In this article, we discuss 12 AI news investors probably missed.
AI is evolving rapidly with recent breakthroughs making it more accessible and efficient than ever. Smaller, cost-effective models are emerging, which are challenging the idea that cutting-edge AI requires massive resources. DeepSeek seems to be a great example of that.
Moreover, Tech Crunch reported that barely a week after DeepSeek unveiled its R1 reasoning AI model, Hugging Face has launched Open-R1, a project to replicate and fully open-source DeepSeek’s R1 reasoning AI model, addressing concerns about its lack of transparency. While R1 has gained attention for its efficiency and top performance, Hugging Face aims to demystify its training process to promote responsible use and innovation. Using its Science Cluster, the team plans to recreate R1 and make it a foundation for future open-source models, emphasizing the collaborative benefits of openness in AI.
Rethinking AI Dominance in a Multi-Model World
At CNBC’s WorldWide Exchange, Zack Kass, an AI futurist and former Head of GTM at OpenAI, discussed the implications of a Chinese firm creating a GPT-4 equivalent model with remarkable efficiency. He highlighted how this reflects a shift from reliance on capital and scale toward innovation driven by necessity. Kass noted that while U.S. firms have benefited from abundant resources, China’s limitations spurred creative breakthroughs, such as building a competitive model at a lower cost.
He addressed skepticism about claims regarding the model’s development cost and chip usage and suggested that it is reasonable to assume the information is largely accurate. Kass also commented on the evolving role of national security in AI, emphasizing the private sector’s growing involvement. While a U.S. executive order aimed at restricting China’s access to chips may not have achieved its intended impact, it may have unintentionally fueled innovation.
Kass argued that the research behind AI models is becoming increasingly accessible, which could lead to more discoveries worldwide. He dismissed concerns over U.S. dominance in AI, framing this development as an opportunity for cheaper, widely available technology. On open source, Kass noted that the future likely involves a diverse ecosystem of models, rather than dominance by a single proprietary approach.
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).
12 AI News Investors Probably Missed
12. Nano Labs Ltd (NASDAQ:NA)
Number of Hedge Fund Holders: N/A
Nano Labs Ltd (NASDAQ:NA) is a Chinese company that designs computing chips and offers distributed computing, storage solutions, and vision computing technologies.
On January 28, Nano Labs (NASDAQ:NA) announced a strategic investment, acquiring a 5% stake in Hangzhou Weiheng Technology, a company developing AI-focused ASIC compute-storage chips for edge computing and large AI models. The chips are compatible with DeepSeek’s latest models. CEO Dr. Jianping Kong highlighted the growing adoption of AI across industries, driven by cost-performance optimization, and emphasized the potential for endpoint computing advancements in 2025. He expressed confidence in Weiheng Technology’s ability to capitalize on emerging opportunities and contribute to global technological progress.
11. Lichen China Limited (NASDAQ:LICN)
Number of Hedge Fund Holders: 1
Lichen China Limited (NASDAQ:LICN) is a Chinese company that provides financial, taxation, and internal control consulting services, along with educational support, training software, and maintenance for the accounting and finance sectors.
On January 28, Lichen China Limited (NASDAQ:LICN) announced plans to integrate the DeepSeek optimization framework into its Financial and Taxation AI Model by Q2 2025, with trials starting in March. The integration aims to advance AI performance in processing complex financial and taxation tasks. DeepSeek’s multi-modal support will allow the AI to handle text, images, and audio, improving document analysis. It also offers efficient computation, long-context processing for detailed documents, adaptive learning based on user feedback, and improved security to ensure reliable outputs for financial applications.
10. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) designs and licenses CPU products, microprocessors, and system IPs for various industries, including automotive, computing, and IoT.
On January 28, KeyBanc Capital Markets identified Arm Holdings (NASDAQ:ARM) and Nvidia along with a few other companies as top semiconductor stocks for 2025, based on a survey with portfolio managers. The firm expects a 9% revenue growth in the semiconductor sector (excluding memory) driven by generative AI, data centers, and modest growth in PC, smartphone, and server markets. KeyBanc also predicts a recovery in the second half of the year, supported by trends in IoT, automotive, and industrial content, and maintains an Overweight rating on Arm and others.
9. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 44
Cloudflare, Inc. (NYSE:NET) offers cloud services that leverage AI to strengthen security, performance, and zero-trust capabilities across platforms like IoT and SaaS applications.
On January 28, JMP Securities raised Cloudflare’s (NYSE:NET) price target to $135 from $120, maintaining an Outperform rating ahead of its Q4 earnings. The firm highlights Cloudflare as a key player in the AI-driven landscape and noted positive feedback from industry experts and strong momentum in security service edge products.
On the same day, Truist increased Cloudflare’s price target to $140 from $120 while maintaining a Buy rating ahead of Q4 earnings. The firm expects strong Q4 results with cautious guidance, supporting potential beat-and-raise momentum in 2025. Customer and partner feedback suggests steady demand and an unchanged macro environment.
8. CyberArk Software Ltd. (NASDAQ:CYBR)
Number of Hedge Fund Holders: 51
CyberArk Software Ltd. (NASDAQ:CYBR) provides identity security solutions, using AI to improve multi-factor authentication, privileged access management, and endpoint protection.
JMP Securities analyst Trevor Walsh increased the price target for CyberArk (NASDAQ:CYBR) to $390 from $360, maintaining an Outperform rating ahead of the Q4 earnings report. The firm expects the company to gain from trends such as government efficiency initiatives, the growing prioritization of identity security, and opportunities in cybersecurity tied to generative AI. The company’s strong position as a preferred identity security platform and potential benefits from its Venafi product lines are seen as key drivers for additional growth.
7. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 68
Intel Corporation (NASDAQ:INTC) creates hardware, including processors and accelerators, to improve performance in AI applications.
On January 28, Tipranks reported that DBS analyst Amanda Tan maintained a Hold rating on Intel (NASDAQ:INTC) with a $24.50 price target. The rating reflects Intel’s mixed performance, as its last financial results met revenue expectations but fell short on earnings due to impairment charges. Intel faces challenges in regaining market leadership, including delays in product launches and operational inefficiencies. The company is also dealing with widening losses in its Foundry division and costs related to its 5N4Y initiatives. While Intel is optimistic about long-term goals, near-term margin pressures persist, and competition from AMD and ARM-based rivals is still strong.
6. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Micron Technology, Inc. (NASDAQ:MU) manufactures memory and storage products for industries such as data centers, automotive, mobile, and consumer electronics. Morgan Stanley analyst Joseph Moore lowered Micron’s price target to $91 from $98 and maintained an Equal Weight rating. The analyst noted that the release of DeepSeek’s AI innovations could have deflationary effects, and while the market’s reaction was surprising, it might lead to more export controls or reduced spending enthusiasm. Moore has adjusted price targets for semiconductor suppliers linked to AI but remains positive on the sector overall.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) designs semiconductors, offering processors and graphics solutions for gaming, data centers, and AI-focused high-performance computing.
On January 27, DBS analyst Amanda Tan maintained a Buy rating on AMD stock with a $200 price target, as per TipRanks. The firm noted the company’s strong position in the data center market and growth potential driven by rising AI demand. AMD’s market share is expanding through its 4th Gen EPYC processors, and its future roadmap includes new AI-focused products. The acquisitions, like Xilinx, strengthen its revenue and margin prospects. While facing challenges in gaming and embedded sectors, AMD’s outlook remains positive.
4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures semiconductors and integrated circuits, supporting industries like computing, smartphones, IoT, and automotive with diverse fabrication processes.
On January 28, Citi said that it remains positive on Taiwan Semiconductor (TSMC) and MediaTek and noted that DeepSeek highlights a shift toward cost-efficient innovation in LLMs and domain-specific applications. Despite GPU supply constraints and geopolitical challenges affecting scalability, TSMC’s key role in advancing AI through the semiconductor supply chain is seen as vital. The firm said:
“While there are constraints in GPU supply, geopolitical factors could continue to significantly impact scalability and economic viability of LLM development. Thus we see semiconductor supply chain, in particular TSMC’s critical role in enabling AI advancement.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) develops AI platforms for data centers, autonomous vehicles, robotics, and cloud computing. On January 28, Tigress Financial’s Ivan Feinseth upgraded Nvidia (NASDAQ:NVDA) to Strong Buy with a raised price target of $220, viewing the recent selloff as a significant buying opportunity. While DeepSeek’s R1 AI model claims competitive features at lower costs, the firm highlighted unknown capabilities and security concerns. Tigress emphasized Nvidia’s key role in AI and data center growth and considers it as a long-term beneficiary of ongoing investments in these areas.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, improving operations and security while heavily investing in AI advancement.
UBS analyst Karl Kierstead reiterated a Buy rating on Microsoft (MSFT) with a $525 price target, noting the stock’s slight 2% dip after DeepSeek’s announcement aligns with Microsoft’s strategy. The company’s decision not to fund OpenAI’s GPU compute targets and focus on building inference infrastructure for enterprise customers is seen as a strategic pivot. While Microsoft’s heavy investment in OpenAI now faces rising competition, its capex growth may slow after FY25 if AI becomes less compute-intensive. Investor sentiment could improve if Microsoft highlights capex discipline and ROI during its upcoming updates. Kierstead noted:
“That ‘bet’ looks like a clever one. While Microsoft has made a very large singular bet on OpenAI, which now faces heightened competition, the pace of Microsoft’s capex growth could slow beyond FY25 if, in fact, AI becomes LESS compute-heavy. Investor sentiment might even improve post Wednesday’s print if Microsoft explains that their StarGate/OpenAI decision was about capex discipline, restoring investor confidence in their capex growth and ROI outlook.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) uses AI across shopping, entertainment, and operations while advancing innovation through investments, AWS collaborations, and Tranium.
In an AWS blog post on January 28, Amazon said that Amazon Bedrock has introduced latency-optimized inference to reduce response times for models like Anthropic’s Claude 3.5 and Meta’s Llama 3.1. By focusing on metrics like Time to First Token and Output Tokens per Second, Bedrock aims to enhance AI performance. Techniques such as streaming responses, using concise prompts, and breaking tasks into smaller steps can further improve speed. Other strategies like optimized system architecture and intelligent prompt routing help achieve faster, more cost-effective AI interactions.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) 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 AMZN 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.
