We recently compiled a list of the 12 AI News Investors Probably Missed. In this article, we are going to take a look at where Arm Holdings plc (NASDAQ:ARM) stands against the other AI stocks.
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).
A robotic arm holding a semiconductor chip, emphasizing the precision and quality of the company’s production equipment.
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.
Overall ARM ranks 10th on our list of the AI stocks investors probably missed. While we acknowledge the potential of ARM 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 ARM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
