Even though there is a looming threat of future curbs, some Asian hedge funds are betting big on Chinese tech companies, according to Reuters. Companies such as Xiaomi and Baidu are increasingly favored due to their innovations in artificial intelligence. Global investors may have been holding back because of the US’s ban on advanced chip exports. Yet, many others are optimistic about the opportunities in Chinese firms and the AI products that they are developing. Their valuations are lower than their US peers, and their large language models have been demonstrating rapid advancements.
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Even industry insiders and technology analysts have told CNBC that Chinese AI models are gaining popularity. Many are keeping pace with, and even surpassing in performance, than those in the US. As such, artificial intelligence has become the “latest battleground” for China and the US. The US has been tightening its restrictions on China’s access to advanced chips used in AI because of national concerns. As a result, China has been focusing on carving its own path for boosting the appeal and performance of its AI models.
This includes relying on open-source technology and developing their own super-fast software and chips. Chinese companies are developing open-source, or open-weight, LLMs. Developers can download them and build on top of them for free without having to obtain stringent licensing requirements from the inventor.
“In the last year, we’ve seen the rise of open source Chinese contributions to AI with really strong performance, low cost to serve and high throughput”.
-Grace Isford, a partner at Lux Capital, told CNBC.
In the latest innovations in artificial intelligence technology, China’s leading search engine company Baidu has launched a text-to-image generation tool for its ad clients. The company also plans to release AI glasses early next year as well as inaugurate its robotaxi service outside mainland China. Timothy Wang, chief investment officer at Monolith, predicts China’s homegrown AI-powered products and services are poised to grow in the coming year.
Hedge fund manager Sean Ho, CIO of Triata Capital which manages $770 million in assets, said about Chinese advancements in AI:
“We are seeing breakthroughs in AI software, such as text-to-video generation and multimodal AI…The high rankings of Chinese AI models on open-source platforms like Hugging Face reflect their ambition to lead globally, a trend that is unlikely to be derailed by ongoing tech conflicts”.
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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A close up of a circuit board, its microchips creating a powerful computing system.
10. Stem, Inc. (NYSE:STEM)
Stem, Inc. (NYSE:STEM) is a global leader in artificial intelligence (AI)-enabled clean energy software and services. On December 17, the company announced that Mercuria Energy Trading, a leading global energy trader, is now using its AI-enabled PowerBidder™ Pro. The PowerBidder™ Pro is an advanced software platform designed to optimize the management and operation of clean energy assets. The move will allow Mercuria to support bidding management and optimization of a second clean energy in Texas within the Electric Reliability Council of Texas (ERCOT). The software was deployed in under 60 days, allowing Mercuria’s trading teams to take control of the asset. This is the second Mercuria asset being supported by Stem’s software since Q3 2024, which signifies Stem’s success through its advanced software solutions.
“Participants in today’s highly complex wholesale power markets need trusted, proven partners with solutions that deliver high levels of performance, flexibility, and control. Regardless of a customer’s return objectives, risk appetite, and energy trading capabilities, Stem’s PowerBidder Pro empowers them with fully configurable strategies in automated or manual bidding mode, accompanied by analytics and insights that inform future decisions. Stem is proud of the proven value we have already delivered to Mercuria and of our growing partnership as a result. We look forward to continuing profitable growth in ERCOT”.
-Cedric Brehaut, Senior Vice President of Product at Stem.
9. Tempus AI, Inc (NASDAQ:TEM)
Number of Hedge Fund Holders: 7
Tempus AI, Inc (NASDAQ:TEM) is a healthcare technology company that provides AI-enabled precision medicine solutions. On December 17, the company announced that the Centers for Medicare and Medicaid Services (CMS) will allow reimbursement for assessments of cardiac dysfunction using the Tempus ECG-AF algorithm. The ECG-AF is an FDA-authorized medical technology that will be impacted by the new CMS decision. The decision will allow hospitals to adopt Tempus’s technology for identifying patients at risk of atrial fibrillation/flutter (AF). Cardiovascular diseases are a leading cause of death around the globe, which is why it is crucial to identify patients at high risk for undiagnosed heart disease. Tempus ECG-AF provides clinicians with an AI-based clinical tool to help them be proactive about earlier disease identification and management.
“We are incredibly excited by this new Medicare ruling. This, combined with our FDA clearance earlier this year, has substantially lowered the barrier for clinicians to broadly adopt innovative technologies like ECG-AF to tackle undiagnosed cardiovascular disease”.
-Brandon Fornwalt, MD, PhD, Senior Vice President of Cardiology at Tempus.