The emerging, cost-effective Chinese AI alternatives have prompted US President Donald Trump to say it is a wake-up call to Silicon Valley. He sees the launch of AI models like DeepSeek r1 and Qwen 2.5 as opportunities rather than threats, given that these innovations can help US companies drive down R&D and deployment costs.
However, the ongoing US earnings season continues to showcase strength in the AI space as companies consistently beat consensus estimates driven by revenues from AI segments.
Semiconductor manufacturers, satellite imagery, IT consultation, and cybersecurity firms continue to heavily integrate AI to reduce operational costs, introduce process transparency, offer global connectivity, and fortify data protection technologies for growth and optimal business productivity.
“The biggest lesson learned is we have to take the unintended consequences of any new technology along with all the benefits and think about them simultaneously – as opposed to waiting for the unintended consequences to show up and then address them,” Microsoft CEO Satya Nadella said at the latest World Economic Forum in Davos. “I don’t think the world will put up anymore with any of us coming up with something where we haven’t thought through safety, equity and trust – these are big issues for the world.”
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).
Close-up shot of a ticker board reflecting the companies stocks in the stock exchange.
10. Planet Labs PBC (NYSE:PL)
Number of Hedge Fund Holders: 8
Planet Labs PBC (NYSE:PL) is an Earth-imaging company with a fleet of imaging satellites that combines proprietary machine learning analytics to offer imagery data and insights to a wide range of companies and government agencies to help with climate monitoring, crop yield prediction, urban planning, deforestation, and disaster response. Planet Labs PBC (NYSE:PL) recently launched the world’s first global-scale AI-powered Forest Carbon Monitoring Product for forest monitoring that will leverage the company’s extensive imagery archive, global library of airborne LiDAR data, and AI processing capabilities to offer 3-meter resolution measurement of forests to support carbon markets, deforestation mitigation, and regulatory compliance.
On January 30th, Craig-Hallum upgraded Planet Labs (NYSE:PL) to “Buy” from “Hold” and raised the stock price target to $7 from $3.50. The brokerage highlighted the company’s 7-year, $230 million win, which it believes is heavily front-loaded and totally incremental. Analysts said this win opens the gateway for potential multiple material upward revisions to the 2025 model. Craig-Hallum added that this win closely follows the launch of the company’s next-gen satellite Pelican-2 on January 14th, which unequivocally validates the Pelican line at the caliber of a $230 million commitment.
9. Lloyds Banking Group plc (NYSE:LYG)
Number of Hedge Fund Holders: 10
Lloyds Banking Group plc (NYSE:LYG) is a leading financial institution offering various banking services across retail, commercial banking, insurance, investments, and pensions. The company has also embarked on a digital transformation journey, including its AI Centre of Excellence to enhance customer experience and trim operational costs.
On January 30th, Lloyds Banking Group plc (NYSE:LYG) named Magdalena Lis as the head of responsible development and use of AI, effective February 3rd. Lis holds a PhD in Computational Linguistics (AI) from the Centre for Language Technology at the University of Copenhagen and has authored research papers on AI systems transparency. With over 15 years of experience in AI, she will focus on using AI to improve the bank’s products while building guardrails and adequate controls for safe use and deployment across the institution. Lis most recently served as the Head of Analytics and Data Science at Toyota Connected Europe.
