.
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 60
Cisco Systems, Inc. (NASDAQ:CSCO) is an American technology company that provides information technology and networking services. On February 10, the company announced its first, jointly developed AI agent from its strategic partnership with French artificial intelligence startup Mistral AI. This partnership product aims to lead Cisco’s Customer Experience (CX) towards an Agentic-AI-Led future. The “AI Renewals Agent” enhances and streamlines Cisco’s renewal proposal creation process by integrating both structured and unstructured data from over 50 signals and sources. It then provides real-time sentiment analysis, summarized recommendations, intelligent automation, and personalization. These are tied to customer outcomes and key performance indicators (KPIs). According to the company, the AI Renewal Agent could cut down renewal proposal and preparation time for customer engagement by as much as 20%.
“Mistral AI is a critical partner for Cisco Customer Experience (CX) as we build towards an Agentic-AI-Led future. In addition to cutting-edge AI technology, Mistral AI shares our mission to put the customer at the center of everything we do. The AI Renewals Agent is an important milestone and the first of many innovative solutions that we’re going to build together. The impact on our teams is also significant as we continue to look at opportunities to simplify and reduce friction in their jobs. By combining our large data set, customer trust and Mistral’s industry-leading technology, we are on our way towards shaping the future of customer and employee engagement.”
-Liz Centoni, Executive Vice President and Chief Customer Experience Officer, Cisco.
6. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity. On February 10th, TD Cowen analyst Shaul Eyal maintained their bullish stance on the stock, giving a “Buy” rating. Eyal’s buy rating stems from several factors, such as a major demand rebound for Palo Alto’s next-generation security solutions. Recent results from industry peers that reflect a strong market trend in the firewall refresh cycle have led to this optimism. Eval also believes that the company may benefit from increased hardware firewall demand which will add to its product revenue growth. Flextronics, Palo Alto’s outsourced production partner, has also witnessed growth in its data center business, supporting the demand surge. Federal spending uncertainties due to US administration changes have led to uncertainties, but Eval finds overall enterprise demand robust. Moreover, federal revenue, which accounts for a small portion of Palo Alto Networks’ total revenue, may decline but will be offset by enterprise customer gains.
5. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On February 10, Stifel Nicolaus analyst Stephen Gengaro maintained a “Buy” rating on the stock and decreased the price target to $474.00 from $492.00. Despite mixed fourth-quarter results and external uncertainties, Tesla’s future potential, particularly its strategic initiatives and innovations, has led the firm to maintain its buy rating on the stock. In particular, promising signs such as cost efficiency are a positive indicator of its future profitability. Moreover, the company plans on introducing a lower-priced vehicle in the first half of 2025 which could potentially expand its market reach. The expected launch of unsupervised Full Self-Driving (FSD) in Texas and its strong outlook for its Energy Storage division further add to Tesla’s long-term growth potential. At the same time, the firm has also cautioned about pricing pressures and low favorability ratings that may hamper short-term sales.
“Following mixed 4Q24 results, uncertainty caused by the Trump Administration, and TSLA’s low favorability ratings, we are modifying our estimates, maintaining our Buy, and reducing our target price to $474 from $492.”
4. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that has gained traction after the launch of its AI-powered platform called Agentforce. On February 10, TipRanks reported that Needham analyst Scott Berg has maintained their bullish stance on the stock, giving a Buy rating on February 6. Berg’s buy rating largely stems from the company’s strong demand and market potential. The firm noted that demand trends in Europe have begun to improve as economic conditions stabilize. This is evidenced by a key Salesforce partner who needed to double their workforce to meet rising demand, indicating growth potential. Interest in AI-powered Agentforce is also growing significantly, with partners beginning initial implementations. Despite implementations being pilot projects, the firm noted that there is enormous potential for expansion. This is particularly true given the strong applicability of Salesforce’s Revenue Cloud in sectors like high-tech. In addition, the company’s Revenue Cloud Advanced offers an advanced solution helping it capture new markets.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On February 10, Bloomberg reported that Hon Hai Precision Industry Co., the main supplier of Nvidia’s AI servers and the world’s largest assembler of Apple’s iPhones, has posted a 3% rise in January sales and reinforced its first-quarter outlook. The company reported a revenue of NT$538.7 billion ($16.4 billion) for January, albeit the performance was skewed because the week-long Lunar New Year break fell in January this year instead of in February in 2024. As a key player in AI infrastructure and Nvidia’s most important AI server maker, the company said that first-quarter sequential growth would be “better than the average level” of the past five years. However, it still faces uncertainty due to Trump-administration tariffs and questions about the sustainability of the AI boom.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On February 10, Phillip Securities analyst Helena Wang downgraded the stock to “Accumulate” from Buy with a price target of $270, up from $240. The rating follows Amazon’s fourth-quarter results on February 6th. The firm has cited valuation concerns after its recent price increase for the downgrade. However, it still believes that the company is well-positioned to benefit from generative artificial intelligence and cloud migration “as it is still in early stage.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On February 10th, Stifel Nicolaus analyst Brad Reback maintained a “Buy” rating on the stock and retained the price target of $515.00. While Reback’s rating comes from several factors, the highlight is Microsoft’s Azure AI Foundry, an integrated platform for Developers and IT Administrators to design, customize, and manage AI applications and agents. The firm sees it as a key differentiator for Azure, given that it offers a robust platform for integrating large language models (LLMs) into applications. The offering currently boasts around 60,000 customers, attracting more developers and applications. Additionally, Microsoft’s strategic investments in AI and application server innovations also place it strategically against competitors, ensuring its leadership in the AI space.
While we acknowledge the potential of MSFT 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
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