The research preview of the latest GPT-4.5 model from ChatGPT creator OpenAI has been released. The preview, released for Pro users and developers worldwide, will also be expanded for access in the coming weeks. According to the company, it is their largest and best model for ChatGPT yet. It comes with an enhanced ability to recognize patterns, generate creative insights without reasoning, and also show greater emotional intelligence.
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The company stated that early testing has shown that GPT-4.5 seems more natural. The model’s broader knowledge base, enhanced ability to follow user intent, and greater “EQ” allow it to be better at writing, programming, and solving practical problems. The company also expects it to hallucinate less than other models.
OpenAI is currently sharing the model as a research preview to better understand its strengths and limitations. CEO Sam Altman has deemed it “a giant, expensive model,” revealing how the company ran out of GPU capacity to roll out to user tiers at the same time.
“We will add tens of thousands of GPUs next week … this isn’t how we want to operate, but it’s hard to perfectly predict growth surges that lead to GPU shortages”.
-CEO Sam Altman
Tencent has also launched an AI model to compete in the AI race. According to Tencent, the model has the ability to answer queries faster than the famous DeepSeek’s R1. Known as The Hunyuan Turbo S, the model can reply to queries within a second. This makes it unique from models such as the DeepSeek R1, Hunyuan T1, and other slow thinking models that need to ‘think for a while before answering”.
Tests have further shown how Turbo S’ capabilities have matched DeepSeek-V3 in fields like knowledge, math, and reasoning. The company has also highlighted the usage costs of the new model are many times cheaper than its previous iterations, signifying how DeepSeek’s open-source and low-pricing strategy has led other leading companies to follow suit.
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. The hedge fund data is as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A couple looking at stocks of companies in their portfolio in a financial advisor’s office.
10. SoundHound AI (NASDAQ:SOUN)
Number of Hedge Fund Holders: 21
SoundHound AI (NASDAQ:SOUN) is a voice artificial intelligence company offering voice AI solutions to businesses. On February 27, the company reported its financial results for the fourth quarter and full year 2024. It reported fourth-quarter revenue of $34.54 million, surpassing the consensus estimate of $33.69 million, whereas its adjusted loss of five cents per share beat analyst estimates for a loss of 10 cents per share.
Looking ahead, the company said it now expects 2025 revenue to be between $157 million to $177 million, as compared with previous guidance of $155 million to $175 million. Wall Street expected 2025 revenue of $165.3 million.
“We had a breakthrough year, expanding our leadership position in voice and conversational AI through major customer wins, expanded partnerships, groundbreaking generative AI innovation, and strategic acquisitions. As we move into the era of Agentic AI, we are uniquely positioned to capitalize on this evolving category. Together with our existing broad portfolio of voice-enabled AI solutions we can deliver even greater commercial impact.”
-Keyvan Mohajer, CEO and Co-Founder of SoundHound AI.
9. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 42
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On February 27, the company reported financial results for the fourth quarter and the full year ended December 31, 2024. It reported a revenue of $572.4 million, beating analyst estimates of $507.3 million by 12.8%. Meanwhile, adjusted EPS came in at $0.43, exceeding analyst estimates of $0.31, a 39.9% beat. Looking ahead, the company anticipates 2025 revenue of a range of $1.65 billion to $1.85 billion, versus the consensus of $1.69 billion.
“We are the solution of choice for powering AI, whether that’s large data centers that need reliable power now, or businesses that are going to use AI for productivity gains. Our proven solution is ready to be deployed at GW scale starting this year.”
– KR Sridhar, Founder, Chairman, and CEO of Bloom Energy.
8. Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 47
Elastic N.V. (NYSE:ESTC) is a search AI company offering cloud-based solutions. On February 28, Stifel analyst Brad Reback raised the firm’s price target on the stock to $140 from $132 and kept a “Buy” rating on the shares. The rating, issued after the company’s earnings print, highlighted how Elastic’s revenue beat expectations by more than 3% based on its broad-based strength across the portfolio. The firm stated that certain factors can position Elastic for relative outperformance, including improvement in go-to-market execution, strong consumption trends, the large and growing GenAI opportunity, and ongoing operational efficiency position.
7. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 77
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection. On February 27, Rosenblatt analyst Catharine Trebnick raised the firm’s price target on the stock to $450 from $385 and kept a “Buy” rating on the shares. The firm anticipates Crowdstrike to meet or exceed the Q4 revenue estimate of 22% year-over-year growth. Conversations with the chief information security officers in January and four resellers suggest that outage impact is now limited, and there is minimal customer churn. This is because customers are choosing to add modules to extend the terms of their contracts.
6. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 95
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On February 26, two short sellers, Fuzzy Panda and Culper Research published reports against AppLovin Corporation, claiming that it has been misrepresenting the benefits of its AI advertising platform. The following day, Wells Fargo commented that both company front-running Meta (META) campaigns and AppLovin-driven downloads are not fraudulent.
It further stated how Meta audits AppLovin technology to avoid channel conflict, and that AppLovin gets paid on partner revenue, not for downloads. The analyst also told investors in a research note that Meta is already aware of the potential channel conflict by bidding into MAX and has established safeguards for it. Wells Fargo also pointed out that AppLovin can’t generate revenue on fraudulent downloads since it primarily charges advertisers based on user spend. The firm kept an Overweight rating on the shares with a $538 price target.
5. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) is an internet giant that offers e-commerce services in China and internationally. On February 24, Citi analyst Alicia Yap maintained their bullish stance on the stock, giving a “Buy” rating. Several factors have led to the rating from Citi, particularly Alibaba’s strategic advancements in AI and the recent launch of the Qwen reasoning model, QwQ, on Qwen Chat.
This reasoning model not only highlights the company’s commitment to innovation in deep reasoning, but also underscores its announcement of a significant capital expenditure investment of RMB 380 bn over the next three years. This investment aims to capture AI opportunities more rapidly. Alibaba is further anticipated to maintain a competitive edge in the AI space through ongoing enhancements and future releases, which include the QwQ-Max version as well as smaller variants for local deployment.
4. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 161
Broadcom Inc. (NASDAQ:AVGO) is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets. On Friday, February 28, Wells Fargo analyst Aaron Rakers maintained a “Hold” rating on the stock and kept the price target at $230.00. The firm contends that even though it is optimistic about Broadcom’s role in AI infrastructure and networking, and that AI networking revenue and custom AI ASICs are expected to grow, certain concerns are hampering this optimism.
One such concern is Apple shifting to internally developed chips, which has the potential to impact Broadcom’s wireless revenue, since Apple is a major customer of Broadcom. In addition, while it is true that Broadcom is expected to gain from AI demand, a slowdown in non-AI semiconductors and uncertain future orders from major clients like Microsoft and Google contribute to a cautious outlook.
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 162
Salesforce, Inc. (NYSE:CRM) is a cloud-based CRM company that has gained popularity after the launch of its AI-powered platform called Agentforce. On February 26, Analyst Keith Weiss from Morgan Stanley maintained a “Buy” rating on the stock and kept the price target at $405.00. Weiss’s buy rating stems from Salesforce’s robust performance in key investor metrics. In particular, its current remaining performance obligations (cRPO) have grown at 11% on a constant currency basis, surpassing both the company’s guidance and investor expectations.
The growth implies a strong demand for the company’s offerings, the firm noted. Moreover, strategic initiatives such as Agentforce and DataCloud/AI offerings have gained substantial momentum, with more than 3,000 Agentforce transactions signed in the quarter and a significant increase in annual recurring revenue. These positive developments coupled with management’s focus on expanding operating margins and maintaining a solid growth trajectory contribute to the buy rating.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On February 26, Nvidia Corporation reported strong earnings and guidance for its latest quarter. Nevertheless, one Wall Street analyst ended up downgrading the stock amid concerns about DeepSeek. Summit Insights Group analyst KinNgai Chan downgraded the stock to “Hold” from Buy, citing concerns about less computing power needed for developing large language models and artificial intelligence (AI) applications.
“We believe risk-reward is no longer favorable for the stock due to persistent high whispers numbers and rumor of entry into the PC Client MPU market (referring to memory protection units). While we think the datacenter capex growth for the training market will continue to benefit NVDA, we believe the lower computing power requirement for inference while not evident today, will undoubtably have a negative impact to NVDA’s financial performance in the medium- to longer-term”.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
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 28, Bank of America Securities analyst Justin Post maintained a “Buy” rating on the stock and retained a price target of $257.00. Amazon holds a strong position in the AI and cloud computing sectors, and has achieved several milestones recently.
CEO Andy Jessy has also highlighted demand for AI capabilities, particularly through AWS, which has been growing despite chip supply constraints. With chip availability expected to improve later in the year, this demand is likely to accelerate further. Milestones the company has recently achieved include introduction of the AI-powered Alexa+ with over 100 GenAI features as well as the development of the new quantum computing chip named Ocelot. These strategic moves, combined with cost saving growth and growth potential, underscore Post’s outlook and buy rating for the stock.
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 time frame. 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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