In the latest news in AI, SoftBank Group CEO Masayoshi Son said that he has agreed with OpenAI CEO Sam Altman to set up a joint venture in Japan. The venture will be offering artificial intelligence services to corporate customers. Known as SB OpenAI Japan, the joint venture will be owned by OpenAI together with a company established by SoftBank and its domestic telecoms arm. This move by Son’s company aims to deepen relations with OpenAI, which has been looking at investing around $15 billion to $25 billion in the company. The company has also committed $15 billion to Stargate, a joint venture with OpenAI and Oracle.
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With AI efforts such as the Stargate initiative and advancements coming from companies such as DeepSeek and Alibaba, the world of AI is shaking up and moving pretty fast. In response, OpenAI is considering a shift to its closed-source development approach. DeepSeek’s release of a lower-cost open-source AI model has led OpenAI to rethink how to move forward, as reported by Seeking Alpha on February 1st citing OpenAI executives’ comments during a Reddit “Ask Me Anything” event. CEO Sam Altman said during the event that OpenAI needs to “figure out a different open-source strategy”.
Altman further added that not everyone shares the same view and that figuring out the strategy is “not our current highest priority”. OpenAI Chief Product Officer Kevin Weil even said during the same event that the company was considering open-sourcing older AI models. Here is what Chief AI Scientist Yann LeCun on OpenAI models:
“DeepSeek has profited from open research and open source. … They came up with new ideas and built them on top of other people’s work,” LeCun wrote. “Because their work is published and open source, everyone can profit from it. That is the power of open research and open source.”
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.
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10. Knightscope, Inc. (NASDAQ:KSCP)
Knightscope, Inc. (NASDAQ:KSCP) is an innovator in robotics and artificial intelligence (“AI”) technologies in public safety. On January 31, the company announced that H.C. Wainwright & Co. has initiated coverage on it with a “Buy” rating and a 12-month price target of $16 per share. The report highlights several factors that have led to the buy rating, such as Knightscope’s repositioning for accelerating revenue growth into 2026 leveraging the company’s Machine-as-a-Service (MaaS) business model, strong industry tailwinds, and expanding market opportunities in the private and public sectors. The report also talks about new client acquisition and a steady flow of customer renewals, which the company reports almost monthly. The company recently deployed its first AI-powered K5 GOV robot, an autonomous security robot, for a U.S. government customer.
“Following strategic corporate and technology enhancements in 2024, Knightscope is now well-positioned for long-term revenue growth and margin expansion. As investors recognize the company’s path toward profitability and increasing free cash flow, demand for KSCP shares is expected to rise.”
-HC Wainwright report
9. MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 25
MicroStrategy Incorporated (NASDAQ:MSTR) offers AI-powered enterprise analytics software and services. On January 30, the company announced the latest release of MicroStrategy ONE®, a business intelligence platform that allows enterprises to gain rapid value from generative AI (GenAI) by personalizing the AI experience for each user. The company’s Auto AI bot enables a human-like conversational experience for users interacting with data. With the latest release, Auto will better understand ambiguous questions using context and past user interactions, as well as provide direct feedback which will allow Auto to tailor future responses. Moreover, there are more granular controls for developers and partners who wish to deploy AI bots within their applications.
“Last year we achieved a major milestone in natural language BI with our Auto AI bot – the ability for users to ask freeform questions and receive trusted answers from governed data. Each release of MicroStrategy ONE delivers increasingly powerful AI models, expanding the breadth and depth of questions Auto can reliably answer, along with greater transparency in how it generates the answer. Working with the top companies in the world drives us to push the boundaries of BI towards self-driving analytics that can transform a business.”
-Saurabh Abhyankar, Chief Product Officer at MicroStrategy.
8. Applied Digital Corporation (NASDAQ:APLD)
Number of Hedge Fund Holders: 26
Applied Digital Corporation (NASDAQ:APLD) is a technology company engaged in designing, developing, and operating digital infrastructure solutions and cloud services in high-performance computing (HPC) and artificial intelligence. On January 28, Compass Point analyst Joe Flynn initiated coverage of the stock with a “Buy” rating and a $10 price target. According to the firm, the risk-reward of signing a 100-400MW lease with a hyperscaler in 2025 is more attractive. In this regard, it believes that the company’s recent Macquarie Asset Management Equity Partnership will help get the lease “over the finish line.” Discussing the recent DeepSeek selloff, the firm said that it sees “an interesting opportunity to again buy into the stock to play the HPC datacenter lease signing catalyst”. It also added that the upside opportunity “looks binary based on whether APLD can sign a 400MW lease in 2025 or not.”
7. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 43
Teradyne, Inc. (NASDAQ:TER) creates automated test systems and robotic solutions. On January 31, Bank of America Securities analyst Vivek Arya reiterated a Sell rating on the stock and set a price target of $100.00. Several reasons impacting the company’s performance have led to the sell rating by the firm. To begin with, Teradyne reported a beat in Q4 sales and earnings but fell short in its Q1 guidance. This has revealed that it faces challenges in meeting its ambitious targets. The company is also dealing with macroeconomic weaknesses, notably in the smartphone and industrial automation sectors. The firm has pointed out limited opportunities in the rapidly growing AI compute and memory markets given its products aren’t utilized by major players like NVIDIA GPUs and Broadcom ASICs. Other concerns pointed out by the analyst include Teradyne’s continuing investments in the industrial automation sector which are capping its gross margins at 59-60% over the next four years. This is despite a sales growth target of 15% CAGR. Arya also highlighted that the company’s valuation is at a premium compared to its peers, with a 26x price-to-earnings ratio. This ratio is not justified by its limited growth prospects and model leverage.
6. 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 January 30, RBC Capital analyst Matthew Swanson raised the firm’s price target on the stock to $276 from $250 and kept an “Outperform” rating on the shares. According to the firm, IBM has had a solid quarter overall. In particular, three focal metrics stood out due to their strong outperformance, namely: free cash flow, GenAI bookings, and Red Hat growth. The analysts told investors in a research note that all three metrics came in above expectations whilst building momentum into 2025 with guidance for $13.5B in free cash flow.
5. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 64
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 January 30, Hewlett Packard Enterprise and Juniper Networks, Inc. responded to the filing of a complaint by the U.S. Department of Justice regarding the closing of HPE’s proposed acquisition of Juniper. The DOJ has sued to block the $14 billion deal, stating that it would stifle competition and lead to only two companies — Cisco Systems and HPE, who would end up controlling more than 70% of the U.S. market for networking equipment.
“We believe the Department of Justice’s analysis of this acquisition is fundamentally flawed and we are disappointed in its decision to file a suit attempting to prohibit the closing of the transaction. We will vigorously defend against the Department of Justice’s overreaching interpretation of antitrust laws and will demonstrate how this transaction will provide customers with greater innovation and choice, positively change the dynamics in the networking market by enhancing competition, and strengthen the backbone of U.S. networking infrastructure. Consistent with the conclusions reached by all other major antitrust regulators who have reviewed the deal, this transaction brings together two complementary networking offerings and will create a networking player with the scope and scale to more effectively compete with global incumbents. This proposed acquisition will provide customers of all sizes with a modern, secure network built with AI and for AI to ensure a better user and operator experience, and will create more competition, not less”.
4. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 90
Eaton Corporation plc (NYSE:ETN) is a global power management company offering electrical, aerospace, vehicle, and eMobility solutions. On January 31, Reuters reported that the company had forecast 2025 adjusted profit above Wall Street estimates. This is because it expects demand for electrical equipment to remain strong due to an AI-related data center boom. With companies racing to develop and adopt artificial intelligence, the demand for these data centers has risen dramatically. According to data compiled by LSEG, the company expects 2025 profit between $11.80 and $12.20 per share, with the mid-point higher than analysts’ estimates of $11.95 per share. Even amidst the DeepSeek frenzy, it is now being said that cheaper AI would mean it would be used in more AI applications. This would eventually translate to more energy needed to power AI data centers, AI-trained robots, electric vehicles, and more.
“Any notion [the data center] market will slow down is simply not consistent with the data”.
– CEO Craig Arnold on Eaton’s earnings conference call.
3. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Vertiv Holdings Co (NYSE:VRT) is a global provider of digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities. On January 30, Jefferies analyst Saree Boroditsky maintained a Buy rating on the stock with a price target of $145.00. According to the firm, the reaction to DeepSeek’s AI models was largely exaggerated and is a lucrative opportunity for investors to buy the stock. Even though these models are a step forward toward AI efficiency, there is still a need for large data centers, which the firm believes Vertiv is well-positioned to support. Scalable computing power and large data centers are a huge need, as supported by commentary from figures such as US AI czar David Sacks and AI infrastructure backing by political leaders like President Trump. Moreover, the competition to develop next-gen AI models will continue, fueling demand for more GPUs, power, and data centers. Hyperscalers will in turn require the latest technology, such as the more efficient GPUs, which will help sustain the demand for Vertiv’s solutions.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company known for its iPhones, iPads, and a range of other software, consumer electronics, and services. On January 31, Monness analyst Brian White maintained their bullish stance on the stock, giving a “Buy” rating. Its buy rating reflects both challenges and opportunities for Apple’s stock. To begin with, the company represents strong potential for innovation with its robust digital ecosystem. This is despite the company reporting a modest decline in iPhone sales and a less-than-terrific quarterly performance. The introduction of Apple Intelligence exemplifies its mark in the AI world, driving future demand and bolstering its competitive edge. Moreover, even though geopolitical and regulatory challenges have dented Apple’s revenue, there is hope that the increased demand for the iPhone 16 series in markets that have access to Apple Intelligence will allow recovery and growth. Other product segments such as Mac and Services have had a strong performance, which underscores the bullish outlook.
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On January 31, Jyoti Mann and Hugh Langley from Business Insider reported that Meta CEO Mark Zuckerberg told staffers to brace for an “intense year” ahead. Addressing several policy changes related to fact-checking and programs for diversity, equity, and inclusion, he emphasized a sense of urgency for the year. He also told the staff that he expects to have a clearer sense of the company’s trajectory by the end of 2025, particularly artificial intelligence.
“This is a marathon, not a sprint. But honestly, this year feels a little more like a sprint to me”.
– As reported by Business Insider.
Additionally, he predicted that 2025 would be the year its “highly intelligent and personalized” digital assistant reached 1 billion users.
“I think whoever gets there first is going to have a long-term, durable advantage towards building one of the most important products in history,” Zuckerberg said, as reported by Business Insider.
He also said that this year may be when Meta starts seeing AI agents take on work, including writing software. Zuckerberg said it was “hard to know” whether this would eventually lead to job cuts, but even if it leads to some roles becoming redundant, it could lead to hiring more engineers who can leverage artificial intelligence to be more productive.
While we acknowledge the potential of META 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 META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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