We recently published a list of Top 10 AI News Updates Taking Wall Street By Storm. In this article, we are going to take a look at where Tower Semiconductor Ltd. (NASDAQ:TSEM) stands against other top AI news updates taking Wall Street by storm.
Escalating costs for developing bigger and more powerful artificial models has always been a big problem. Over the years, the cost of creating AI models has ranged between a thousand to million dollars, depending on complexity, project scope, and the need for specialized resources. The development of advanced and more powerful graphics processing units costing thousands of dollars has only fueled the costs.
In comes, DeepSeek, a Chinese AI startup that has shown it is possible to develop AI models without spending much. It maintains that its R1 AI model, despite being constructed at a fraction of the cost, competes with or surpasses top US AI models on various industry standards.
As the tech sector attempts to figure out how DeepSeek accomplished the feat, the fallout from the R1 launch is rapidly spreading around the world. DeepSeek’s achievements are fueling the race to develop cost-effective AI models.
Cohere is in the process of launching an AI model to conduct complicated business tasks while running on just two A100 H100 chips. It is significantly less than the number of chips required for some large models and also less than what DeepSeek’s system is thought to need. Similarly, Google has unveiled an AI model that runs on a single advanced AI chip.
Nevertheless, tech giants are still spending billions of dollars on data centres, semiconductors, and personnel. However, the latest releases also allude to a drive within the industry to create AI software that operates as effectively as possible. The fervor surrounding the Chinese startup might only hasten the development of robust, cost-effective AI models.
DeepSeek has disrupted numerous beliefs within Silicon Valley regarding the financial aspects of creating AI, the optimal technical approaches for developing the technology, and the degree of the United States’ advantage over rivals in China. For the longest time, the burgeoning AI sector has assumed that achieving superior AI heavily relies on substantial investments in advanced chips and significantly larger data centres to accommodate them.
“The release of DeepSeek AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win,” US President Donald Trump said.
Our Methodology
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 in Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a modern semiconductor chip, intricately wired and gold plated.
Tower Semiconductor Ltd. (NASDAQ:TSEM)
Number of Hedge Fund Holders: 36
Tower Semiconductor Ltd. (NASDAQ:TSEM) is an independent semiconductor foundry that provides technology, development and process platforms for integrated circuits. It also manufactures analog integrated circuits, key to speeding up data transfers and improving power efficiency in AI and data centre applications. On March 12, the company confirmed a successful demonstration of the 400G/lane modulator PH18DA integrated silicon photonics platform.
The demonstration, which was conducted in partnership with OpenLight, achieved a better than 3.5db extinction ratio using PAM-4 modulation format at 0.6 volts peak-to-peak drive voltage. The successful tests addressed critical challenges in data centre and AI optical connectivity, whereby silicon modulators cannot support 400G bit rates.
Tower Semiconductor (NASDAQ:TSEM)’s ability to enable 3.2Tb solutions spanning CWDM wavelengths places it at the nexus of two rapidly expanding markets, AI infrastructure and silicon photonics. Likewise, it boasts as a competitive advantage in meeting the demands of next-generation optical communication since it can provide a scalable, manufactured solution.
“This is a significant step toward providing scalable, reliable, high-performance and manufacturable solutions for the next generation of optical communication technology,” said Russell Ellwanger, CEO of Tower Semiconductor. “By utilizing Tower’s PH18DA platform, this collaboration allows OpenLight’s heterogeneous integration technology to provide a secure path to higher speeds without the need for complex and expensive integration alternatives like Thin Film Lithium Niobate (TFLN), BTO or polymers.”
Overall, TSEM ranks 5th on our list of top AI news updates taking Wall Street by storm. While we acknowledge the potential of TSEM 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 time frame. If you are looking for an AI stock that is more promising than TSEM 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.