Determined to lead the AI frontier, China is deploying every resource at its disposal and mobilizing every tool in its arsenal. In the latest news, Reuters has reported how the country is now planning to expand its undergraduate enrollments to prioritize what it called “national strategic needs” and develop talent in areas such as artificial intelligence (AI).
Several of China’s top public universities have announced these plans of expansion following the launch of artificial intelligence courses in February. The country recently experienced a “Sputnik moment” after an AI startup from within the country, DeepSeek, launched a cheaper and more efficient AI model which it claimed outperforms its Western counterparts.
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According to analysts, DeepSeek’s success is largely backed by researchers from elite domestic universities. This fact reflects how Beijing’s investment in building a large homegrown STEM talent pool and recent U.S. restrictions on Chinese student visas have enabled the country to catch up on the AI race.
“Scientific and technological innovation has contributed to China’s economic growth, with investment in high-tech industries increasing by 11.1 percent year-on-year from January to October 2022”.
– A report by People’s Daily
Innovation has also opened up new areas for China’s economic development, such as renewable energy vehicles, lithium batteries, and photovoltaic products. The country’s scientific and technological innovations have helped it garner global attention, and it looks like it is neck to neck in competition with its competitor, the United States.
Noting the country’s need for further advancement, Peking University recently said it would add 150 undergraduate spots in 2025, focusing on areas of “national strategic importance”, fundamental disciplines and “emerging frontier fields”. Meanwhile, Renmin University said it would add more than 100 places in areas such as AI to improve innovation.
Shanghai Jiao Tong University will also be adding 150 spots concentrating on “cutting-edge technologies” and emerging industries “urgently needed”, in AI, integrated circuits, biomedicine, healthcare and new energy.
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 portfolio manager in front of their computer screen, evaluating a variety of mid-cap stocks.
10. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 13
BigBear.ai Holdings, Inc. (NYSE:BBAI) is an artificial intelligence specialist that provides decision intelligence solutions. On March 7, Cantor Fitzgerald lowered the firm’s price target on the stock to $6 from $8 and kept an “Overweight” rating on the shares after it assumed coverage of the name. The analyst told investors in a research note that BigBear.ai’s top-line growth for Q4 has been “underwhelming”. It has also provided a lower-than-expected guidance, and federal uncertainty further adds as a reason to the lowered price target.
However, certain catalysts are driving a bullish outlook on the stock, such as the Pangiam acquisition to boost vision AI and the switch to target higher-margin commercial customers. An adjusted EBITDA gain and enhanced balance sheet flexibility are some other positives for the stock. To conclude, the firm believes BigBear.ai is well-positioned to establish itself as a leading AI/ML platform provider in the intelligence space, despite recent adjustments to the financial outlook.
9. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 17
XPeng Inc. (NYSE:XPEV) is a leading Chinese Smart EV company. On March 10, Citi upgraded the stock to “Buy” from Neutral with a price target of $29, up from $13.70. The firm upgraded the Chinese EV company due to robust volume growth for Xpeng. It lifted the company’s 2025 and 2026 volume forecasts from 260,000 and 330,000 units to 480,000 and 580,000 units, respectively, quoting strong order intake in February. The rating is also influenced by XPeng’s consistent efforts in the AI/Robotics field.
“Xpeng has expressed its commitment to the AI/Robotics field, and we see some upside risk to Xpeng if it achieves decent progress.”
Other factors have also led to a Buy.
“Upgrade to Buy considering strong volume growth in 2025/26E on robust order intake and new model launches, 2026E earnings turnaround and potentially extra growth drivers on AI/Robotics.”