The pace of artificial intelligence development and deployment is “pretty terrifying”. That’s the sentiment echoed by Steven Adler, a former safety researcher at OpenAI. The remarks come amid growing concerns that robust AI systems capable of evading human control could come into being with catastrophic consequences.
Amid the safety concerns raised, tech giants and emerging startups are not showing signs of slowing down on AI spending. They are allocating billions of dollars on capital expenditures to accelerate the development of powerful AI systems. Bloomberg expects capital expenditures in the development of various AI solutions to exceed $200 billion in 2025, representing a $90 billion increase from last year.
Higher capital expenditure should result in new innovations resulting in the widespread use of AI in many industries. Similarly, AI is predicted to transform various sectors, including healthcare, retail, finance, and the automotive industry.
Nevertheless, billionaire investor Steve Cohen believes AI’s transformational shift could take decades to realize. “This is a 10- to 20-year theme. It’s going to affect everybody in how they conduct their lives, how they do their business,” Cohen said. “We’re still in the first, second inning of something that’s going to be transformational for the economy and the world. … It is such a dramatic, important shift that to ignore it, I think it’s a mistake.”
The CEO and chairman of hedge fund Point72 maintains that there may be ups and downs in the AI boom and that the volatility surrounding investments related to AI may worsen due to a lack of reliable information. However, the increasing need for cutting-edge AI technologies like deep learning and robotics may present difficulties for hardware parts like AI chips. That’s because the high processing demands of AI algorithms and machine learning models are beyond the capabilities of conventional CPUs and GPUs. Top tech firms must increase their expenditures and production to overcome these obstacles.
Because AI applications like generative AI and large language models require massive data processing, energy efficiency is another issue. Potential remedies include quantum computing and high bandwidth memory, but each has drawbacks. Amid the ever-growing energy needs needed to power AI models and infrastructure, former Canadian Deputy Prime Minister Chrystia Freeland has urged President Donald Trump to take the threat of tariffs off the table definitively. According to Freeland, the US needs Canadian energy to achieve dominance in artificial intelligence. Freeland insists the US should thank Canada for being “a great partner” that can provide the much-needed power to dominate the AI space.
A financial expert pointing to details of stocks while describing the weighted properties of the index.
Our Methodology
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).
8 AI Stocks Sending Shockwaves on Wall Street Following DeepSeek Scare
8. Kingsoft Cloud Holdings Limited (NASDAQ:KC)
Number of Hedge Fund Holders: 5
Kingsoft Cloud Holdings Limited (NASDAQ:KC) provides cloud services to businesses and organizations. Its product portfolio includes cloud products infrastructure as a service (IaaS). The stock rallied by more than 20% on February 3rd amid reports that Xiaomi had poached top talent from artificial intelligence sensation DeepSeek.
A major player in China’s consumer electronics landscape, Xiaomi is looking to strengthen its AI prospects. Kingsoft Cloud Holdings Limited (NASDAQ:KC) rallied because its chairman, Lei Jun, is also Xiaomi’s founder. Additionally, the stock has been rising amid growing expectations that it will attract big business for its cloud solutions, which should receive a significant boost on AI integration, given its close ties to Xiaomi. The talent poaches ads to the excitement around the intersection of AI and cloud computing, of which Kingsoft Cloud is a big player.
7. Maxlinear Inc (NASDAQ:MXL)
Number of Hedge Fund Holders: 18
MaxLinear Inc. (NASDAQ:MXL) designs and builds highly integrated radio-frequency, analog, and mixed-signal chips to enable multi-gig connectivity in broadband communications applications, wired and wireless infrastructure and data centres. On January 31st, David William of Benchmark Company reiterated a Buy rating on the stock with a $28 price target. The bullish rating comes as the company remains well-positioned to benefit from the AI boom.
MaxLinear Inc. (NASDAQ:MXL) unveiled a Software-Defined Storage (SDS) solution in partnership with Quantum Cloud Technology. The solution combines MaxLinear ZFlush™, Panther III and QCT’s robust storage platform to enable a high-performance solution optimized for AI and HPC workloads. The company has also designed its Keystone PAM4 digital signal processor to connect the world of cloud and AI data centers.