Sarah Guo, founder of Conviction, spoke on Bloomberg Technology about the evolving AI space and the impact of open-source models. She noted that AI has developed rapidly since her firm launched, reinforcing its belief in its long-term significance. Initially, the firm invested in application companies and vertically integrated businesses, a strategy she believes remains relevant today. She pointed out that competition among foundation models has increased significantly in recent weeks.
Guo also discussed Deep Seek and described it as a powerful model with multiple layers, including a base model, an instruction-tuned version, and a reasoning model. While DeepSeek’s origins in a Chinese hedge fund surprised many, she sees its open-source nature as beneficial for developers and a challenge for the U.S. to stay competitive in AI. She also emphasized that no single country holds exclusive control over AI talent, making export restrictions less effective.
When the discussion shifted to investment trends, Guo explained that while AI is expanding economic opportunities across infrastructure, tooling, and model development, her firm prioritizes applications and industry-specific solutions. She noted that training large models remains costly, despite claims of lower expenses, and expects the most sustainable growth to come from application-focused companies.
Guo also discussed agentic AI and how it improves customer experiences in industries such as finance and travel. She explained that AI’s ability to handle more complex tasks increases its value to businesses, making applications that automate tasks more attractive. As AI continues to advance beyond simple responses, she expects companies working on industry-specific automation to capture significant market value.
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).
9. ZenaTech, Inc. (NASDAQ:ZENA)
Number of Hedge Fund Holders: N/A
ZenaTech, Inc. (NASDAQ:ZENA) develops cloud-based enterprise software for various industries and manufactures drones.
On February 6, ZenaTech announced that it will begin testing high-density batteries for its ZenaDrone 1000, a multifunction AI drone designed for defense and commercial use. The batteries, developed by ZenaTech’s affiliated Galaxy Batteries Inc., will provide longer flight times, increased reliability, and better performance for military applications. The ZenaDrone 1000 has already undergone trials with the US Air Force and Navy Reserve and it is part of ZenaTech’s effort to meet the rigorous requirements for Blue UAS certification to become an approved supplier to the US Department of Defense.
8. MicroCloud Hologram Inc. (NASDAQ:HOLO)
Number of Hedge Fund Holders: N/A
MicroCloud Hologram Inc. (NASDAQ:HOLO) offers holographic technology services, including LiDAR solutions, digital twin technology, and 3D holographic imaging for several industries.
On February 6, MicroCloud Hologram (NASDAQ:HOLO) announced that it integrated the DeepSeek large model API into its Holographic Digital Human GPT, improving AI-driven conversational interactions. This API, built on the Transformer architecture, improves language comprehension and generation to enable more accurate responses in areas such as text creation, Q&A systems, and dialogue completion.
The integration improves the realism and responsiveness of HOLO’s AI-powered holographic digital human by refining semantic understanding and improving expressive capabilities. It allows the system to detect user intent, engage in natural conversations, and generate high-quality text. Security measures, including encryption and access controls, have been implemented to protect user data.
