Celestial AI™, creator of the Photonic Fabric™ optical interconnect technology platform, recently announced that it has raised an additional $250 million in venture capital, bringing its total raised to date to $515 million. The AI startup is working hard to crack a key speed constraint in artificial intelligence. Recently, it has tapped photonics, a technology that uses light in order to create speedy links between AI computing chips and memory chips.
The Series C1 funding round was led by Fidelity Management & Research Company, with new investors including funds and accounts managed by BlackRock, Maverick Silicon, Tiger Global Management and Lip-Bu Tan, as well as participation from existing investors including AMD Ventures, and Koch Disruptive Technologies (KDT), to name a few.
READ ALSO: 10 AI Stocks Trending On Wall Street Right Now and 12 AI Stocks Making Headlines: Latest News and Ratings
The photonic-based technology Celestial AI uses improves memory bandwidth, a key factor in AI performance. Currently, Nvidia reigns supreme in memory bandwidth due to its proprietary technologies called NVLink and NVSwitch. However, Celestial AI, like several other chip firms, is striving to come up with alternatives.
Celestial AI is developing a technology that can sit like a bridge between two or more chips, leveraging a different kind of photonics technology than its competitors. According to Celestial AI CEO Dave Lazovsky, the goal of this “photonic fabric, is to offer speed while saving space and power.
“There are no good answers right outside of Nvidia. What we had created with the photonic fabric does the same thing, but at a different level of energy efficiency and of latency.”
– Celestial AI CEO Dave Lazovsky
The Photonic Fabric technology by Celestial AI is fully compatible with industry standard manufacturing and 2.5D packaging processes. Through this funding, the company will be able to expand and qualify its volume manufacturing supply-chain to serve customer demand.
“Celestial AI’s Photonic Fabric is fundamentally transforming AI computing, networking and memory solutions by addressing critical infrastructure challenges with unmatched performance and energy efficiency. I have witnessed the innovative potential of their technology to unlock new capabilities and as a member of the Board of Directors, am proud to be on the Celestial AI team as they commercialize their ground-breaking Photonic Fabric platform.”
-Diane Bryant, Independent Director at Celestial AI and Broadcom Inc.
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 graph plotting the trends and performance of stocks on the public equity markets.
10. Synaptics Incorporated (NASDAQ:SYNA)
Number of Hedge Fund Holders: 27
Synaptics Incorporated (NASDAQ:SYNA) is a global developer and fabless supplier of premium mixed-signal semiconductor solutions that enable interaction with connected devices and data. On March 10, the company revealed that it has extended its award-winning Veros™ Triple Combo connectivity portfolio with the SYN461x family, a set of ultra-low power (ULP) wireless system-on-chips (SoCs).
The chips support Wi-Fi® 2.4/5/6 GHz, Bluetooth® 6.0 and Bluetooth Low Energy (BLE), and IEEE 802.15.4 (Zigbee®/Thread®), enabling seamless connectivity for wearables, smart watches, audio speakers and headsets, home appliances, security cameras, asset trackers, and factory automation.
“The SYN461x family is a breakthrough addition to our Veros portfolio. The SoCs are our first in a series designed from the ground up for ULP embedded Edge AI IoT applications. We believe their low-power architecture, software support, and low-density packaging extend our broad-market reach and position us to share in a ~$3.2 billion1 market opportunity.”
-Vineet Ganju, VP of Wireless Product Marketing at Synaptics.
9. Credo Technology Group Holding Ltd (NASDAQ:CRDO)
Number of Hedge Fund Holders: 43
Credo Technology Group Holding Ltd (NASDAQ:CRDO) provides high-speed connectivity solutions for Ethernet applications; serving hyperscalers, OEMs, and data centers. Analysts made a noteworthy call on Credo Technology Group Holding Ltd for Monday, March 10. Susquehanna, in particular, upgraded the stock to “Positive” from neutral, stating that it has upgraded the data infrastructure solutions company. The firm finds the stock’s valuation compelling.
“We initiated on Credo last December with a Neutral rating as we expressed concern around its rich valuation, despite its compelling AI networking story. With shares -50% off the peak and fundamentals strengthening, we are revisiting the story with an upgrade.”
8. Confluent, Inc. (NASDAQ:CFLT)
Number of Hedge Fund Holders: 49
Confluent, Inc. (NASDAQ:CFLT) operates a data streaming platform in the United States and internationally that allows organizations to continuously stream, connect, process, and manage data in real-time across various systems. On March 10, Loop Capital analyst Yun Kim lowered the firm’s price target on the stock to $30 from $34 and kept a “Hold” rating on the shares. The rating, issued after the company’s Investor Day presentation, illustrates the management’s confidence on Confluent being one of the best positioned software companies in the current age of AI. The price target reduction, however, reflects multiple compressions in the market and its software peer group over the past month.
7. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 60
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 March 10, the company announced that Mitsubishi Motor Sales of Canada has unveiled an innovative AI-powered tool designed to transform the customer experience for the new Mitsubishi Outlander 2025, an SUV by Mitsubishi. “The Intelligent Companion” is a first-time collaboration between WongDoody (an Infosys company and IBM ecosystem partner), Mitsubishi Motors Canada, and IBM.
It leverages the WatsonX portfolio of AI products from IBM and Mitsubishi Outlander 2025 data to offer a personalized, interactive 3D visual guide to the vehicle’s features, augmenting customer engagement during the purchasing decision. Meanwhile, WongDoody has developed the 3D visualization within “The Intelligent Companion” which demonstrates the vehicle’s features in an engaging and interactive way. Users will be able to experience the new Outlander in a real-world, Mitsubishi-branded environment.
“With the watsonx portfolio, clients can swiftly and efficiently integrate generative AI into their operations, leveraging their own enterprise data to help enrich customer experiences and boost productivity for the enterprise. Solutions like watsonx Orchestrate and watsonx.ai are designed to scale and accelerate AI impact, empowering businesses to transform how they go to market and become AI-first organizations.”
-Matt Sanchez, VP of product, watsonx Orchestrate at IBM.
6. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 64
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On March 10, it was announced that the company is expanding its partnership with Voyager Technologies (Voyager), a global leader in defense technology and space solutions. The partnership aims to develop AI-powered solutions for enhanced Space Domain Awareness, thereby facilitating the proactive mitigation of potential collisions and threats.
The system will integrate Voyager’s VPX signal processing electronics and chassis, signals intelligence software and mission services capabilities, along with Palantir’s AI/Machine-Learning engines, to enable space-based object detection, identification, classification and tracking. Palantir’s AI capabilities will allow Voyager to enhance its defense and national security solutions.
“We are deepening our partnership with Voyager to deliver the transformative capabilities required to maintain our national security. We are further extending the reach of our AI solutions from ground to space, a critical frontier where demands are intensifying as the environment grows increasingly contested.”
-Robert Imig, Head of USG Research and Development at Palantir.
5. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 66
Hewlett Packard Enterprise Company (NYSE:HPE), an American multinational technology company, provides high-performance computing (HPC) systems, AI software, and data storage solutions for running complex AI workloads. On March 7, Loop Capital lowered the firm’s price target on the stock to $16 from $24 and kept a “Hold” rating on the shares. The firm cites the price target downgrade to HPE’s Q1 earnings miss.
The analyst told investors in a research note how the gist of the earnings call and management outlook has been that there is margin pressure both in the form of selling price pressure with traditional servers, inventory, and tariffs. The analyst further contended that the Gen AI premium that HPE had enjoyed from the run up in the stock price from $15 to $25 has now “round-tripped.”
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 79
QUALCOMM Incorporated (NASDAQ:QCOM) develops wireless technologies, supplies chips for mobile, automotive, and IoT devices, licenses patents, and invests in emerging industries worldwide. On March 11, TD Cowen analyst Joshua Buchalter maintained a “Buy” rating on the stock and set a price target of $195.00. Analyst Joshua Buchalter focused on Qualcomm’s diversification strategy following a series of investor meetings in Europe, expressing optimism in the company’s ability to expand its business beyond the traditional handset market by utilizing its intellectual property in compute and connectivity.
The firm contends that Qualcomm is going in the right direction by leveraging its low-power and connectivity-focused product portfolio to tap into high-growth opportunities within the Internet of Things (IoT) and Automotive sectors. There are concerns over Qualcomm’s licensing segment, but these are outweighed by the company’s strong financials and anticipated benefits coming from Qualcomm’s diversification into new high-value markets.
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On March 10, Morgan Stanley kept an “Overweight” rating on the stock with a $430 price target. The analyst told investors in a research note that the stock is down from its December highs, and that this pullback is a buying opportunity for the “embodied AI compounder”.
The factors responsible for this pullback are poor sales data, negative brand sentiment, and market de-grossing, the analyst noted. However, several events could serve as catalysts for the stock, including the Austin robotaxi unveil scheduled sometime in June-August, the likely pull-forward of updated Federal rulemaking related to autonomous vehicle technologies, and an AI/Humanoid day showcasing the latest capabilities of Tesla’s Optimus.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On March 10, Citi analyst Atif Malik removed the firm’s “90-day positive catalyst watch” on Apple shares. The analyst has maintained a “Buy” rating on the stock with a $275 price target. According to the firm, the stock has been removed from the positive catalyst watch following Apple’s announcement that its “much anticipated” AI-powered Siri update as part of the iOS 18.4 update in April has been delayed.
The firm has also lowered its 2025 and 2026 iPhone units estimate to 232M and 244M, respectively, reflecting the delay in the Siri upgrade. Malik noted that even though Apple Intelligence utility is different for different people, an upgraded Siri may have driven a higher iPhone refresh this year. Nevertheless, Apple’s progress in rolling out Apple Intelligence in China has been noteworthy.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On March 10, UBS analyst Karl Kierstead reiterated a “Buy” rating on the stock with a $510.00 price target. The analyst, highlighting Microsoft’s recent performance dip, attributed it to a slowdown in Azure growth without AI. Even though the company has cited go-to-market (GTM) changes planned for mid-2024 as a factor, the lack of clarity around the root cause and resolution timeframe is impacting investor sentiment.
Microsoft sustains strong fundamentals despite these concerns. The analyst and his team also reached out to Microsoft channel partners to assess Azure sales deceleration in the second quarter of December, with feedback suggesting that the GTM adjustments around licensing, channel incentives, and account management may have been responsible. Regardless, the firm believes that Azure’s medium-term prospects remain strong.
While we acknowledge the potential of MSFT 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
