In this article, we discuss 11 AI news and ratings you shouldn’t miss.
DeepSeek has quickly gained attention in AI with its R1 model, which delivers high performance at a lower cost. The company has introduced innovations to improve efficiency and accessibility in AI development. DeepSeek’s fast growth, despite having a small team, shows the increasing trend of AI-driven businesses scaling with minimal human resources. Its success also shows the broader shift toward open-source AI models, especially in China, where competition is driving faster innovation and more cost-effective solutions.
UBS’s Insights on DeepSeek R1 and AI Investment Strategies
In a report posted by UBS on January 31, the UBS CIO analyzed the impact of DeepSeek’s R1 model on financial markets and AI investment strategies. The firm expects continued capital spending by hyperscalers, benefiting semiconductor companies, and recommended diversified exposure across AI’s value chain. The declining cost of training large language models is driven by algorithmic advancements and hardware improvements, with R1 increasing AI adoption. Hardware scaling also remains important alongside algorithmic progress to support AI infrastructure investments.
In addition, China continues to play a significant role in AI innovation, with companies like Alibaba developing competitive models. UBS maintained a positive view of Chinese internet firms due to their ability to offer customizable, cost-effective AI solutions. The firm also highlighted the rise of AI-driven startups, emphasizing investment in firms with proprietary data or strong customer retention.
Furthermore, the rapid development of AI software suggests prioritizing physical infrastructure investments over traditional software. AI’s ability to self-improve introduces unpredictability, leading UBS to recommend structured products for volatility exposure while avoiding non-physical assets lacking a competitive advantage.
UBS believes that despite fluctuations, AI investment remains solid, with major tech firms expected to increase capital spending in 2025. AI adoption is also rising, supporting cloud growth and monetization. While volatility may be there due to economic and regulatory factors, AI’s long-term outlook remains positive, with both high-cost and low-cost models expected to coexist.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 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).
11 AI News and Ratings You Shouldn’t Miss
11. Conduit Pharmaceuticals Inc. (NASDAQ:CDT)
Number of Hedge Fund Holders: 7
Conduit Pharmaceuticals Inc. (NASDAQ:CDT) is a clinical-stage life science company advancing Phase 2-ready assets using AI-driven development.
On February 7, Conduit Pharmaceuticals announced that it completed Phase I of its collaboration with Sarborg Limited and is now moving to Phase II, focusing on AI and cybernetics in drug development. Phase I involved aligning AI-driven processes with Conduit’s goals, validating proprietary inputs, and analyzing cocrystal candidates. The next phase will develop personalized software dashboards to improve efficiency, providing real-time data on clinical trials and drug discovery. The transition supports Conduit’s efforts to streamline drug repurposing, optimize solid-form identification, and improve clinical trial monitoring, especially in autoimmune disorders.
10. Open Text Corporation (NASDAQ:OTEX)
Number of Hedge Fund Holders: 17
Open Text Corporation (NASDAQ:OTEX) provides information management, cybersecurity, AI, and cloud-based solutions for businesses, supporting digital workflows, security, and automation.
On February 6, OpenText reported FQ2 non-GAAP EPS of $1.11, surpassing estimates by $0.18. Revenue reached $1.34 billion, a 13% decline year-over-year but exceeding expectations by $20 million. The company also marked its 16th consecutive quarter of organic cloud growth. The company management said that it is using AI and SaaS to improve content management, secure collaboration, and automated workflows. The company secured major SaaS deals with SAP, BASF, Aldi, and Munich Re last quarter.
It is also prioritizing its security business, with Muhi Majzoub, EVP of Cybersecurity Products & Services, now dedicated to this area. The new security cloud covers identity, applications, networks, forensics, and upcoming XDR capabilities, strengthened by a partnership with Microsoft Security Copilot on Azure. Recent SaaS wins include Nestlé, Frost Bank, and Capgemini. OpenText is embedding AI across its products, with Titanium X featuring 15 aviators and over 100 agents, and is aiming to evolve corporate roles with digital workers.
9. STMicroelectronics N.V. (NYSE:STM)
Number of Hedge Fund Holders: 18
STMicroelectronics N.V. (NYSE:STM) designs, develops and sells semiconductor products for automotive, industrial, and consumer applications worldwide.
On February 6, Bank of America downgraded STMicroelectronics to Neutral from Buy with a €23 price target, down from €29, favoring Infineon Technologies due to its strengths in AI server power management and automotive MCUs. The company’s management attributed weaker Q1 2025 revenue guidance to inventory corrections at major customers, Tesla’s market share adjustments, and lower capacity reservation fees. However, the company expects benefits from premium smartphone demand and MCU inventory stabilization later in the year. Cost reductions and manufacturing transitions are expected to improve margins from 2026 onward.
8. Synaptics Incorporated (NASDAQ:SYNA)
Number of Hedge Fund Holders: 23
Synaptics Incorporated (NASDAQ:SYNA) develops and sells semiconductor solutions for wireless connectivity, AI, touch and display technology, and biometric authentication across various industries.
On February 6, Synaptics reported Q2 non-GAAP EPS of $0.92, exceeding estimates by $0.06. Revenue reached $267.2 million, reflecting a 12.7% increase year-over-year and surpassing expectations by $1.61 million. The management discussed the company’s new agreement with Broadcom, improving its Edge AI strategy and strengthening its position in IoT connectivity. The deal expands Synaptics’ portfolio to include WiFi 8 and WiFi 7 combo devices, ultrawideband intellectual property, next-generation GPS/GNSS products, and combo front-end modules. The move secures the company’s wireless roadmap for over five years and broadens its market reach into AR/VR, Android smartphones, and consumer audio.
The company also highlighted a collaboration with Google to integrate Google’s MLIR-compliant machine learning core with Synaptics’ Astra processor line, focusing on high-efficiency AI solutions. Google’s partnership strengthens Synaptics’ position in Edge AI and is expected to drive innovation in AI model development.
7. Qualys, Inc. (NASDAQ:QLYS)
Number of Hedge Fund Holders: 27
Qualys, Inc. (NASDAQ:QLYS) provides cloud-based IT security and compliance solutions, helping organizations manage cyber risks and protect digital assets.
On February 6, Qualys reported Q4 results with non-GAAP EPS of $1.60, exceeding estimates by $0.23, and revenue of $159.19 million, up 10.1% year-over-year. The company introduced the Risk Operations Center for real-time cybersecurity risk management and highlighted strong MITRE ATT&CK results for its Endpoint Detection and Response solution. For Q1 2025, revenue is projected between $155.5 million and $158.5 million, with non-GAAP EPS expected to range from $1.40 to $1.50. Full-year 2025 revenue guidance is set between $645 million and $657 million, with non-GAAP EPS expected between $5.50 and $5.90.
Qualys management said that the company has expanded its platform from vulnerability scanning to a comprehensive risk analytics and quantification solution. The evolution enables seamless integration with existing security tools while providing full visibility, risk scoring, and AI-driven orchestration across an organization’s attack surface. Some major improvements in 2024 included the introduction of TruRisk Eliminate for extended remediation, improved asset management using patent-pending technology, and integration of the MITRE ATT&CK prioritization matrix for proactive threat response. The company also launched TotalAI to secure generative AI applications and strengthen its TotalCloud CNAPP platform with multi-cloud ITSM integration.
6. Onto Innovation Inc. (NYSE:ONTO)
Number of Hedge Fund Holders: 34
Onto Innovation Inc. (NYSE:ONTO) develops process control and metrology solutions for semiconductor manufacturing and advanced packaging industries. On February 7, TipRanks reported that Needham analyst Charles Shi reaffirmed a Buy rating on Onto Innovation with a $230 price target, due to strong growth prospects.
The company’s recent performance met expectations, and new NAND orders along with increasing demand for High Bandwidth Memory are expected to drive growth, especially in late 2025. While concerns over wafer fab equipment demand are still there, the report signals a positive shift, with only minor adjustments anticipated in 2025 estimates.
5. Lumentum Holdings Inc. (NASDAQ:LITE)
Number of Hedge Fund Holders: 36
Lumentum Holdings Inc. (NASDAQ:LITE) provides optical and photonic products for data transmission, cloud networking, AI, and industrial laser applications across multiple industries.
Lumentum reported FQ2 2025 non-GAAP EPS of $0.42, exceeding estimates by $0.06, with revenue reaching $402.2 million, a 9.7% increase year-over-year, surpassing expectations by $11.23 million. The company ended the quarter with $896.7 million in cash, cash equivalents, and short-term investments, a decrease of $19.4 million from the previous quarter. For Q3, Lumentum forecasts revenue between $410 million and $425 million, a non-GAAP operating margin of 9.5% to 10.5%, and EPS between $0.47 and $0.53, above the consensus estimate of $0.41.
The company exceeded revenue and earnings expectations in the second quarter, driven by strong demand from cloud customers and advancements in photonics technology. Lumentum is expanding its role in AI and cloud computing by scaling production, improving optical data transmission, and strengthening partnerships with cloud operators. The company reported record shipments of EMLs and began delivering 200G lane speed variants, positioning itself for future growth in AI-driven data centers. Despite challenges in the industrial tech segment, Lumentum remains focused on innovation, with expectations of continued expansion in cloud and networking.
4. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) designs and licenses CPU architectures, semiconductor technologies, and system IP for various industries worldwide. On February 6, TD Cowen analyst Krish Sankar maintained a Buy rating on ARM Holdings with a $200 price target, due to strong growth potential.
The company exceeded December quarter revenue guidance, driven by licensing and royalties. Future projections align with market expectations. ARM’s parent’s AI initiatives, such as Stargate and Cristal Intelligence, are seen as contributors to long-term growth, despite increased R&D costs.
3. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 44
Cloudflare, Inc. (NYSE:NET) offers cloud-based security, networking, and performance solutions for businesses across various industries worldwide.
On February 6, Cloudflare reported Q4 non-GAAP EPS of $0.19, surpassing expectations by $0.01, with revenue reaching $459.9 million, a 26.9% increase year-over-year, exceeding estimates by $7.78 million. Non-GAAP gross profit was $356.8 million with a 77.6% margin. For Q1 2025, Cloudflare projects revenue between $468.0 million and $469.0 million, below the $474.12 million consensus, and non-GAAP EPS of $0.16, missing estimates of $0.18. Full-year guidance forecasts revenue between $2.09 billion and $2.094 billion, with non-GAAP EPS of $0.79 to $0.80.
Co-Founder and Chief Executive Officer, Matthew Prince said that Cloudflare sees four main AI opportunities. First, like many companies, it is improving efficiency using AI, often using its own infrastructure. Second, AI makes its security and performance products better by detecting threats through machine learning. Third, Cloudflare Workers is emerging as a leading platform for AI applications, offering a cost-effective, serverless model for AI inference. The company’s AI Gateway also helps developers optimize costs. Finally, Cloudflare’s position between AI companies and content creators allows it to influence the evolving business model of the AI-driven web, shaping how content is managed and monetized.
2. Carrier Global Corporation (NYSE:CARR)
Number of Hedge Fund Holders: 45
Carrier Global Corporation (NYSE:CARR) provides HVAC, refrigeration, fire, security, and building automation solutions for residential, commercial, and industrial markets worldwide.
On February 6, Carrier Global Corporation introduced Carrier QuantumLeap, a suite of cooling solutions designed for the expanding data center industry. With the data center cooling market projected to hit $20 billion by 2029, Carrier is growing its portfolio with energy-efficient cooling systems, customizable aftermarket programs, and partnerships with global tech firms. The QuantumLeap suite offers integrated thermal management, combining direct-to-chip liquid cooling with HVAC systems, predictive maintenance, and AI-driven controls for improved efficiency and reliability. Carrier is also investing in liquid cooling through Strategic Thermal Labs, expanding manufacturing, and increasing engineering capacity to support rising demand.
1. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) develops and licenses wireless technologies, supplies semiconductor solutions, and invests in emerging tech industries globally.
On February 7, TipRanks reported that Benchmark Co. analyst Cody Acree reaffirmed a Buy rating on Qualcomm with a $240 price target, and highlighted strong financial performance and growth potential. The company posted record revenue in the December quarter, exceeding expectations, with strength in smartphones, IoT, and automotive. Qualcomm’s chipset business also saw strong year-over-year growth. Future prospects are also positive, which are supported by strategic partnerships, product innovation, and licensing deals with major Chinese OEMs. An exclusive supply agreement for Samsung’s Galaxy S25 and AI-driven opportunities further strengthen its market position.
While we acknowledge the potential of QUALCOMM Incorporated (NASDAQ:QCOM) as an investment, our conviction lies in the belief that 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 QCOM 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
