The moment of reckoning has arrived: China’s artificial intelligence industry has almost caught up with the US. Moreover, it is more open and efficient too. This is unlike the US’s strategy towards the nascent technology, which it wants to keep largely within its borders. To recap President Donald Trump’s first week in office, it is safe to say that the message towards the community has been simple: Build, build, and build.
When he came to office, Trump immediately rescinded Biden’s sweeping executive order on AI. While AI with fewer guardrails may be terrifying for some, it may be a possible way to expand into new territories and win the race toward AI. In light of this, Trump has recently signed an executive order related to AI to “make America the world capital in artificial intelligence”.
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The President has also announced a joint venture led by SoftBank Group Corp., OpenAI, and Oracle Corp. The “Stargate initiative” will fund billions of dollars worth of AI infrastructure. On the eve of taking office, President Trump said that he would allow “people with a lot of money” to invest in so-called “AI plants” that power data centers for artificial intelligence.
Trump’s actions signal the direction AI policy is going to take under his reign, particularly when it comes to competing with China. Meanwhile, both China and the US are doing everything in their power to win the AI race. Back in September, OpenAI released the world’s first reasoning model, o1, which used a “chain of thought” to answer difficult questions. Other companies soon followed suit. Google developed its own reasoning model called “Gemini Flash Thinking” in December and a few days later, o3 was born.
Keeping a close tab on these developments, China has recently made a mark of its own, igniting panic in Silicon Valley along the way. An AI lab, known as DeepSeek, unveiled a free, open-source large-language model in late December. According to the lab, it took only two months and less than $6 million to build the model, using reduced-capability chips from Nvidia called H800s.
Third-party benchmark tests have revealed how DeepSeek’s model outperformed Meta’s Llama 3.1, OpenAI’s GPT-4o, and Anthropic’s Claude Sonnet 3.5 in accuracy ranging from complex problem-solving to math and coding. If this wasn’t enough, DeepSeek, last Monday, released r1, a reasoning model that has outperformed OpenAI’s latest o1 in several of these third-party tests.
“To see the DeepSeek new model, it’s super impressive in terms of both how they have really effectively done an open-source model that does this inference-time compute, and is super-compute efficient. We should take the developments out of China very, very seriously”.
-Microsoft CEO Satya Nadella
DeepSeek’s r1 is particularly remarkable considering it also had to navigate the strict semiconductor restrictions that the U.S. government has imposed on China. These restrictions had cut the country off from access to the most powerful chips, like Nvidia’s H100s. The development also implies how the AI lab either found a way around the rules or, the controls were simply not as effective as anticipated. Does this mean that Trump’s stance toward fewer guardrails is the way to go? We are yet to find out.
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A close-up view of a computer motherboard with integrated semiconductor chips.
10. Arbe Robotics Ltd. (NASDAQ:ARBE)
Number of Hedge Fund Holders: 3
Arbe Robotics Ltd. (NASDAQ:ARBE) is a radar solutions provider for driver-assist systems and autonomous driving. On January 13, Roth MKM raised the firm’s price target on Arbe Robotics to $5 from $4 and kept a “Buy” rating on the shares. The rating, issued after meeting with management, demonstrated that the firm is bullish on the stock considering its recent partnership with Nvidia. The said partnership aims to augment Arbe Robotics’ AI-driven radar capabilities, progressing safety and autonomy in the automotive industry. Besides the partnership, the firm stated that Arbe Robotics has completed a registered direct offering and has strengthened its funding position “significantly”.
9. DigitalOcean Holdings, Inc. (NYSE:DOCN)
Number of Hedge Fund Holders: 22
DigitalOcean Holdings, Inc. (NYSE:DOCN) is a public cloud provider that can support AI workloads. On January 22, Cloudways, part of DigitalOcean Holdings, Inc., announced a suite of AI solutions known as Cloudways Copilot. The solutions aim to bring intelligent managed hosting to small and medium-sized businesses (SMBs). Cloudways Copilot will be helping digital businesses address website-related problems through the automatic detection, diagnosis, and support of the resolution of site issues in real time. Working up to four times faster, the solution reduces diagnoses and resolution times from over 45 minutes, to under 10 minutes as compared to manual intervention.
“Our customers have been at the heart of our AI adoption journey. When starting the process, we worked closely with them to understand their web hosting challenges, which uncovered a need for simplification. Our purpose-driven AI solution efficiently helps to solve the repetitive and time-consuming problems that distract clients away from managing their core business”.
– Suhaib Zaheer, SVP of Managed Hosting at Digital Ocean
