DeepSeek has sparked a frenzy for Chinese stocks with exposure to artificial intelligence innovations. While the focus in the past was on US tech giants, there is a realization that Chinese companies could be at par or even ahead amid the AI boom.
The renewed focus on Chinese AI investment comes as Grandview Research projects the country’s artificial intelligence market to reach $206 billion by 2030 while growing at a compound annual growth rate of 44%. Amid the expected growth, investors have started jostling for investment opportunities with Chinese chipmakers, software designers, and even data center operators.
“DeepSeek’s breakthrough shows Chinese engineers are creative and capable of inventions that can compete with Silicon Valley,” said China Europe Capital Chairman Abraham Zhang. “It has also stirred nationalistic fever in capital markets.”
Analysts at Goldman Sachs have already warned that there is a possibility of Chinese breakthroughs in artificial intelligence materially altering the stock market trajectory. The investment bank has already reiterated that the revolutionary technology will result in enhanced efficiency that could bolster earnings by up to 2% for Chinese equities. The firm also predicts brighter growth prospects that could lead to a 20% valuation uplift for Chinese firms.
Even as Chinese investors rush into Chinese stocks, US stocks remain king amid the artificial intelligence race. Companies likely to benefit from low-cost AI models, as shown by DeepSeek, have rallied significantly ever since the Chinese startup rattled Wall Street.
According to analysts at JPMorgan, artificial intelligence should continue to drive economic and market outcomes in the US. Nevertheless, the analysts insist that stiff competition between China and the US will result in winners and losers. Therefore, analysts are warning that the concentration of the US stock market in mega tech names could pose significant risks to investors in 2025.
Nevertheless, AI opportunities are not a monolith, as increased competition and efficiency lead to increased consumption of resources.
“We encourage investors to look for opportunity while maintaining an overall portfolio that is resilient to the potential shocks that could occur. Some ways to ensure portfolio resilience could include checking in on your overall plan, proper diversification, a consistent approach to rebalancing and a reminder that stock market volatility is normal (the average year sees a nearly 15% peak to trough decline,” said JPMorgan in a note to investors.
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).
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9. Oklo Inc (NYSE:OKLO)
Number of Hedge Fund Holders: N/A
Oklo Inc (NYSE:OKLO) is developing advanced nuclear power plants to provide clean, reliable, and affordable energy. The company received a site use permit from the U.S. Department of Energy, was awarded fuel material from Idaho National Laboratory, and is developing advanced fuel recycling technologies. On February 7, B. Riley analyst Ryan Pfingst raised the target on Oklo to $58 from $27 while maintaining a Buy rating. Oklo’s stock has climbed 153.96% since the beginning of the year and 423% over the past twelve months.
Pfingst is optimistic about Oklo Inc (NYSE:OKLO) due to its connections with the AI and nuclear sectors. Project Stargate’s investment in AI infrastructure has benefited Oklo’s stock, especially with OpenAI CEO Sam Altman as Chairman. Oklo also announced an MOU with RPower to expedite power availability for data centers, initially using natural gas generators and transitioning to Oklo’s nuclear power solutions.
8. Asana Inc. (NYSE:ASAN)
Number of Hedge Fund Holders: 18
Asana Inc. (NYSE:ASAN) is a software company that provides work management tools for tracking tasks, monitoring progress, delegating responsibilities, and communicating goals across various industries. On February 7, Piper Sandler maintained an Overweight rating on Asana’s stock with a $27.00 price target.
The analysts highlighted the impact of cost discipline and the introduction of AI Studio on the company’s financial performance. Asana’s new AI features are expected to enhance its intelligent work management tools, which are already used by over 2.5 million users, including 85% of the Fortune 100 companies. With year-over-year revenue growth of 11.89% and a market cap of $5.06 billion, the rating is based on stabilized growth, operational discipline, expanding enterprise adoption, and potential AI-driven revenue. The appointment of CFO Sonalee Parekh, known for her efficient growth mindset, is expected to positively impact Asana’s profitability narrative.
