In this article, we discuss 10 AI news you should definitely take a look at.
New AI Initiative Promises Jobs and Infrastructure Boost in the U.S.
President Trump announced a major investment initiative to advance artificial intelligence in the U.S., involving a joint venture called Stargate with OpenAI, SoftBank, Oracle, and the UAE’s MGX. Initially committing $100 billion, with potential growth of up to $500 billion over four years. The venture will focus on building large data centers, starting in Texas, and creating over 100,000 American jobs. The announcement was made at the White House, with SoftBank’s Masayoshi Son, OpenAI’s Sam Altman, and Larry Ellison in attendance.
The launch of the AI initiative has sparked a public dispute among major tech leaders. Elon Musk criticized OpenAI’s partnership with the project, questioned the financial backing of companies like SoftBank, and claimed they lack the necessary funds. Sam Altman of OpenAI quickly refuted Musk’s claim in a post on X.
READ ALSO: 10 AI News You Should Not Miss and 10 AI News Making Waves on Wall Street.
Additionally, CNBC reported that President Trump announced plans to fast-track the construction of power plants for artificial intelligence by using an emergency declaration. The plants would be exempt from climate targets and could use any fuel, including coal for backup power. The aim is to quickly meet the increasing energy demands of AI data centers, as power consumption is expected to rise significantly. While tech companies have focused on renewable energy, natural gas is expected to play a crucial role due to its reliability and faster deployment. Trump emphasized that the plants would connect directly to data centers, bypassing the traditional power grid.
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 You Should Definitely Take a Look At
10. Bit Digital, Inc. (NASDAQ:BTBT)
Number of Hedge Fund Holders: 6
Bit Digital, Inc. (NASDAQ:BTBT) offers cloud infrastructure services designed for AI applications, alongside its primary focus on digital asset staking and mining.
On January 21, Craig-Hallum initiated coverage on Bit Digital (NASDAQ:BTBT) with a Buy rating and a $6 price target. The firm highlighted Bit Digital’s acquisition of Enovum Datacenters and its move into GPUaaS as key steps in transforming the company into a more stable, cash-generating business. With its vertical integration in AI and HPC, the company is viewed as having significant untapped potential, as the market has yet to recognize its catalysts and the value of its assets. Craig-Hallum sees the company as a promising opportunity within the AI infrastructure sector, supported by its strategic changes and experienced management.
9. Cerence Inc. (NASDAQ:CRNC)
Number of Hedge Fund Holders: 10
Cerence Inc. (NASDAQ:CRNC) offers AI-powered virtual assistants and conversational AI solutions, including speech recognition and natural language processing, for the global mobility and transportation market.
On January 22, Needham upgraded Cerence (NASDAQ:CRNC) from Hold to Buy with a price target of $16 as the firm mentioned expected growth in price per unit (PPU) driven by new LLM-based voice assistants. The upgrade reflects strong management, effective debt handling, improved cash flow from deferred revenue, confidence in PPU increases, and a normalized contract balance by late 2026. Near-term operating expense estimates are viewed as conservative, and the valuation is deemed attractive. While the NVIDIA partnership extension is not a direct factor, it is expected to boost software capabilities in the short term and support long-term edge LLM strategies. The price target is based on a FY27 EBITDA estimate of $52 million.
8. Himax Technologies, Inc. (NASDAQ:HIMX)
Number of Hedge Fund Holders: 15
Himax Technologies, Inc. (NASDAQ:HIMX) provides display imaging processing technologies, including driver ICs, automotive IC solutions, and smart image sensing products for various industries worldwide.
In a post on January 22, TF International Securities analyst Ming-Chi Kuo wrote that Himax (NASDAQ:HIMX) is expected to see strong growth as the exclusive supplier of micro-lens arrays for TSMC’s COUPE FAUs, a technology crucial for AI and advanced computing. Revenue is projected to grow from $1.16 billion in 2026 to $2.4 billion by 2028, with EPS rising from $1.00 to $3.40. The first generation of COUPE has completed development, with mass production set for 2H26, while the second generation begins validation in 1H26.
COUPE is a key focus for TSMC, with companies like AMD and NVIDIA expected to adopt it for AI uses, including NVIDIA’s Rubin Ultra by late 2027. Himax is projected to ship millions of micro-lens arrays by 2028, benefiting from high demand and strong profit margins. Upcoming announcements may further highlight COUPE’s importance in advancing AI and computing technology. Ming-Chi Kuo wrote:
“Based on my recent supply chain checks, if there are no big production problems, FOCI will be the sole FAU (ReLFACon) provider for both Gen 1 and Gen 2 COUPE, and Himax is the exclusive supplier of the micro-lens array. The earliest a second supplier might enter the market would be for the Gen 3.”
7. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures high-performance server and storage systems, specializing in AI, cloud technology, and 5G applications.
On January 23, Loop Capital analyst Ananda Baruah increased its price target for Super Micro (NASDAQ:SMCI) from $35 to $40 while maintaining a Buy rating. The analyst Ananda Baruah highlighted SMCI’s importance in its sector and noted key catalysts like resolving SEC filing delays and growth opportunities as Blackwell GB200 and GB300 products gain momentum. The company is also expected to benefit as Tier 2 cloud service providers ramp up their activity heading into summer. Baruah further noted:
“Additionally, SMCI’s two largest customers have huge plans for 2025, and we believe it is inevitable that SMCI benefits. That said, we anticipate SMCI could experience a clunky 1HCY2025, at least until May/June when key Tier 2 customers begin getting GB200 allocation. That is to say, while we have conviction in our $40 PT, there is some possibility, given Blackwell ramp and Tier 2 purchasing patterns, that getting there isn’t a straight line. Our $40 PT is 10x–11x the $4.00 EPS we believe SMCI can be run-rating in 2HCY2025.”
6. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) creates, develops, and licenses CPU products, system IPs, and related technologies for various industries, such as automotive, IoT, and consumer electronics. Susquehanna raised its price target on Arm (NASDAQ:ARM) to $140 from $118, maintaining a Neutral rating. The firm updated its semiconductor forecasts and predicted a 6% decline in 2025 wafer fab equipment spending to $94B, followed by 6% growth in 2026. Wafer fab spending is expected to stay between $90B and $100B through 2026. However, the firm anticipates that increased test time and diversified end-market demand will support growth.
5. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 55
Equinix, Inc. (NASDAQ:EQIX) offers digital infrastructure services that ensure seamless connectivity and support AI-driven advancements for businesses. Scotiabank raised its price target for Equinix (NASDAQ:EQIX) from $985 to $1,114 and maintained an Outperform rating. The firm updated its earnings projections for companies in the TMT Infrastructure sector and showed optimism about data center stocks while remaining neutral on tower operators. Scotiabank anticipates strong growth in data center activity and strong performance in core leasing and capacity expansion in 2025, highlighting Equinix’s strong position to sustain its growth momentum.
4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 68
Intel Corporation (NASDAQ:INTC) designs and manufactures hardware for AI applications, including processors, accelerators, and solutions to enhance performance.
On January 21, HSBC upgraded Intel from Reduce to Hold with a $20 price target, saying the 26% drop in Intel’s stock since its Q2 2024 results has made it fairly valued. Analysts pointed out that issues like challenges with the IDM 2.0 strategy and the resignation of CEO Pat Gelsinger are already reflected in the stock price.
The firm expects Intel’s upcoming results to match expectations but sees a possible 9% drop in Q1 2025 revenue, more than the 6% expected by others, due to weaker performance in the data center segment. Concerns also remain about lower gross margins (38.5% vs. 39.1% expected) and uncertainty around Intel’s Foundry goals, which make the company’s recovery unclear.
3. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) specializes in wireless communication technologies and has heavily invested in AI, 5G, and IoT applications, influencing multiple industries.
DBS analyst Fang Boon Foo has reaffirmed a Buy rating on Qualcomm (NASDAQ:QCOM) with a price target of $215, as per a January 23 report by TipRanks. Qualcomm’s strengths include its focus on smartphone market recovery, AI-driven smartphones with its Snapdragon 8 Elite platform, and its entry into the AI-PC market through the Snapdragon X platform. The company is also diversifying into high-growth areas like automotive, IoT, and edge networking, reducing its reliance on the smartphone sector. A strong dividend policy, capital returns, and an extended partnership with Apple through 2026 provide stability and support a positive outlook, despite challenges like weaker smartphone demand and slower recovery in China.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) focuses on AI-powered solutions, providing platforms for data centers, autonomous vehicles, robotics, and cloud services.
Nvidia is expected to play a central role in Project Stargate, a $500 billion AI infrastructure initiative announced by the Trump administration, which will span the next four years. According to UBS, the project will heavily rely on Nvidia’s compute and hardware solutions, potentially extending its growth trajectory beyond 2026. Key partners in the initiative include Microsoft, ARM, Oracle, Softbank, and OpenAI, with Nvidia positioned as a critical technology provider. While addressing concerns about peak compute demand, the project highlights Nvidia’s strategic importance in AI infrastructure. UBS maintains a Buy rating on Nvidia with a $185 price target.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) provides a range of AI-powered solutions, such as cloud services, productivity tools, and business applications, to enhance operations and security, while making significant investments in AI development.
On January 22, Jefferies analyst Brent Thill maintained a Buy rating on Microsoft with a price target of $500. He believes the company’s expectations for 10% year-over-year growth in Q2 are achievable, even with tougher comparisons to last year. Despite the stock being down since Q1, Thill sees growth potential, especially with Azure, M365 Copilot, and strong capital spending. He remains positive on Microsoft’s long-term prospects and AI developments and the price target of $550 represents about 36 times the company’s expected earnings in FY26.
While we acknowledge the potential of Microsoft Corporation (NASDAQ:MSFT) 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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