With so much happening in AI, keeping up with the latest news can be challenging. Every day, a new country emerges with its plans to embrace and advance in AI, tech companies keep unveiling new AI products, and industry leaders continue to shape the conservation-sometimes even with sharp exchanges.
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In the latest news, South Korea has announced plans to secure 10,000 high-performance graphics processing units (GPUs) this year. The country plans to keep itself relevant in the race toward artificial intelligence.
“As competition for dominance in the AI industry intensifies, the competitive landscape is shifting from battles between companies to a full-scale rivalry between national innovation ecosystems”.
-South Korea’s acting President Choi Sang-mok said in a statement.
These 10,000 GPUs will be secured through public-private cooperation to help the country launch services at its national AI computing center early. While the US government has recently announced a new regulation that aims to restrict the flow of American AI chips and technology to certain countries, South Korea doesn’t fall into the restricted list.
The details of the type of GPU products to be purchased by South Korea, its models, and other particulars will be finalized by September of this year. The US regulation has essentially divided the world into two tiers. 18 countries are essentially exempt from the restrictions, while 120 face caps, and countries such as Iran, China, and Russia are barred completely.
In other news, tech mogul Elon Musk has released its latest artificial intelligence model, Grok 3. According to Musk, the AI model can outperform offerings from OpenAI and China’s DeepSeek based on early testing. This testing included standardized tests on math, science, and coding.
“We’re very excited to present Grok 3, which is, we think, an order of magnitude more capable than Grok 2 in a very short period of time”.
-Musk said at a demonstration of Grok 3 on his social media platform X.
Musk’s team also said it was launching a new product called “Deep Search”, set to act as a “next generation search engine.”
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among 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).
An investor poring over the Wall Street Journal, undecided on their next move.
10. Informatica Inc. (NYSE:INFA)
Number of Hedge Fund Holders: 22
Informatica Inc. (NYSE:INFA) is a leader in enterprise AI-powered cloud data management. On February 14, Cantor Fitzgerald analyst Thomas Blakey lowered the price target on Informatica the stock to $18.00 (from $29.00) and maintained a “Neutral” rating. The price target has been reduced due to Informatica’s AI-driven cloud modernization deals and the impact of changes in contract renewal terms on revenue.
Blakely noted that even though these cloud modernization deals increased in the last quarter, constituting over one-third of new cloud bookings in Q4, they have led to a decrease in net new Annual Recurring Revenue (ARR). The company has also faced a greater reduction in the renewal term length for on-premises self-managed contracts.
“Management saw a re-acceleration of cloud modernization deals this Q, and the modernization deals was significantly higher than expected. Modernization deals were over one third of new cloud bookings in Q4 compared to the mid-20s in prior quarters resulting in lower net new ARR (accounting)…Revenue was further impacted by greater than forecasted reduction in renewal term length for on prem self-managed contracts. This happening in Q2 causing mgmt to reduce revenue forecast at that time to reflect the trend, but in Q4 the average renewal term length continued to decline more than expected”.
-Cantor Fitzgerald
Additionally, Goldman Sachs, another investment firm that has downgraded Informatica (INFA) to “Neutral” from Buy with a price target of $20, noted that the accelerated shift from maintenance to cloud modality, despite demonstrating strong expansion once customers transition to Informatica’s AI-powered Intelligent Data Management Cloud (IDMC) has also led to a short-term reduction in net new ARR.
9. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 52
Twilio Inc. (NYSE:TWLO) is a leading cloud communications platform-as-a-service (CPaaS) company. On February 14, Bernstein SocGen Group updated its outlook on the stock. The firm increased the price target to $119 from the previous $82 and kept a “Market Perform” rating on the shares. Twilio has demonstrated considerable revenue growth, with double-digit increases for the first time in two years.
However, the guidance for the upcoming quarter suggests a slight dip in growth. Twilio has been facing challenges in its gross margins, which are lower than most SaaS businesses. Consequently, net income has been impacted due to thin margins which eventually led to missed consensus estimates. The firm has further noted that even though there is a significant opportunity in AI-driven demand, it is still in the early stages and will take time to materialize.
8. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 54
Baidu, Inc. (NASDAQ:BIDU) is a Chinese internet giant and AI pioneer, known for its noteworthy investments in artificial intelligence technology and its position as the dominant search engine within the country. On February 17, the South China Morning Post reported that Baidu said it wants to fully connect its search engine to DeepSeek and its proprietary Ernie large language model. The integration will allow for a “more diversified search experience”, the company announced. In a separate statement, the company also said that it will add DeepSeek to its LLM platform for developers.
7. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 56
International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products. On February 17, the company announced a collaboration with Penn State, a Pennsylvania-based, top-ranked public university. The collaboration will allow the development of MyResource, an AI-powered student concierge built with Watsonx, IBM’s portfolio of AI products.
Expected to launch in the fall semester to nearly 90,000 Penn State students, the gen AI-powered assistant will allow streamlined access to campus resources, such as academic advising, health and wellness, and financial aid. The need for the concierge was discovered after an analysis by the university student leaders, who identified how students needed improved access to campus services. IBM is also planning to bring this solution to other higher education institutions in the United States.
“IBM is honored to co-create a solution with Penn State that will play a significant role in its goal to advance engagement from students through an AI-infused assistant. Penn State students want quicker access to the important resources they need to be successful during their college experience and beyond. By integrating IBM’s AI, Penn State can unlock new possibilities for its students.”
-IBM General Manager, Public Sector Frank Attaie.
6. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 70
Arista Networks, Inc. (NYSE:ANET) develops, markets, and sells cloud networking solutions. On February 16, Morgan Stanley highlighted several overweight-rated stocks to buy ahead of earnings, including Arista Networks. Analyst Meta Marshall is standing by shares of the networking stock ahead of earnings on Tuesday.
“[The] company has beaten revenue by ~300-400bps over the last 3-4 years, about in line with buyside expectations into the quarter”.
-Meta Marshall
Still, she said that the fourth-quarter results are not likely to move the needle.
“Further multiple expansion” is on hold until the company shows a meaningful amount of new customers”
The firm did highlight Arista as having an underappreciated opportunity in the data center space.
“Our checks were incrementally more positive on networking this quarter, with data center an area of focus and expectations of gradual improvement throughout the year”.
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $120 implies a 12% upside, however, the Street-high target of $145 implies an upside of 36%.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company. One of the biggest analyst calls on Friday, February 14, was for Apple Inc. Goldman Sachs reiterated the stock as “Buy”, stating that it is optimistic about the company’s several upcoming product releases. On February 13, CEO Tim Cook revealed on social media site X that Apple will be launching a new product next week. Goldman Sachs said it may be a 4th-generation iPhone SE supportive of its artificial intelligence system, Apple Intelligence. On the same day, it was confirmed that Apple will be integrating Alibaba’s AI into its iPhone in China.
“While investor sentiment on AAPL remains negative given skepticism around Apple Intelligence, competition in China and the smartphone upgrade cycle, we are encouraged the by upcoming rumored product releases (i.e. iPhone SE 4th gen and updated MacBook Airs) which should help sustain demand amidst smartphone and PC refresh cycles, as well as AAPL’s efforts to address China smartphone competition with a more accessible price point ($499 rumored price) and AI features”.
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $254 implies a 4% upside and the Street-high target of $325 implies an upside of 33%.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On February 16, analysts at Morgan Stanley highlighted several overweight-rated stocks to buy ahead of earnings as the reporting season wraps up. According to the firm, it’s sticking with stocks like Nvidia heading into quarterly reports.
“While sentiment has worsened around potential longer term risks, near term business continues to firm, Blackwell supply visibility continues to build, customer desire to spend is clearly on display. … .We believe that NVIDIA should trade at a premium given its higher probability of upward revisions in the near term.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $175 implies a 26% upside from current levels.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On February 14, Bloomberg reported that Meta has hired the former chief executive officer of luxury goods marketplace The RealReal Inc. to expand its retail sales channels for Quest headsets, smart glasses, and other artificial intelligence wearables. Joining Meta as vice president of retail, John Koryl’s hire demonstrates Meta’s dedication toward investing in the retail experience for its AI products. Koryl will be reporting to Chief Technology Officer Andrew Bosworth.
“It’s no secret that products like Quest, Ray-Ban Meta, and AI wearables require a different kind of customer experience beyond the standard retail offerings. We see an opportunity to build more direct expertise in the space and then share what we have learned with all of our retail partners who will continue to drive the bulk of our sales volume.”
-Bosworth in a memo sent to employees.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On February 17, the company announced that it plans on spending PLN 2.8 billion by June 2026 to expand its hyperscale cloud and artificial intelligence (AI) infrastructure in Poland.
It will also be collaborating with the Polish National Defense to establish a framework to strengthen national cybersecurity. The investment will allow Poland to enhance its competitiveness by developing and adopting digital technology, support the growth of existing data center campuses, and expand Azure services to meet the demand of customers in the region.
“This is an investment in our future, our security, our youth, our startups, and our scholars. This is an investment that will provide Poles, especially the younger generation, with access to the most modern tools and opportunities offered by the best in the world. (…) This mutual trust and the fact that we can operate in the most challenging areas, such as cybersecurity. (…) Microsoft will also be conducting AI training in Poland. Tools, money, and investments are important, as is cooperation with our people and companies, but we will achieve the desired effects also by taking advantage of training opportunities. I am pleased to hear that the work on the Polish language model – Bielik – is progressing so well. It is not only a matter of aspirations but also something that indicates Poland’s importance in these processes and the high technical and intellectual skills of our staff – scientists and IT specialists”.
-Donald Tusk, Prime Minister of Poland.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com Inc (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On February 14, The Washington Post learned that the public release of the new Alexa, Amazon’s cloud-based voice service, has been delayed yet again. Even though the revamped version of the Alexa virtual assistant will be unveiled in New York later this month, the public release has been pushed back.
The said upgrade, known to be “smarter and more conversational”, was first announced back in September 2023 and was a work in progress. The new delay, however, is because the virtual assistant is giving incorrect answers to test questions. According to an employee who wants to remain anonymous, the new version of Alexa will not be available until March 31 or later. This is at least a year and a half after it was initially announced in response to competition from ChatGPT.
While we acknowledge the potential of AMZN 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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