The US is struggling to keep its technology within its borders, a goal that the US government and most of the country are determined to achieve to maintain dominance, particularly in AI. In this regard, ChatGPT maker OpenAI has recently complained that its competitors, including those in China, are using its work to advance in developing their own artificial intelligence (AI) tools.
READ NOW: These 29 AI Electricity and Infrastructure Stocks Are Crashing Due to DeepSeek News and 10 AI Stocks to Watch Amid the DeepSeek Buzz
Bloomberg reported that Microsoft, a major investor in OpenAI, is currently investigating whether any data belonging to the AI startup has been used in an unauthorized manner. White House “AI and crypto czar”, David Sacks, seems to agree with OpenAI’s allegations. Sacks suggested that DeepSeek may have used OpenAI’s models to get better, a process known as knowledge distillation.
“There’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models. I think one of the things you’re going to see over the next few months is our leading AI companies taking steps to try and prevent distillation… That would definitely slow down some of these copycat models.”
-David Sacks
Nevertheless, DeepSeek’s AI models demonstrate how previous sanctions and export controls by the US have failed to curb competition. Investment firm Morgan Stanley, speaking of the broad market reaction on Monday following the emergence of DeepSeek’s cheaper and more efficient AI models, stated that the consequence may be a reduced spending interest or even tighter export controls.
“The DeepSeek release highlights evolutionary innovations in AI, some of which may be deflationary. That said, the stock market reaction is probably more important than the cause and could bring further export controls or reduce spending enthusiasm”.
It must be noted here that the technology behind DeepSeek’s r1 model Wall Street is raving over isn’t new, but what is surprising is the claim that it has been developed cheaply, and also using less powerful chips.
“The takeaway is that there are many possibilities to develop this industry. The high-end chip/capital intensive way is one technological approach. But DeepSeek proves we are still in the nascent stage of AI development and the path established by OpenAI may not be the only route to highly capable AI.”
-Xiaomeng Lu, director of Eurasia Group’s geo-technology practice.
That said, the road ahead for AI development looks enticing, and AI scientists broadly agree that these new developments are a positive step for the industry as a whole.
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 image of a Wall Street trader working in a busy, fast-paced environment.
10. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 7
BigBear.ai Holdings, Inc. (NYSE:BBAI) is an artificial intelligence specialist that provides decision intelligence solutions for national security, digital identity, supply chain and logistics, enterprise operations, and manned-unmanned teaming in autonomous systems. On January 30, the company announced that it had been awarded a prime Indefinite Delivery/Indefinite Quantity (IDIQ) contract under the U.S. Department of Navy’s SeaPort Next Generation (SeaPort NxG) program. SeaPort NxG is the key contracting platform for the Navy. This contract will allow BigBear to provide its AI-powered solutions to the U.S. Navy and other federal agencies. In particular, the company will be offering systems engineering, process engineering, and specialized technology solutions under the SeaPort NxG contract. BigBear has been expanding its efforts in naval initiatives before this contract, including AI development for advanced autonomous surface vessels (ASV), computer vision for maritime situational awareness, and more.
“BigBear.ai is proud to build AI-powered solutions for the U.S. Department of Defense and federal agencies. This award reflects our continued dedication to our Nation’s defense efforts, and we are honored to contribute our capabilities to the critical missions of the U.S. Navy.”
-Kevin McAleenan, CEO of BigBear.ai.
9. Synaptics Incorporated (NASDAQ:SYNA)
Number of Hedge Fund Holders: 23
Synaptics Incorporated (NASDAQ:SYNA) develops and supplies custom-designed semiconductor solutions. On January 28, the company announced that it has accelerated its Edge AI strategy by signing a definitive licensing agreement with Broadcom. The agreement includes technologies such as Wi-Fi 8, ultra-wideband (UWB), Wi-Fi 7, advanced Bluetooth, and next-gen GPS/GNSS for the IoT and Android ecosystem. The strategic benefits of the deal include solidifying Synaptics’ leadership position for end-to-end AI Internet of Things (IoT) connectivity, securing its Veros™ wireless product roadmap, expanding its addressable market, strengthening its wireless team, and an expected $40+ million in annualized sales.
“Our wireless technology and capabilities are cornerstones of our success in IoT markets. We are now developing this expertise to enable ecosystems with centralized control and seamless connectivity to a rapidly growing array of Edge AI devices. Our platform history, proven track record, and strategy uniquely position us to integrate Broadcom’s technology and fully deliver on the potential of IoT connectivity”.
-Michael Hurlston, President and CEO of Synaptics.
