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.
8. FiscalNote Holdings, Inc. (NYSE:NOTE)
Number of Hedge Fund Holders: 13
FiscalNote Holdings, Inc. (NYSE:NOTE) is a leading AI-driven enterprise SaaS technology provider of global policy and market intelligence solutions. On December 17, the company announced that its AI-driven local policy coverage has added its 5,000,000th (5 million) local policy document to its proprietary database. The database, covering more than 16,000 local governments and school districts across the U.S., helps organizations keep up with changing policies. This is done through Fiscal Note’s proprietary AI technology which collects, processes, interprets, sorts, and tags the vast range of unstructured data.
“Our AI-driven SaaS platform provides customers with immediate access to accurate policy information from thousands of local entities nationwide, and actively processes hundreds of thousands of documents in thousands of municipalities and school districts. This empowers customers to stay informed, take proactive action, and engage with key decision-makers effectively so they can influence positive outcomes benefitting their organizations. Our relentless focus on providing timely and actionable local policy intelligence is not only integral to enhancing our customers’ ability to navigate policy complexities, but also plays a critical role in driving our growth and success. By equipping organizations with these insights and tools, FiscalNote enables them to operate efficiently, mitigate risks, and seize opportunities in rapidly changing policymaking environments – especially those following national and local elections”.
– Josh Resnik, President & Chief Operating Officer, FiscalNote
7. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Holders: 29
Five9, Inc. (NASDAQ:FIVN) is a technology company that offers cloud software solutions for contact centers. On December 17, Needham raised the firm’s price target on Five9 to $52 from $48 and kept a “Buy” rating on the shares. The buy rating follows the firm’s review of Five9’s recently announced AI agent expansion within its AI Genius suite, the company’s comprehensive product suite that tailors AI applications to the company’s CX (customer experience) needs.
The company had introduced Five9 AI Agents, the next generation of Five9 Intelligent Virtual Agents (IVA) integrating Generative AI. The analyst told investors in a research note that these agents enable customers to transition from scripted and deterministic responses to more natural support sessions coupled with powerful AI reasoning to drive higher response resolution. The company can win in the AI contact center race over siloed point solutions, the analyst noted.
6. ON Semiconductor Corporation (NASDAQ:ON)
Number of Hedge Fund Holders: 45
ON Semiconductor Corporation (NASDAQ:ON) is a semiconductor manufacturing company that provides intelligent sensing and power solutions. On December 16, the company announced that it has strengthened its collaboration with tier-one automotive supplier DENSO CORPORATION. The enhanced relationship will support the procurement of autonomous driving (AD) and advanced driver assistance systems (ADAS) technologies. ON Semiconductor has been supplying DENSO with the latest intelligent automotive sensors for the last ten years. These semiconductors have played a crucial role in improving vehicle intelligence that helps reduce traffic accident fatalities.
“DENSO’s desire to work more closely with us demonstrates its confidence in our innovative capabilities, decades of expertise and supply resilience in automotive technologies”.
– Hassane El-Khoury, president and CEO of onsemi.
5. Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 47
Elastic N.V. (NYSE:ESTC) is a search AI company offering cloud-based solutions. The solutions enable users to bring in all kinds of unstructured data and quickly make the data searchable. On December 16, Morgan Stanley analyst Sanjit Singh initiated coverage of Elastic (ESTC) with an Overweight rating and a $130 price target. The analyst told investors in a research note that Elastic’s core end search market is “poised to accelerate”. This is because customers are modernizing search experiences and bringing in generative artificial intelligence early in their applications. Strong customer feedback and innovative developments position Elastic firmly to maintain its market share.
4. Juniper Networks, Inc. (NYSE:JNPR)
Number of Hedge Fund Holders: 47
Juniper Networks, Inc. (NYSE:JNPR) is a global company that provides AI networking, cloud, and connected security solutions. On December 17, the company announced that Port Huron Area School District (PHASD) has selected Juniper Networks’ AI-native wired and wireless solutions to modernize its network infrastructure with AI-native wired and wireless solutions. Juniper’s solution has allowed PHASD to keep up with the demands of digital learning while minimizing operator costs. Ever since PHASD implemented Juniper’s AI-native networking platform, it has improved its wireless stability, and classroom performance, and reduced troubleshooting time by 80%.
“It is essential for schools to embrace advanced technologies that significantly enhance learning while optimizing costs and operational efficiency. Juniper’s AI-Native Networking technology is at the forefront of this transformation, enabling PHASD to establish high-performance, secure network that provides seamless access to digital tools and resources. By leveraging AI, the district can strategically reallocate resources to innovative educational initiatives, thereby enabling student success and empowering educators to deliver innovative learning experiences.”
– Jeff Aaron, Group Vice President, Product Marketing, Juniper Networks
3. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 49
MongoDB, Inc. (NASDAQ:MDB) provides a general-purpose database platform worldwide that integrates operational, unstructured, and AI-related data to streamline building applications. On December 16, Rosenblatt initiated coverage of MongoDB with a “Buy” rating and a $350 price target. According to the analyst, MongoDB has positioned itself strategically amid the upcoming AI application boom. It stands to benefit from multiple trends, such as the overall growth of the database market and a shift from traditional relational databases to modern alternatives. The firm further added that the stock decline, which was largely due to a misunderstanding, is a good buying opportunity. The company’s shares were down after it posted its third-quarter fiscal earnings report, largely due to unimpressive results for its cloud database service called Atlas. It was anticipated that the key business segment should get a big boost from AI. Longtime chief financial officer Michael Gordon’s departure from the office may also have spooked investors.
2. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 70
Arista Networks, Inc. (NYSE:ANET) develops, markets, and sells cloud networking solutions. On December 17, Morgan Stanley analyst Meta Marshall raised the firm’s price target on Arista Networks to $118 from $102.50 and kept an “Overweight” rating on the shares. The firm noted that networking companies had “bifurcated performance in 2024”. Companies that were “AI enablers” did really well, with the trend anticipated to continue heading into next year. On the other hand, it is more cautious about service provider names, considering a recovery in the area is already anticipated and priced in. Arista’s advanced networking solutions are critical for AI workloads, and its collaboration with major technology companies, such as Meta, underscores the role it plays in building large-scale AI infrastructure.
1. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection. On December 17, a new product integration was announced between Crowdstrike and Salt Security, a leading API security company, to provide customers with detailed information about API-based attacks. It will combine the capabilities of the Salt Security API Protection Platform with CrowdStrike Falcon® Next-Gen SIEM, both of which incorporate artificial intelligence in their operations. Salt Security’s AI-powered platform detects and prevents API attacks. Meanwhile, Crowdstrike’s Falcon, which is also AI-driven, provides endpoint, identity, and cloud telemetry. Together, the integration will provide organizations with a comprehensive view of the modern attack surface and the ability to rapidly detect and respond to threats.
“APIs drive digital transformation and application modernization but also create unique security challenges. Our collaboration with Salt Security integrates their API threat intelligence with the Falcon platform, delivering actionable insights to help organizations of all sizes identify security gaps, understand their attack surface, and proactively secure critical assets”.
-Daniel Bernard, chief business officer at CrowdStrike.
While we acknowledge the potential of CRWD 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 CRWD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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