In this article, we discuss 10 AI news updates making waves on Wall Street.
The evolving space of AI has been a major focus these days, as experts and executives are weighing in on how it is reshaping the tech sector. From the rise of open-source models to the shift towards AI agents that perform tasks autonomously, AI is quickly transforming industries. Advancements in large language models are continuing to progress and companies are rethinking their strategies, with some seeing AI as a commodity and others exploring new ways to harness its potential. At the same time, regulatory shifts and market reactions to these technological developments, like the introduction of DeepSeek’s R1 model, are creating both opportunities and challenges for the future of AI in tech.
AI Investments and the Future of Tech Stocks
Financial Markets analyst, Fiona Cincotta recently discussed AI’s impact on tech earnings and the regulatory environment under the new Trump administration on Bloomberg Technology. She highlighted that AI continues to be the main focus for investors, who are eager to see returns from the significant investments made in the sector. The optimism surrounding AI has helped maintain high stock valuations, as investors expect the potential for cost reductions in the future. However, Cincotta noted a divergence between software and hardware companies, with software firms benefiting from fewer restrictions, while chipmakers could face challenges due to tariffs and export limitations.
When talking about regulation, Cincotta mentioned that a potential reduction in regulation under the new administration could benefit the tech industry, especially in AI, where regulation is still an open question. She suggested that decreased regulation would likely boost stock prices in the tech sector.
She also discussed investor expectations, especially the pressure to see results from AI investments. While AI spending is still seen as crucial, the recent unveiling of DeepSeek raised questions about the sustainability of such investments. Investors are optimistic for now, but as we approach mid-2025, they will expect stronger revenue streams and profit margins. She pointed out that some Big Tech stocks are under scrutiny, with investors looking for solid financial returns as a measure of success. Nevertheless, the Mag7 tech stocks remain a focal point for investor interest.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 AI News Making Waves on Wall Street
10. Cloudastructure, Inc. Class A Common Stock (NASDAQ:CSAI)
Number of Hedge Fund Holders: N/A
Cloudastructure, Inc. Class A Common Stock (NASDAQ:CSAI) offers a cloud-based security platform with AI-driven surveillance, remote guarding, and flexible pricing to provide proactive, real-time crime prevention and reduced ownership costs.
On February 6, Cloudastructure announced that it is expanding its salesforce to meet the rising demand for its AI-powered video surveillance and security solutions. The move is part of the company’s strategy to strengthen its position in the security market, especially in industries such as multifamily properties and large commercial sites. The expanded team will focus on engaging businesses and property managers, educating them on the benefits of Cloudastructure’s AI surveillance and remote guarding services, and helping clients adopt tailored security solutions.
9. Direct Digital Holdings, Inc. (NASDAQ:DRCT)
Number of Hedge Fund Holders: N/A
Direct Digital Holdings, Inc. (NASDAQ:DRCT) offers an advertising platform that optimizes campaigns and provides solutions for underserved markets, focusing on small and mid-sized businesses.
On February 6, Direct Digital Holdings (NASDAQ:DRCT) launched an AI Council to support small and mid-sized businesses (SMBs) in using AI for digital advertising. The council aims to bridge the AI gap between large corporations and smaller enterprises by providing education, strategy development, technology implementation, and performance monitoring. It will offer workshops, practical guides, and free eBooks to make AI more accessible to SMBs. The initiative will also collaborate with experts to ensure the latest AI innovations are available to improve the competitiveness of smaller businesses in the digital advertising space.
8. Richtech Robotics Inc. (NASDAQ:RR)
Number of Hedge Fund Holders: 1
Richtech Robotics Inc. (NASDAQ:RR) manufactures, and sells robotic solutions for automation in industries such as hospitality, healthcare, and retail.
Richtech Robotics (NASDAQ:RR) announced that the grand opening of Clouffee & Tea at Town Square, Las Vegas, will take place on February 9, 2025. It marks the debut of the company’s AI-driven food and beverage brand, featuring its robot barista, ADAM. ADAM is powered by NVIDIA AI and can interact with customers, take verbal orders, and craft beverages with precision. Richtech Robotics’ President, Matt Casella said:
“Today’s announcement is a major milestone for Richtech Robotics, marking the official launch of our innovative food and beverage brand, Clouffee & Tea. This grand opening highlights our ability to leverage AI-powered robotics to drive real revenue in the hospitality industry, setting a new standard for automation in customer experiences.”
7. Coeptis Therapeutics Holdings, Inc. (NASDAQ:COEP)
Number of Hedge Fund Holders: 4
Coeptis Therapeutics Holdings, Inc. (NASDAQ:COEP) develops innovative cell therapies for cancer, autoimmune, and infectious diseases, with a focus on immunotherapies and CAR T technologies.
On February 6, COEPTIS (NASDAQ:COEP) successfully raised an additional $5.7 million in its Series A Preferred Offering, bringing the total amount raised in the round to $10 million. Led by CJC Investment Trust, the financing includes a convertible Series A Preferred with shares priced at $8.00 each and a 15% equity interest in COEPTIS’ subsidiaries, SNAP Biosciences Inc. and GEAR Therapeutics Inc. The funds will be used to strengthen the company’s balance sheet, repay obligations, and support corporate purposes, with a focus on integrating AI and automation to improve research and operational processes.
6. DarioHealth Corp. (NASDAQ:DRIO)
Number of Hedge Fund Holders: 4
DarioHealth Corp. (NASDAQ:DRIO) offers digital health solutions with personalized interventions for chronic conditions, including diabetes and hypertension. On February 6, DarioHealth (NASDAQ:DRIO) secured a new agreement with a Blue Cross Blue Shield health plan, expanding its presence in the health plan market. The program was launched in January 2025, and it provides members with access to Dario’s AI-driven health coaching and monitoring tools for diabetes, hypertension, and weight management. The deal is already contributing to the company’s recurring revenue and is expected to grow throughout the year.
5. FormFactor, Inc. (NASDAQ:FORM)
Number of Hedge Fund Holders: 25
FormFactor, Inc. (NASDAQ:FORM) designs and manufactures testing and measurement systems for semiconductors, including probe cards, metrology systems, and thermal solutions.
On February 5, FormFactor (NASDAQ:FORM) reported Q4 non-GAAP EPS of $0.27 and revenue of $189.5 million, both missing estimates. According to management, the company’s results highlight contrasting market trends. The company benefited from strong growth in generative AI and high-bandwidth memory, which saw a 4x increase over 2023 and contributed $100 million in revenue. However, demand remained weak in high-volume segments such as client PCs and mobile handsets.
On February 6, B. Riley downgraded FormFactor (NASDAQ:FORM) to Neutral from Buy and reduced its price target to $34 from $64 after the company’s fourth-quarter results slightly missed expectations, while its first-quarter guidance came in weaker than expected. The firm pointed to sluggish demand for probe cards due to soft PC and smartphone markets, along with lower volumes impacting gross margins. Weakness in high-volume applications and Intel’s below-normal performance add to concerns, while new U.S. shipment restrictions are cutting China-related revenue by approximately $11 million quarter-over-quarter. The firm added:
“While progress on AMD-related qualifications could drive potential initial late-CY25 revenue and factors such as strong HBM share and cost control remain positives, confidence in near-to-intermediate-term revenue reacceleration and gross margin expansion has diminished. The urgency in pursuing new customers and cost reductions is evident, but further end-customer uncertainty leads us to implement a -20-25% CY25 and CY26 EPS cut from prior estimates. This creates a more opaque path to the target of $800M revenue, 48.0% gross margin, and $2.00 EPS.”
4. Cellebrite DI Ltd. (NASDAQ:CLBT)
Number of Hedge Fund Holders: 30
Cellebrite DI Ltd. (NASDAQ:CLBT) provides digital forensics solutions for legally sanctioned investigations, offering tools for data collection, analysis, and management across several sectors, including law enforcement and enterprise services.
On February 6, Cellebrite introduced Generative AI capabilities within its Guardian evidence management platform which improve efficiency for law enforcement agencies. The AI-driven solution helps investigators quickly summarize and analyze large volumes of data, such as text messages, chat threads, and browsing histories, and provides insights into relationships and crime patterns. Cellebrite’s 2024 industry survey found that while AI-related crime is rising, most respondents see AI as a tool to combat crime.
3. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) develops and licenses semiconductor technologies, including microprocessors and system IPs, for different industries like automotive, computing, and IoT.
On February 6, UBS reiterated its Buy rating on Arm with a price target of $215, after strong December quarter results. The March quarter guidance aligns with UBS and consensus estimates. The main positives include AWS Graviton processors exceeding 50% market share, improved networking equipment sales, and accelerating demand for Compute Subsystems, which are now contributing to smartphone royalty growth. Arm is also set to benefit from the rise in custom ASICs for hyperscalers and continues to invest in growth, with AI driving expansion in major markets, especially in data centers and smartphones.
2. Dynatrace, Inc. (NYSE:DT)
Number of Hedge Fund Holders: 45
Dynatrace, Inc. (NYSE:DT) offers a security platform for multi-cloud environments, providing monitoring, analytics, and automation services to different industries.
On January 6, TipRanks reported that Koji Ikeda from Bank of America Securities reaffirmed the Buy rating on Dynatrace (NYSE:DT) with a $70.00 price target, driven by the company’s strong position in the $50 billion observability market. Ikeda highlighted the positive feedback from partners and customers at Dynatrace’s annual conference and noted that the company’s leadership reputation is expected to boost subscription revenue and free cash flow. He also sees potential in Dynatrace’s new On Demand Consumption metric, which is viewed as a predictable revenue stream. Additionally, the company’s focus on AI-driven growth strategies supports a favorable outlook for its medium-term prospects.
1. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) develops wireless technologies and offers integrated circuits, software, licensing, and strategic investments across various industries.
On February 5, Qualcomm reported Q1 non-GAAP EPS of $3.41, beating estimates by $0.44, and revenue of $11.67 billion, up 17.6% year-over-year, surpassing expectations by $770 million. For Q2, the company expects revenue between $10.2 billion and $11.0 billion, with non-GAAP EPS between $2.70 and $2.90, in line with consensus estimates. Qualcomm is optimistic about the growing AI opportunity, especially with on-device AI models like DeepSeek-R1, which are running on Snapdragon-powered smartphones and PCs. The company expects increasing demand for its platforms across a range of devices as AI inference moves to the edge. In handsets, the Snapdragon 8 Elite powers Samsung’s Galaxy S25 series, improving AI capabilities. Qualcomm’s design traction also extends to Chinese OEMs and PCs, with the Snapdragon X series showing significant growth. The company continues to expand in XR, IoT, and automotive, with notable collaborations, including with Meta.
While we acknowledge the potential of QUALCOMM Incorporated (NASDAQ:QCOM) as an investment, our conviction lies in the belief that 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 QCOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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