In the artificial intelligence world, the spotlight will be shifting to France next week as the world awaits the US and China to find common ground over the safe development of artificial intelligence. Judging by the measured response from China over the tariffs issue, there is a chance it might. That noted, a wide variety of countries are going to be attending an AI Action Summit in Paris next week to discuss how to put the technology to work. France is going to be hosting the summit alongside India on Feb 10 and 11, focusing on areas such as open-source systems and clean energy for powering data centers, Reuters reported.
READ NOW: Top 10 AI Stocks Trending On Wall Street and 9 AI Stocks Investors Are Monitoring
Meanwhile, the emergence of DeepSeek is increasingly turning into a game-changing event for AI development in China. The founder, Liang Wenfeng, is being hailed as a national hero. Indeed, his efforts have greatly helped the country to catch up with the US in the race toward AI supremacy. Chinese companies are increasingly rushing to support AI models coming from DeepSeek. Moore Threads and Hygon Information Technology, for instance, said on Monday that their computing clusters and accelerators will be able to support Deep Seek’s R1 and V3 models. Moore Threads, in particular, stated that progress by DeepSeek’s models using domestically made GPUs could set China’s AI industry “on fire”.
While many of the companies in China are rushing to adopt DeepSeek, yet many others are pushing their own AI models forward. Alibaba Cloud released Qwen 2.5-Max just after DeepSeek over the holidays, Beijing-based start-up Zhipu is also in the AI race with its AI assistant app released in October, Chinese start-up Moonshot AI released its own LLM the day DeepSeek released its r1 model, and more. These moves by Chinese companies, and the broader market reaction in the US after the emergence of DeepSeek, reflect on how grave the impact has been on the AI world.
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 investor analyzing the performance of the Midstream/Energy stocks at a trading desk.
12. Navitas Semiconductor Corporation (NASDAQ:NVTS)
Number of Hedge Fund Holders: 8
Navitas Semiconductor Corporation (NASDAQ:NVTS) is a small-cap chip designer. Its next-generation power solutions support energy-efficient AI data centers. On February 5th, the company announced that it has adopted both technologies, i.e. next-generation GaNFast gallium nitride (GaN) and GeneSiC silicon carbide (SiC) power semiconductors, into Dell’s family of notebook adapters, from 60 W to 360 W. Navitas technologies will enable Dell to offer high-speed charging, featuring highest efficiency, coolest temperature, and that too, in a smaller and lighter design. The technologies will support Dell’s AI-powered notebooks, building on its portfolio as the broadest GaN adapter offering for notebooks. Furthermore, the adapters will help Dell achieve sustainability goals, using 50% less plastic and cutting CO2 emissions and energy usage.
“Since Dell’s first GaN adapter was enabled by Navitas back in 2020, we’ve worked closely with Dell engineering to further improve charging speed, efficiency, size, weight, and now environmental footprint. Dell’s new adapters are an optimal solution for speed, portability, and sustainability. Our clients achieve a win-win for both the market and environment by deploying Navitas GaNFast power ICs and GeneSiC power devices.”
-Gene Sheridan, CEO and co-founder of Navitas.
11. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On February 4th, the stock received a new Street-high price target of $125 from BofA analyst Perez Mora. Mora raised the price target to $125 from $90 and kept a “Buy” rating after Palantir’s Q4 beat.
“The company sees the world ripe for an AI and technology revolution. We see PLTR enabling and leading this revolution in both Commercial and Defense markets”.
To reflect the company’s “sustained high-growth and profitability profile”, the firm is moving toward a longer-term valuation methodology. Moreover, Palantir is seen as a leader in commercial and defense markets, with another growth avenue being the Department of Government Efficiency (DOGE). The firm said that (DOGE) presents a significant opportunity for “Government efficiency enablers,” and that Palantir is an “enabler of efficiency and a clear winner.” Considering DOGE initiates commercial-style contracting, digital-first development, and open, agnostic architecture needs, Palantir’s portfolio and “approach to government contracts is already in line.” The analyst further told investors in a research note that with the proliferation of more commoditized solutions in the artificial intelligence market, Palantir’s value proposition is only becoming “more pronounced”. It further asserted that AI-value adders will gain more market value and that Palantir is a value-adder.
10. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 47
Fortinet, Inc. (NASDAQ:FTNT) is a technology company that provides cybersecurity and convergence of networking and security solutions worldwide. On February 5, BTIG analyst Gray Powell maintained a “Hold” rating on the stock. Powell’s hold rating suggests limited short-term upside for the stock. Even though there is an increase in interest for Fortinet’s SSE product in the mid-market, the overall demand trend continues to be steady compared to the previous quarter. The Security Service Edge is a cloud-based security service that incorporates artificial intelligence to enhance security, optimize performance, and detect threats. The firm noted that even though the company is expected to meet or slightly surpass Q4 estimates, street estimates for 2025 seem too optimistic. Additionally, despite the positive momentum in the mid-market and operational technology demand, there are concerns related to large enterprise traction.
9. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 52
Twilio Inc. (NYSE:TWLO) is a leading cloud communications platform-as-a-service (CPaaS) company. The company integrates artificial intelligence via tools like Twilio Segment and Twilio Flex for enhancing customer engagement and data insights. On February 5th, the company announced that it had entered into a multi-year partnership with Chelsea Football Club. Twilio will be serving as an official supplier for the club, leveraging the Twilio Segment customer data platform (CDP) to enhance fan engagement and digital experiences. Twilio Segment will allow the club to create a comprehensive view of each fan’s interaction with Chelsea, helping it to provide highly personalized experiences. Some examples of these experiences include rewarding fans for engagement by offering promotions when they enter the stadium, personalizing the content they see with their favorite player, and more.
“This exciting new partnership will empower Chelsea Football Club to connect with their fans, enabling powerful, personalised engagement both home and away. At Twilio, we’re committed to supporting Chelsea in allowing its fans to feel even closer to the club. We’re excited to see the game-changing impact of this partnership over the coming years.”
– Peter Bell, Vice President of Marketing, EMEA at Twilio.
8. 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 February 4th, Bank of America Securities analyst Wamsi Mohan reiterated a Buy rating on the stock and set a price target of $270.00. The rating, issued after IBM’s Investor Day, emphasized sustainable revenue and margin growth for IBM. CEO Arvind Krishna has been leading the company toward strategic transformation, with a portfolio shift towards higher growth areas such as software and consulting. As such, the company targets a topline growth of over 5% and anticipates an approximately 10% compound annual growth rate in this segment. Improvements in profit and free cash flow are also a plus point, while divested low-growth assets and mergers and acquisitions have strengthened both total and organic growth. Lastly, emphasis on areas such as quantum computing and AI-driven consulting services is expected to provide further growth potential. All of these factors have together led to the reiterated buy rating.
7. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity. On January 30th, the company posted on its blog about its recent findings regarding the Chinese AI model from DeepSeek. Palo Alto Networks Unit 42, talking about these concerning vulnerabilities in DeepSeek, has revealed that it can be easily jailbroken to provide nefarious content with little to no specialized knowledge or expertise. Unit 42 researchers tested two novel and effective jailbreaking techniques, known as the Deceptive Delight and Bad Likert Judge, along with a multistage jailbreaking technique called Crescendo, against the DeepSeek models. After testing, they found out that there were high rates of bypassing safeguards, demonstrating tangible security risks. The findings imply how these models are vulnerable, raising security, credibility, and regulatory concerns.
“Additional testing across varying prohibited topics, such as drug production, misinformation, hate speech and violence resulted in successfully obtaining restricted information across all topic types.”
-Palo Alto Networks
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
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 February 3rd, Bloomberg reported that Tesla has registered fewer cars in California in all four quarters of 2024, with sales of its second-most important model, Model 3, plunging 36% for the year. According to data from the California New Car Dealers Association, sales fell almost 8% in the fourth quarter and 12% for the year. Registrations have been declining despite Tesla having added the Cybertruck to its lineup last year. Both the Model 3 and Cybertruck utilize artificial intelligence through Tesla’s Full Self Driving (FSD) system. Some probable reasons for the declines in their registrations include changing over the Model 3 sedan early in the year as well as the active role of Chief Executive Officer Elon Musk in the US election. Tesla’s reputation has taken a hit among certain groups of US consumers due to this involvement.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops semiconductors, providing processors and graphics technologies for gaming, data centers, and AI-driven high-performance computing. On February 5th, analyst Amanda Tan from DBS maintained a “Buy” rating on the stock and a $200.00 price target following the company’s earnings report on the previous day. While the company reported quarterly results and revenue outlook above analyst estimates, it missed AI chip-related revenue with investors scrutinizing its results against Nvidia. Fourth-quarter data center revenue, a proxy for AMD’s AI revenue, was $3.9 billion, compared to the consensus estimate of $4.15 billion. Regardless, Tan’s rating signifies AMD’s potential for growth and market leadership.
In particular, its expanding market share in the data center accelerator space is expected to reach an addressable market of USD 400 billion driven by AI demand. The company’s roadmap, including the release of the MI325X accelerator in 2024 and subsequent series in the coming years, will help it stay competitive. AMD’s strategic positioning in the AI market is a multi-billion dollar opportunity. Moreover, its data center segment is anticipated to grow at a compounded annual growth rate of 47% from FY23 to FY27 on the back of rising demand for data center GPUs. Finally, market share gains, synergies from acquisitions like Xilinx, and a clear execution roadmap, further help AMD focus on revenue growth and margin expansion. Overall, the firm is bullish on AMD despite PC market challenges and competition from tech firms such as Nvidia and Intel.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. One of the biggest analyst calls for Wednesday, February 5th, was for Nvidia. JPMorgan reiterated the stock as “Overweight”, stating that it’s bullish on Nvidia despite DeepSeek’s emergence.
“Higher compute complexity/new innovation in models combined with proliferation of inference applications should unlock strong demand for GPUs – #1 technology/innovation leadership should enable them to unlock new use-cases.”
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOG) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses. On February 4th, the company reported its fourth-quarter results after markets closed. Revenue of $96.47 billion for the company fell short of the $96.56 billion expected by analysts polled by LSEG. Meanwhile, earnings per share of $2.15 exceeded the $2.13 consensus estimate. The company’s cloud revenue was disappointing at $11.96 billion during the quarter, compared to $12.19 billion expected by Wall Street. The company further noted that it will spend $75 billion on its AI buildout this year, which was 29% more than Wall Street expected. As per LSEG data, Wall Street was expecting 2025 capital expenditures of about $58 billion, a modest increase from $52.5 billion spending in 2024. Defending this expenditure, CEO Sundar Pichai said that Google’s Gemini family of AI models is comparable in efficiency to DeepSeek.
“The cost of actually using (AI) is going to keep coming down, which will make more use cases feasible. The opportunity space is as big as it comes, and that’s why you’re seeing us invest to meet that moment.”
-Sundar Pichai.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On February 4th, Piper Sandler’s research reported by Benzinga discovered a less optimistic outlook for the company in the artificial intelligence race. After CEO Mark Zuckerberg noted that the company is “still digesting” some of the “novel things” Chinese AI startup DeepSeek has done, the firm reflected on insights from a data center engineering expert. The crux of the matter is that Meta is clearly behind its competitors. The Piper Sandler note has revealed that DeepSeek is ahead of Meta’s latest Llama model, but lags behind OpenAI and Anthropic by about six months. The firm further indicates that Meta has substantial ground to make up for in the rapidly changing AI landscape.
“In terms of the tricks and methodology applied by DeepSeek, the leading labs such as OpenAI and Anthropic are fully aware of such methodologies and also employ these but such is not the case of Meta which is clearly behind.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com Inc (NASDAQ:AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions. On February 4th, Bank of America Securities analyst Justin Post maintained a “Buy” rating on the stock and retained the price target of $255.00. Amazon’s strong fourth-quarter results, backed by robust retail growth and increasing AI contributions in the AWS segment, have led to the reiteration. Besides Amazon’s solid financial position, its positive retail data implies stable or accelerating growth, noted the firm. Amazon is not free from risks, with tariff impacts and increased depreciation expenses for AWS looming. However, AWS’s growth potential, efficient retail operations, and Prime Video advertising opportunities justify the Buy rating. Additionally, the company’s advancements in AI and relative profit growth are anticipated to sustain the stock’s valuation.
While we acknowledge the potential of AMZN 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 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 Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
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.
