The artificial intelligence community is raving over a new reasoning model that has surprised even Silicon Valley. Developed by Chinese start-up DeepSeek, the r1 claims to match and even exceed OpenAI’s o1 by multiple benchmarks, and that too, at a fraction of the cost. A Chinese hedge-fund manager, Liang Wenfeng, has led the development of r1. Wenfeng has become the leading figure in the country’s AI initiative.
“Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen”.
-Marc Andreessen, Silicon Valley venture capitalist who has been advising President Trump.
While some specialists are saying that DeepSeek’s technology is a bit behind OpenAI and Google, it is still an achievement considering it has used fewer and less advanced chips. The country has also had to deal with US restrictions along the way, implying how DeepSeek either found a way around the rules or the controls weren’t stringent enough in the first place.
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Also developed by DeepSeek is its AI assistant, an artificial intelligence application that was released on January 10. The AI assistant is powered by the DeepSeek-V3 model and boasts over 600 billion parameters. It is designed to assist users by offering them seamless interactions, answering user questions, and enhancing daily tasks.
In the latest news, Reuters reports how the Chinese startup DeepSeek’s AI Assistant has overtaken rival ChatGPT to become the top-rated free application available on Apple’s App Store in the United States. According to its creators, the AI assistant “tops the leaderboard among open-source models and rivals the most advanced closed-source models globally”.
Both the r1 and AI assistant by DeepSeek are proof that China is getting closer to the US in the race toward supremacy in AI. While several Chinese tech companies have released tech companies over the past, DeepSeek has been particularly praised by the US tech industry for its innovation and achievements.
At the same time, there is skepticism regarding how these cheaper alternatives may question the pricing power of US tech giants and if their spending needs need to be re-evaluated.
“While it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term, initial worries are centered on whether US tech giants’ pricing power is being threatened and if their massive AI spending needs re-evaluation”.
-Jun Rong Yeap of IG Asia.
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.
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10. WeRide Inc. (NASDAQ:WRD)
WeRide Inc. (NASDAQ:WRD) is a leading provider of autonomous driving products and services. On January 24, JPMorgan analyst Alex Yao initiated coverage on WeRide Inc (NASDAQ:WRD) with an “Overweight” rating and a price target of $21. The firm issued the rating as it believes that the autonomous driving company is best positioned for gains ahead. This is because it is a prominent player in the autonomous driving industry. The company boasts a diverse range of technologies and is also the first company in the domain to have its products operative and undergoing testing in a broad international landscape. It covers 30 cities and nine countries across Asia, the Middle East, and Europe.
“WeRide is a leading global autonomous driving (AD) company that develops AD technologies from Level 2 to Level 4 for a wide range of use cases, including ADAS solutions, robobus, robosweeper, robovan and robotaxi.”
9. ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA)
Number of Hedge Fund Holders: 1
ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) is a biotechnology company leveraging multi-omics modeling and complex artificial intelligence to discover and develop therapeutic antibodies. On January 22, the company announced the development of a new class of GLP-1 therapies completely through artificial intelligence. Developed through its AI-driven proprietary LENSai™ platform, this class of therapies has been developed for managing type 2 diabetes and obesity. IPA’s AI-driven approach aims to enhance stability, reduce dose frequency, and improve patient compliance. The company is also exploring GLP-1-like alternatives as non-invasive alternatives to injection, representing its first fully AI-generated assets and adding to its growing portfolio of AI-assisted and laboratory-developed therapies.
“LENSai‘s continued breakthroughs underscore the unparalleled power of our HYFT patterns. These patterns, which only IPA possesses, are the key to unlocking unprecedented speed and precision in biologics research. LENSai is not just accelerating development—it’s redefining the very process of therapeutic innovation”.
-Dr. Jennifer Bath, CEO of ImmunoPrecise Antibodies.
8. Lantern Pharma Inc. (NASDAQ:LTRN)
Number of Hedge Fund Holders: 3
Lantern Pharma Inc. (NASDAQ:LTRN) uses artificial intelligence, machine learning, and genomic data through its RADR platform to advance precision oncology. On January 27, the company announced improvements to its RADR® AI platform aimed at accelerating and optimizing the development of antibody-drug conjugates (ADCs). ADC is a process of creating Antibody-Drug Conjugates, a type of targeted cancer therapy for the treatment of the disease. The company’s AI-driven approach has already identified 82 promising ADC targets and 290 target-indication combinations, with some already validated for use. The AI-powered ADC module could speed up drug development by up to 50% and lower costs by 60%. It would also reduce both the time and cost of ADC development while also increasing the probability of clinical success. The company has been actively advancing multiple ADC candidates through preclinical development and has also engaged in a collaboration with the prestigious MAGICBULLET::Reloaded Initiative at the University of Bielefeld in Germany.
“The implications of this research extend far beyond just expanding the repertoire of potential ADC targets. By leveraging our RADR® platform’s advanced AI capabilities, we’ve created a systematic approach that could dramatically reduce both the time and cost of ADC development while increasing the probability of clinical success. Our platform is particularly well-suited for partnership opportunities with pharmaceutical companies looking to accelerate their ADC programs or expand their pipeline with novel targets”.
-Kishor Bhatia, Ph.D., Chief Scientific Officer at Lantern Pharma.
7. Planet Labs PBC (NYSE:PL)
Number of Hedge Fund Holders: 8
Planet Labs PBC (NYSE:PL) is a leading provider of satellite imaging services, known for its extensive image archives and emphasis on AI-powered solutions. On January 24, Cantor Fitzgerald analyst Colin Canfield initiated coverage of Planet Labs with an “Overweight” rating and a $6.30 price target. In its initiation of Planet Labs, the firm stated that it is bullish on the satellite imaging company. The analyst told investors in a research note that the rising value of AI-driven data and growing defense and climate threats will provide the necessary boost to Planet Labs’ growth and profit margins. In the long run, the firm also sees the company selling its data to military and government agencies.
“AI-derived data price accretion, acceleration of defense/climate threats drives growth, margins.”
6. Keysight Technologies, Inc. (NYSE:KEYS)
Number of Hedge Fund Holders: 36
Keysight Technologies, Inc. (NYSE:KEYS) is a global technology company that provides electronic design and test solutions. On January 27, the company announced the launch of a comprehensive Low-Power Double Data Rate 6 (LPDDR6) design and test solution. This solution is designed to support next-generation memory systems, helping improve the validation and testing necessary for advancing artificial intelligence. With the proliferation of mobile and AI technologies, the need for high-performance and energy-efficient memory is growing. Keysight’s solution offers a complete workflow featuring transmitter and receiver testing tools, an Advanced Design System (ADS) Memory Designer, and automated test capabilities. Together, these features help accelerate time to market, optimize device performance, and enhance performance analysis. The high performance and energy efficiency makes LPDDR6 efficient for AI, computing, data centers, automotive, and even edge applications.
“As a leader in memory design and test solutions, Keysight continues to collaborate with JEDEC to develop the LPDDR6 standard. This new LPDDR6 standard is set to revolutionize the market, offering unprecedented speed, efficiency, and reliability, enabling the industry’s AI Edge rollout. As the deployment and use of next-generation memory devices are growing, Keysight has achieved a significant milestone in enabling faster time to market for LPDDR6 memory designs”.
– Dr. Joachim Peerlings, Vice President and General Manager, Network and Datacenter Solutions.
5. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 70
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors, focusing heavily on data centers. On January 27, Melius Research initiated coverage of the stock with a “Buy” rating and a $188 price target. Melius initiated Marvell as buy considering the semis stock is the “next multi-hundred billion dollar AI semis company. With a shortage of semis names that “can get really big from here”, it asserts that Marvell “is the next one to do it on the back of the AI theme”. The firm said that Marvell’s networking chips are anticipated to benefit from what they refer to as an “AI Halo Effect”. It also believes there is a potential upside to Marvell’s current quarter, which ends this January. There is also an analyst day in June, where Marvell might unveil an expanded addressable market for Marvell’s custom silicon solutions.
“Despite Marvell’s stock being up 108% since the start of 2024, there is more to go since there’s a shortage of semis names that can get really big from here – and we bet this company is the next one to do it on the back of the AI theme.”
4. 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 January 27, CNBC reported that Goldman Sachs analyst Mark Delaney has reiterated a Neutral rating on Tesla and a $345.00 price target on the stock. According to the firm, Tesla has long-term potential, but it may be time to wait and see. The company is leading in electric vehicles, with capabilities in AI. However, its Full Self-Driving Technology may take longer to develop than expected.
“We believe Tesla remains well positioned for long-term growth, given its leadership position in EVs; the breadth/depth of its technical capabilities in AI, software, and hardware; and its ability to benefit from a full set of solutions including in charging and storage. However, we see a handful of offsetting factors. These include: 1) We expect the ramp in FSD to take longer than Tesla currently targets; 2) We believe auto fundamentals could remain volatile in the near-term (with lower pricing/incentives a headwind, and we expect delivery volumes to be somewhat lower than Tesla’s outlook for 2025); 3) We see valuation as full.”
3. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets. On January 27, Bernstein kept an “Outperform” rating with a $220 price target on the stock. Regardless of DeepSeek intimidating Silicon Valley, the firm “continues to like” names such as Broadcom and Nvidia within U.S. Semiconductors. According to the firm, DeepSeek’s entry isn’t going to be a “doomsday” situation for AI buildouts playing out in the Twitterverse. The $5 million figure that is being quoted was needed to develop DeepSeek’s AI assistant doesn’t reflect everything. The firm contended that the figure does not include all the other costs associated with previous research and experiments on architectures, algorithms, or data. Even if DeepSeek managed to cut these costs, as much as by 10 times, the current model cost trajectories’ increasing by about that much every year anyway “can’t continue forever”. As such, innovations like DeepSeek’s are positive if AI is to continue progressing.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that has recently launched Apple Intelligence, its personal intelligence system. On January 27, Rosenblatt Securities reaffirmed a “Buy” rating on Apple with a $262.00 target price. The firm stated that its expectations for the tech giant’s December quarter are low, as demonstrated by third-party data which has hinted at disappointing iPhone performance. Other firms such as UBS have also lowered their iPhone sales forecast for December due to declining demand and falling market share in China.
The tech giant is increasingly facing competition from Chinese smartphones like Huawei. These brands have integrated advanced AI features into their phones, offering more personalized user experiences. Moreover, while Apple’s new intelligence features for the iOS 18, iPadOS 18, and macOS Sequoia 15.1 updates are expected to boost sales in 2025 as it enters new territories, Huawei has announced substantial discounts for the New Year on its premium models.
“Expectations for Apple’s Dec. quarter are low, after 3rd party data suggesting a disappointing iPhone performance. But there are mitigating factors for the Dec. quarter fears, including lack of an earnings warning, and potential for services and other devices to make up some of the iPhone gap”.
– Rosenblatt Securities
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company. On January 27, CNBC reported that Jefferies analyst Brent Thill maintained a Buy rating on Meta Platforms and set a price target of $715.00. Jefferies said the stock remains a top idea at the firm. The firm is bullish on the stock due to the company’s advancements in generative AI, particularly through the META.AI platform and Llama models. Both of them present a compelling opportunity for the company to solidify its foothold in the AI market.
“We are bullish on META’s position to monetize its traction in Gen AI with META.AI & Llama, seeing strong returns for these investments.”
While we acknowledge the potential of META 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 META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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