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.
7. Cognizant Technology Solutions Corporation (NASDAQ:CTSH)
Number of Hedge Fund Holders: 39
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is a leading IT provider offering consulting technology and outsourcing services. It provides customer experience, robotic process automation, analytics, and AI services in areas such as digital lending. The company delivered impressive fourth-quarter and full-year results on February 6th thanks to solid AI investments.
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) logged a 6.7% year-over-year increase in revenue in Q4 to $5.1 billion, as full-year revenue increased 1.9% to $19.7 billion. The robust revenue growth came as Cognizant Technology expanded its AI capabilities by introducing platforms like Flowsource, Neuro Edge, and Neuro Cybersecurity, enhancing its service offerings. Chief Executive Officer Ravi Singisetti has confirmed investments in AI are on course to enhance productivity and innovation. Cognizant Technology already has 1,200 AI projects, all focused on cloud migration data modernization and agentification. Its AI products are designed to help clients accelerate digital transformation.
6. Wix.Com Ltd. (NASDAQ:WIX)
Number of Hedge Fund Holders: 46
Wix.com Ltd. (NASDAQ:WIX) is a software infrastructure company that operates as a cloud-based web development platform for registered users and creators. While the stock has delivered an 87% return over the past year, analysts at Citi reiterated a Buy on the stock on February 3rd, and hiked the price target to $275 from $270.
The bullish rating comes amid expectation that Wix.com Ltd. (NASDAQ:WIX) will deliver a third consecutive quarter of growth in the Self Creators and Partners segment. The growth comes as Wix.com increasingly invests in AI products and launches a new Editor Program. It has already launched Business Launcher, an AI tool that helps entrepreneurs create new business initiatives from concept to execution. It has also launched AI Website Builder and AI-enhanced onboarding processes that are contributing to improved conversion rates and user growth. The AI tools have positioned Wix.com for growth in the highly competitive web development market.
5. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 51
Coherent Corp. (NYSE:COHR) is a technology company that develops, manufactures, and markets engineered materials, optoelectronic components and devices. The diversified provider of lasers, optical components, and electronic materials delivered better-than-expected fiscal results in the second quarter of 2025 on February 5th.
Revenue in the quarter topped $1.44 billion, above the $1.37 billion expected, marking a 27% year-over-year increase. It also logged earnings per share of $0.95 against $0.69 expected. The better-than-expected results were driven by robust demand for Coherent Corp.’s (NYSE:COHR) AI-related data centre applications. AI data centre demand drove a 79% increase in data-com-related sales. The company is increasingly leveraging AI to enhance the development of advanced semiconductor products to improve yield rates and reduce waste.
4. PROS Holdings, Inc. (NYSE:PRO)
Number of Hedge Fund Holders: 25
PROS Holdings, Inc. (NYSE:PRO) is a leading provider of AI-powered SaaS pricing, CPQ, revenue management, and digital offer marketing solutions. The company is reaping the rewards of developing AI-powered software solutions that optimize selling and shopping in the digital economy. On February 4th, Averitt, a leading player in freight transportation, extended and expanded the use of the company’s AI-powered PROS SMART Price Optimization solution.
Averitt has been using the PROS solution since 2014 to refine its pricing strategies. The AI-powered PROS solution stands out as it allows Averitt to adjust prices dynamically and in real time. The switch to an AI-powered pricing solution has strengthened Averitt’s customer relationships. The PROS solution has enabled the company to make well-informed decisions, work more closely with important stakeholders, and quickly and effectively provide its sales team with dynamic, optimized prices.
3. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 71
Workday, Inc. (NASDAQ:WDAY) is a technology company that sells workforce management software. It offers enterprise cloud applications that help customers plan, execute and manage business operations. On February 5th, the company confirmed plans to reduce its headcount by 8%, by cutting 1,750 jobs. The cuts come amid increased demand for artificial intelligence, which is also expected to drive long-term growth.
Following the cuts, Workday, Inc. (NASDAQ:WDAY) is to focus on investments like AI and platform development. The decision to cut thousands of jobs also coincides with a slump in human capital management due to the automation of various functions by AI tools. The layoffs comprise the company’s broader restructuring plan, which prioritizes investments in strategic areas like artificial intelligence and platform development.
2. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 91
Oracle Corporation (NYSE:ORCL) is a technology company that offers products and services that address enterprise information technology environments. On February 6th, the company confirmed embedding AI capabilities into its Human Capital Management Software. The integration is part of the software giant efforts to optimize workplace productivity and unlock new growth opportunities.
Oracle Corporation’s (NYSE:ORCL) new AI solution can respond to employees’ inquiries from all aspects of their jobs. It will also help employees become more productive by providing quick answers to a wide range of questions, allowing them to concentrate more on the core mission of their work. Similar to ChatGPT, the AI tool has human-like conversations and replies with accurate information that participating businesses give Oracle. According to Gartner research, these AI agents are a component of Oracle Fusion Cloud Human Capital Management, a cloud-based HR solution that has dominated the market for ten years.
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 115
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese internet giant that provides technology, infrastructure and marketing reach to help merchants connect with customers. The company has affirmed its commitment to advancing artificial intelligence technology as it looks to strengthen its cloud computing unit. On February 6th, it emerged that the company has tapped the talents of top AI scientist, Steven Hoi, as it looks to strengthen its AI prospects and expertise.
Hoi is to join Alibaba Group Holding Limited (NYSE:BABA) as the vice president in charge of the AI multi-modal basic model. Alibaba has reportedly tapped Hoi as it seeks to build a top-tier AI algorithm research and engineering team to advance its AI developments. Hoi’s appointment comes just days after the Chinese internet giant unveiled Qwen 2.5 Max, a new AI model that it claims outperforms leading AI systems.
While we acknowledge the potential of Alibaba Group Holding Limited (NYSE:BABA) 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 BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.
