The battle for supremacy on artificial intelligence development and innovation is heating up. While the US appears to have an edge on fundamental AI research and technology, China is also hitting the mark with breakthroughs in efficiency and accessibility. Just days after the US touted a $500 billion Stargate project aimed at strengthening its edge with the construction of data centres; France has also made it clear it is ready to join the big boys club amid the AI boom.
President Emmanuel Macron has reiterated that France’s artificial intelligence sector is to receive a $112.6 billion private investment, which underscores the spending spree around revolutionary technology.
Macron’s $112.6 billion plan is a great thing for the European AI ecosystem, according to Victor Riparbelli, CEO of the British AI startup Synthesia. However, he added that more is required to make sure the continent can compete with tech giants like the U.S. and China.
“We need to set the right foundations for Europe to thrive as an ecosystem. It’s great that we invest more in infrastructure. I don’t think it’s the sole solution to the problem. There are lots of other things we need to worry about as well. But what I think is really great, is there’s political will to actually do something,” Riparbelli said on CNBC.
While Chinese AI startup DeepSeek has shown it is possible to develop AI models while spending the least amount possible, countries and tech giants are not showing any signs of going slow on AI capital expenditure. Companies are spending billions of dollars on data centres, advanced semiconductors, equipment, and power sources as the AI arms race heats up.
CNBC reports that tech giants are poised to spend close to $325 billion combined, on AI technologies and data center build-outs in 2025. It will be a significant improvement from the $230 billion spent in 2024. Amid the high AI spending spree, tech giants expect it to result in a boon in their cloud offerings, expected to be major growth drivers in the future.
“On the Capex part, it’s important to remember that we employ a hybrid kind of approach where we do things internally and we have certain partners that we do business with externally where the Capex would appear in their respective businesses,” CEO Tim Cook said on an earnings call last year.
Even though the spending spree triggers worries of a potential bubble in the AI space, it’s also given rise to unique investment opportunities. Companies exposed to the development of data centres, clean sources of power, AI equipment, and solutions have been on the roll despite the recent DeepSeek scare.
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).
Top 10 AI Stocks Amid Soaring AI Capital Expenditure
10. CLPS Incorporation (NASDAQ:CLPS)
Number of Hedge Fund Holders: 2
CLPS Incorporation (NASDAQ:CLPS) provides information technology (IT), consulting, and solutions to banking, insurance, and financial institutions. On February 7th, the company confirmed the launch of Nibot, a next-generation Robotic Process Automation product designed to automate business processes while ensuring seamless interaction between multiple applications.
Through data analysis and predictive modeling, Nibot will further integrate with AI to enable intelligent decision support. Nibot can automate the management of tiresome daily business processes, integrate with a variety of systems with ease, and assist clients in realizing the full benefits of digital transformation.
This will help companies identify bottlenecks in their business processes, make well-informed decisions, and put improvements into place. With its sophisticated visual process designer, which enables the quick creation of intricate automation workflows via drag-and-drop functionality and a pre-built template library, Nibot sets itself apart from other global RPA products.
9. Rezolve AI Limited (NASDAQ:RZLV)
Number of Hedge Fund Holders: 3
Rezolve AI Limited (NASDAQ:RZLV) is a technology company that offers retail and engagement technology solutions that acts as an instant transaction tool for mobile devices. The company has been integrating artificial intelligence into its technology solutions to better serve brands, media houses, banks and mobile network operators.
While at the forefront of AI-driven commerce solutions, Rezolve has echoed Softbank’s $40 billion investment in OpenAI, announced on February 7th. According to Rezolve AI Limited (NASDAQ:RZLV), the investment, which values OpenAI at $300 billion, reaffirms the artificial intelligence potential across various industries. Rezolve AI’s strategic positioning, particularly in the $30 trillion retail sector, demonstrates its significant value and potential to capture a major share of this rapidly growing market, especially as AI adoption picks up speed at an unprecedented rate.
“SoftBank’s investment into OpenAI reinforces what we’ve known all along – AI is reshaping industries at an extraordinary scale,” said Daniel M. Wagner, CEO of Rezolve Ai. “However, while OpenAI is developing foundational AI models, Rezolve Ai is focused on applying AI in real-world, high-impact commercial environments. Our solutions are already transforming how businesses engage with consumers, personalize experiences, and drive revenue growth.”
8. Xometry, Inc. (NASDAQ:XMTR)
Number of Hedge Fund Holders: 7
Xometry, Inc. (NASDAQ:XMTR) operates an online marketplace that lets buyers source custom-manufactured parts and assemblies. It offers computer numerical control manufacturing, sheet metal forming, sheet cutting, 3D printing, and fused deposition modeling. On February 10th, analysts at JMP Securities reiterated a Buy rating on the stock with a $42 price target. The bullish rating hinges on the company’s ability to grow its customer base and strengthen profit margins.
Xometry, Inc.’s (NASDAQ:XMTR) artificial intelligence-powered digital manufacturing services marketplace has catalyzed robust underlying growth. In the third quarter, the AI-driven marketplace set records for revenues, gross profit growth, and marketplace gross margin while gaining more market share worldwide.
7. Tevogen Bio Holdings Inc. (NASDAQ:TVGN)
Number of Hedge Fund Holders: 10
Tevogen Bio Holdings Inc. (NASDAQ:TVGN) is a clinical-stage specialty immunotherapy company that develops off-the-shelf precision T-cell therapies for the treatment of infectious diseases, cancers, and neurological disorders. The company is increasingly attracting interest, this time from the Center for the Biomedical Advanced Research and Development Authority (BARDA). On February 7th, the company held discussions with BARDA, focusing on the game-changing ExacTcell technology as a potential medical countermeasure.
Tevogen Bio Holdings Inc.’s (NASDAQ:TVGN) scalable and reasonably priced ExacTcell platform, the encouraging outcomes of TVGN 489’s proof-of-concept clinical trial, and the incorporation of Artificial intelligence into their production procedures were the three main topics of discussion. The conversation focused on how ExacTcell can quickly adjust to new viral threats, making it a viable option for protecting the public’s health. The company has already opened talks with federal agencies as it looks to tap opportunities around its AI innovations.
6. Semtech Corporation (NASDAQ:SMTC)
Number of Hedge Fund Holders: 32
Semtech Corporation (NASDAQ:SMTC) designs, develops, manufactures, and markets analog and mixed-signal semiconductors and advanced algorithms. It is one of the companies pivoting to artificial intelligence as a growth driver. Likewise, its CopperEdge product has been integrated into Nvidia’s Blackwell platform due to its ability to reduce noise and lower costs and power.
On the other hand, analysts at Stifel reiterated a Buy rating on the stock on February 10th but cut their price target to $70 from $75. The price cut comes on Semtech Corporation (NASDAQ:SMTC) predicting lower-than-expected revenue from its CopperEdge products, which are mostly used in data centre and artificial intelligence applications for active copper cables.
According to the company’s forecast, CopperEdge’s revenue for the fiscal year 2026 will fall short of the $50 million minimum that was previously anticipated. Semtech has stated that they do not expect a surge in sales over the next 12 months or so because of modifications to rack architectures and recent feedback from a particular server rack customer.
5. Cognizant Technology Solutions Corporation (NASDAQ:CTSH)
Number of Hedge Fund Holders: 39
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is a professional services company that provides consulting, technology, and outsourcing services. It provides customer experience, robotic process automation, analytics, and AI services in areas such as digital lending and next-generation payments. On February 7th, Mizuho Securities increased its price target on the stock to $87 from $84 and reiterated a Neutral rating.
The IT service giant has also received a significant boost from universal multi-channel bank insurer KBC Group, which renewed its relationship on February 10th. The renewal, which runs to 2027, paves the way for Cognizant to offer a suite of IT and business transformation solutions. The company is to provide IT services in application development, maintenance, data service, and quality engineering. The KBC contract renewal comes on the heels of Cognizant Technology Solutions Corporation (NASDAQ:CTSH) integrating AI features to make its IT solutions more effective and competitive.
4. HP Inc. (NYSE:HPQ)
Number of Hedge Fund Holders: 42
HP Inc. (NYSE:HPQ) is a computer hardware company that provides personal computing and other digital access devices, imaging and printing products, and related technologies. On February 10th, the company announced plans to pursue growth opportunities in Saudi Arabia as part of its global expansion plan.
HP Inc. (NYSE:HPQ) is establishing a state-of-the-art manufacturing facility in the kingdom to cater to the growing demand for computing devices. Additionally, the company is to set up an artificial intelligence research and development centre. The centre focuses on developing AI-driven solutions to enhance business efficiency and automation. The artificial intelligence centre will also focus on areas of AI-driven decision-making data analytics and robotic process automation. Based in Dhahran, the centre is expected to attract top global and local AI talent.
“At HP, we see tremendous potential in the Kingdom of Saudi Arabia and have made strategic AI investments to fuel further growth in the region”, said Enrique Lores, President and CEO of HP. “Building on our trusted brand and the strength of our portfolio, we are committing to manufacturing, education and research initiatives that drive innovation and help expand HP’s global reach, bringing even greater opportunity to the MEA region.”
3. Digital Realty Trust, Inc. (NYSE:DLR)
Number of Hedge Fund Holders: 52
Digital Realty Trust, Inc. (NYSE:DLR) is a real estate company that delivers a full spectrum of data centre, colocation, and interconnection solutions. Its PlatformDIGITAL data centre platform offers customers a secure data meeting place. On February 10th, analysts at JMP Securities reiterated a buy rating on the stock with a $220 price target buoyed by its strong performance with the stock approaching all-time highs.
Digital Realty Trust, Inc. (NYSE:DLR) is one company that has emerged as a beneficiary amid growing demand for high-performance infrastructure to set up multibillion-dollar data centres. As an AI data centre-focused real estate investment trust, the company remains well-positioned to benefit from the AI boom. High demand for hosting data centres combined with continuous restrictions in space and power gives the perfect conditions for pricing and maximizing profitability on recently constructed properties.
2. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 54
Baidu, Inc. (NASDAQ:BIDU) is a Chinese internet giant that offers online marketing and cloud services. On February 8th, the company moved to strengthen its growth prospects on the cloud with the launch of four brand new applications Kexue, Xiling, Yijian, and Zhenzhi. Successfully integrated into the latest version of the DeepSeek model, the applications are designed to provide enterprises with an array of artificial intelligence solutions, including human video script generation, visual intelligence analysis, and knowledge management.
Baidu, Inc. (NASDAQ:BIDU) Intelligent Cloud is actively encouraging the deployment of applications across a range of industries, including manufacturing, healthcare, transportation, finance, and government, as digital transformation picks up speed. The integration is part of the company’s push to strengthen its position in the AI and cloud service market.
1. Oracle Corp (NYSE:ORCL)
Number of Hedge Fund Investors: 91
Oracle Corp (NYSE:ORCL) is a software infrastructure company that is increasingly transitioning from database software roots towards artificial intelligence as it looks to strengthen its growth metrics. On February 6th, the company launched Project Vidya, which looks to tap India’s vast talent pool amid the AI boom. As part of the project, the company is to train 500,000 youth and women on the latest digital technologies, including AI, Generative AI and cybersecurity.
Project Vidya is to provide learners with training and certification in key digital skills needed to prosper in technology-driven careers. In addition to professional-level training and certifications in fields like DevOps, AI, and data science, the program will provide students with rigorous foundational training in cloud technologies. Additional training will be selected on an individual basis based on learning objectives and learning levels.
While we acknowledge the potential of Oracle Corp (NYSE:ORCL) 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 ORCL 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 was originally published at Insider Monkey.
