The United States’ lead in artificial intelligence technology has become questionable after the release of DeepSeek’s AI models. As a direct consequence, the US Commerce Department is now looking into whether the Chinese company used US chips that were not allowed to be shipped to China in the first place. Last week, DeepSeek’s AI model and its free assistant, which the company claimed used less data and power than US models, wreaked havoc in the tech world and resulted in a massive broad market sell-off.
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Investors began questioning the sustainability of the huge investments in AI made by leading tech giants and the significant power demand from power-hungry data centers. DeepSeek’s emergence led to worries that cost-effective AI solutions would erode market share and US tech companies’ profitability. Consequently, a rout sparked that wiped around $1 trillion off U.S. technology stocks.
DeepSeek has claimed that its chatbot performs on par or better than Microsoft-backed OpenAI at a fraction of the cost. However, a report published by NewsGuard has revealed that the chatbot achieved only 17% accuracy in delivering news and information. It further revealed that it repeated false claims 30% of the time and gave vague or useless answers 53% of the time in response to news-related prompts, raising doubts about the claims it initially made.
While clarity on these models is yet to be achieved, the current restrictions on companies such as Nvidia have been in place to stop the most sophisticated chips from reaching China and restrict the country from taking the lead in AI. According to a source reported by Reuters, however, organized AI chip smuggling to China has been tracked out of a few countries, including Malaysia, Singapore, and the United Arab Emirates.
In this regard, Singapore’s trade ministry noted that there is no reason to believe that DeepSeek obtained any export-controlled products from the country. It further noted that it has always upheld the rule of law and acted decisively against those who disobey the rules.
“We expect U.S. companies to comply with U.S. export controls and our domestic legislation. Our customs and law enforcement agencies will continue to work closely with their U.S. counterparts.”
– Singapore’s Trade Ministry
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A close-up of a digital circuit board with chips illuminated by LED lights.
10. ScanTech AI Systems Inc. (NASDAQ:STAI)
Number of Hedge Fund Holders: N/A
ScanTech AI Systems Inc. (NASDAQ:STAI) is a leading innovator of next-generation checkpoint security scanners. On February 3rd, the company applauded Canada’s recent efforts to reduce cross-border contraband and expressed hope to expand its presence in Canada by leveraging its AI-driven checkpoint scanning technology. The company’s AI systems are currently excluded from the recently announced cross-border tariff regimes, and it is anticipated that they will remain exempted due to the mission-critical nature of its technology and products. Following a $1.3 billion effort to strengthen US-Canadian border security, the Canadian government has announced the intent to purchase new checkpoint scanning and security equipment to secure North America against illegal border crossings and drug trafficking. ScanTech AI believes that its AI-driven checkpoint scanners will help to deter fentanyl at the borders and other critical infrastructure. The company estimates an appropriation of up to approximately $100 million (USD) will be needed to acquire the number of checkpoint scanners. This will lead to an estimated 120 legal land ports of entry between the US and Canada.
“We believe our CT scanning equipment will become one of the core tools in the effort to deter fentanyl at our borders and critical infrastructure, and we look forward to expanding our presence in Canada. In addition to our existing contracts to protect key components of Canada’s nuclear power infrastructure, we will also pursue emerging opportunities to deploy our CT scanning equipment along the US-Canada border.”
-Dolan Falconer, ScanTech AI’s Founder and CEO.
9. Airship AI Holdings, Inc. (NASDAQ:AISP)
Number of Hedge Fund Holders: 9
Airship AI Holdings, Inc. (NASDAQ:AISP) is a technology company that provides an AI-driven video, sensor, and data management surveillance platform in the US. On January 31, the company announced that it had been awarded a seven-figure, additional one-year system maintenance and sustainment contract with a Fortune 100 company. Airship AI will maintain and enhance the company’s security systems using its AI-powered Acropolis Enterprise Video and Data Management platform. Specifically established for law enforcement, military, and commercial enterprise organizations, the Acropolis platform provides public safety and operational efficiency by offering predictive analysis of events before they occur and vital intelligence to decision-makers. Customers can manage their devices and sensors across the digital ecosystem, leveraging AI to optimize operational efficiency and enhance real-time decision-making capabilities.
“Our follow-on expansion contract with this flagship customer is a testament to the Acropolis eco-system’s ability to enhance physical security at the scale needed for the large-scale operations of the world’s largest corporations. This allows the customer to continue to federate and manage global logistical operations from a single security operations center. The seven-figure contract includes ongoing health monitoring, technical and engineering support, and software maintenance, demonstrating the ability to provide revenue from a mix of professional services in addition to our traditional software and hardware offerings. With employee safety and operational efficiency a key mission for this global Fortune 100 company, we look forward to further developing our suite of AI driven offerings to create additional efficiencies and continual improvements to operational effectiveness”.
-Paul Allen, President of Airship AI.
8. Perion Network Ltd. (NASDAQ:PERI)
Number of Hedge Fund Holders: 21
Perion Network Ltd. (NASDAQ:PERI) is a global technology company that offers digital advertising solutions for brands, agencies, and publishers globally. On February 3rd, the company announced the launch of its “Perion One” strategy, unifying all its brands and technologies into one advanced platform named “Perion One”. The Perion One transformation will integrate artificial intelligence technology to simplify modern advertising and optimize the company’s cost structure. Customers will be offered an all-in-one solution to gain benefits such as greater customer retention, longer duration contracts, an increase in large-scale customers, increased recurring revenue per customer, as well as a more efficient business structure.
“Perion One represents a significant transformation for our company, which will unify our diversified brands and advanced technologies into one leading platform. Chief Marketing Officers (CMOs) and their marketing teams need seamless, nimble, and comprehensive solutions that can connect the dots across the media ecosystem, empowering them to deploy advertising dollars with confidence and report on actual impact – Perion One will be that solution. Perion’s growth is rooted in innovation – from the strength of our technological capabilities to our acquisitions of market-leading technologies. With Perion One, our customers will have access to the full breadth of our capabilities in one platform, and our sales leaders can reach markets with pre-existing relationships. Our new journey is just beginning, and we believe we will become a premier solutions provider in our industry, which will help us drive long-term value for all our stakeholders”.
– Tal Jacobson, Perion’s CEO.
7. Tower Semiconductor Ltd. (NASDAQ:TSEM)
Number of Hedge Fund Holders: 26
Tower Semiconductor Ltd. (NASDAQ:TSEM) is an independent semiconductor foundry. Its specialized semiconductor technologies fit the growing demands of AI applications. On February 3rd, Wedbush analyst Matt Bryson initiated coverage on the stock with an “Outperform” rating and a target price of $60. The firm said that it is bullish on the semiconductor company, specifically talking about the company’s recent outperformance, longer-term opportunities in specialty technologies, and its beneficial diversified geographical footprint. However, the firm sees some mixed near-term demand signals but the recent decline in valuation accounts for the risk. Overall, Wedbush is focused on TSEM’s longer-term growth opportunities.
6. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On February 3rd, the company announced financial results for the fourth quarter and fiscal year ended December 31, 2024. Palantir has had a strong quarter. The company posted adjusted earnings per share (EPS) of 14 cents, surpassing the consensus estimate of 11 cents according to data compiled by LSEG. Revenue also came in higher than expected, reaching $828 million compared to analysts’ projections of $776 million. Showcasing strong momentum, Palantir closed 129 deals of at least $1 million, 58 deals of at least $5 million, and 32 deals of at least $10 million. Besides the fourth-quarter beat, the company also provided better-than-expected guidance. It expects revenue of between $858 million and $862 million, ahead of an LSEG estimate of $799 million. For the full year, the company forecast sales of $3.74 billion to $3.76 billion, exceeding the $3.52 billion average estimate. Palantir’s Chief Revenue Officer Ryan Taylor told Reuters that the revenue is being driven by both new customers and the expansion of those customers with Palantir’s Artificial Intelligence Platform AIP. According to CEO Alexander Karp, there is an “untamed organic growth” in demand for its artificial intelligence software.
“Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution. Our early insights surrounding the commoditization of large language models have evolved from theory to fact. I would also like to congratulate Palantirians for their extraordinary contributions to our growth. They have earned every bit of the compensation from the delivery of their market-vesting stock appreciation rights (SARs).”
-Alexander C. Karp, Co-Founder and Chief Executive Officer of Palantir Technologies Inc.
Responding to queries regarding DeepSeek, Reuters reported that Karp has discouraged its clients from using DeepSeek, stating that U.S. government customers would be unable to use the Chinese company’s models.
5. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 44
Cloudflare, Inc. (NYSE:NET) is a cloud services provider that powers AI workloads through its Workers AI platform. On February 3rd, the company announced that it has launched a new, one-click solution for content creators and publishers that aims to preserve the digital history of an image. Users will be able to see how an image was created, and by whom, and even know about edits and resizes—across the Cloudflare network. These digital ‘nutrition labels,’ or Content Credentials, will allow creators to be credited for their work and consumers to be able to easily verify the origin and alterations of digital content. Users of Cloudflare Images, the company’s image storage and optimization solution, can choose to “Preserve Content Credentials,” and safeguard embedded, secure metadata across the entire global Cloudflare network. These transformations will be recorded using public key cryptography, and anyone can verify its digital history using the Adobe Content Authenticity Inspect tool.
“The future of the Internet depends on trust and authenticity. By integrating Content Credentials across our global network, we can help media and news organizations to verify authenticity and maintain ownership of their work, wherever it moves online. This isn’t just about securing individual images—it’s about giving publishers the tools they need to preserve trust and remain relevant in the age of AI.”
-Matthew Prince, co-founder and CEO, Cloudflare.
4. Talen Energy Corporation (NASDAQ:TLN)
Number of Hedge Fund Holders: 68
Talen Energy Corporation (NASDAQ:TLN) is a leading independent power producer and energy infrastructure company. On February 3rd, BofA initiated coverage of the stock with a “Buy” rating and a $253 price target. The analyst told investors in a research note that the firm is “bullish” on Talen’s opportunities from data center growth, particularly the lucrative AWS (AMZN) data center contract for the Susquehanna nuclear plant. Other two factors it is optimistic about are the newly proposed RMR rates and the prospect of higher power prices. Talen has reached a reliability-must-run (RMR) agreement with PJM Interconnection, which should provide “a secure and accretive revenue stream”. The contract could guarantee $110 million in revenues from May 2025 through 2029 once approved. Despite the competition and the new price cap, “higher prices would more accurately reflect market dynamics,” noted the analyst.
3. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 115
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology. On February 3rd, the South China Morning Post reported that Alibaba Group Holding’s cloud-computing services unit has now made DeepSeek’s artificial intelligence (AI) models available on its platform. This move follows similar ones made by other Big Tech companies to bring the Chinese start-up’s open-source systems to their clients.
“On [our] platform, users can achieve the whole process from training to deployment to inference with zero coding”.
-Alibaba Cloud said in a statement posted on WeChat.
According to Alibaba, the platform enables users to train, deploy, and use AI without coding. Users can log into its PAI Model Gallery to access DeepSeek’s models, DeepSeek-V3 and DeepSeek-R1, and deploy them to “power their own reasoning and text-generating applications”. The platform also provides so-called distilled versions of those models, such as DeepSeek-R1-Distill-Qwen-7B.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that has recently launched Apple Intelligence, its personal intelligence system. One of the biggest analyst calls on Monday, February 3rd, was for Apple Inc. Bank of America reiterated the stock as “Buy” with a $265 price target on Apple. The firm believes that the tech giant can survive the effects of U.S. President Donald Trump’s 10% tariff on Chinese imports considering that it has shifted its manufacturing of iPhone components to India. The firm estimates that 80% of the iPhones sold in the US could be sourced outside of China.
“Most iPhone models can now be manufactured in India,” said BofA analysts, led by Wamsi Mohan, in a Monday investor note. “As the new tariff is imposed on imports from China, Apple could have its manufacturing partners’ ramp up production in India and ship to the U.S. This could also be done for other Apple products that are manufactured in countries including Vietnam, Malaysia, etc.”
The firm remains a buy based on Apple’s stable cash flows, earnings resiliency, and the growing use of AI on edge devices, such as iPhones and iPads.
“Maintain Buy on stable cash flows, earnings resiliency & potential beneficiary of AI use on edge devices.”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On February 3rd, CMB International Securities analyst Saiyi He maintained a “Buy” rating on Meta Platforms with an associated price target of $835.00. The rating, issued after Meta’s strong Q4 results, was largely driven by developments in ad impressions and pricing, and further boosted by AI optimization techniques. Net income also rose significantly, 49% year-over-year, which is a reflection of favorable legal and restructuring cost adjustments. Looking ahead, the company’s management anticipates revenue growth of 8-15% year-over-year for Q1 2025, driven by investments in both artificial intelligence and its core business segments. Consequently, expenses and capital expenditures will also rise, in turn reflecting on Meta’s commitment and drive to advance its AI capabilities. Meta’s sustained growth in products such as Reels and Threads, together with new AI initiatives, further suggests potential for sustained long-term growth.
While we acknowledge the potential of META 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 META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
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