In this article, we discuss 10 AI news investors probably missed.

The world of AI is shifting fast, and DeepSeek is at the center of the latest shake-up. A small Chinese company with just 200 employees has built an AI model that rivals tech giants at a fraction of the cost. This breakthrough raises big questions about the future of AI: Will open-source models challenge the dominance of closed systems? Will companies still need massive data centers, or is AI becoming more efficient? And how will major tech firms respond? While the answers aren’t clear yet, one thing is, that AI is evolving, and the race is far from over.

DeepSeek Breakthrough and the Future of AI Development

Chief Investment Strategist and Portfolio Manager at Hightower, Stephanie Link joined CNBC Squawk Box to discuss the market downturn, especially in tech and energy, and the impact of DeepSeek on AI competition. She acknowledged concerns about the AI semiconductor sector but emphasized that the market is large enough for multiple players. While she questioned whether DeepSeek’s technology is truly superior, she suggested investors look for opportunities in companies like Amazon and Broadcom.

Andrew Ross Sorkin of CNBC raised points about the potential shift toward open-source AI, questioning whether this could commoditize AI technology and reduce the need for massive data centers. Link responded that while open-source models like DeepSeek may become widespread, there are still unresolved questions regarding security and long-term adoption by large companies. Despite this, she believes hyperscalers will continue to invest in AI, with billions earmarked for the sector. While Link sees the AI market continuing to grow, she emphasized the need for careful stock selection rather than jumping in immediately.

For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 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).

10. zSpace, Inc. (NASDAQ:ZSPC)

Number of Hedge Fund Holders: N/A

zSpace, Inc. (NASDAQ:ZSPC) develops AR/VR technology for education, offering 3D interactive experiences without requiring head-mounted displays.

zSpace’s Career Readiness Solution, powered by Career Coach AI, won the 2025 District Administration Top EdTech Products Award in the CTE, Upskilling, and Credential Technology category. This innovative platform uses augmented and virtual reality to assist students in career exploration, skills development, and earning industry-recognized credentials. Career Coach AI provides real-time feedback and insights into fields like healthcare, IT, and engineering, helping students gain skills directly applicable to the workforce. The award highlights zSpace’s commitment to enhancing career readiness and preparing students for modern industry demands.

9. SEALSQ Corp (NASDAQ:LAES)

Number of Hedge Fund Holders: N/A

SEALSQ Corp (NASDAQ:LAES) designs and markets semiconductor chips and provides security solutions for IoT, data protection, and device authentication across industries like smart energy, automotive, aerospace, and more.

On January 28, SEALSQ Corp announced the decentralization of AI development through its cost-effective post-quantum semiconductors, aiming for a sustainable and decentralized AI future. With an R&D investment of $10 million, SEALSQ’s semiconductors offer high performance while addressing security concerns related to quantum computing. This move is influenced by the success of China’s DeepSeek, a large language model that rivals GPT-4 in performance at a fraction of the cost. SEALSQ’s innovations, optimized for IoT and edge devices, aim to democratize AI access and reduce environmental impact.

8. Perfect Corp. (NYSE:PERF)

Number of Hedge Fund Holders: 9

Perfect Corp. (NYSE:PERF) offers AI- and AR-powered solutions for the beauty, fashion, and skincare industries. On January 29, Perfect (NYSE:PERF) introduced the AI Frizzy Hair Analyzer, an advanced tool within its AI Hair Analysis suite that evaluates hair frizz levels in seconds. By analyzing three uploaded photos, the AI categorizes frizz into four levels: smooth, slightly frizzy, moderately frizzy, and extremely frizzy, using a dataset of 10,000 images representing diverse hair types.

The technology helps brands offer personalized product recommendations, such as anti-frizz treatments, improving customer experience and boosting sales. It integrates seamlessly into digital platforms, eliminating the need for in-person consultations or complex hair quizzes.

7. Domo, Inc. (NASDAQ:DOMO)

Number of Hedge Fund Holders: 15

Domo, Inc. (NASDAQ:DOMO) provides a cloud-based business intelligence platform that connects executives and employees with real-time data and insights across different devices.

On January 29, Domo (NASDAQ:DOMO) announced that Domo.AI has been recognized as a Trend-Setting Product in Data and Information Management for 2025 by Database Trends and Applications magazine. The recognition highlights Domo.AI’s comprehensive AI services that advance Domo’s platform, providing tools for flexible model creation, AI deployment, and improved governance and security. These features enable organizations to safely integrate data, personalize AI usage, and build data products with confidence.

6. PROS Holdings, Inc. (NYSE:PRO)

Number of Hedge Fund Holders: 25

PROS Holdings, Inc. (NYSE:PRO) offers software solutions to optimize sales, pricing, and customer experiences across various industries.

On January 28, It was announced that PROS Holdings (NYSE:PRO) and Lufthansa Group strengthened their long-term collaboration as Lufthansa Group has expanded its use of PROS’ AI-driven pricing solutions by adopting Dynamic Ancillary Pricing alongside Request-Specific Pricing. The technologies allow Lufthansa to optimize pricing in real time by considering trip details, market conditions, and customer preferences, improving both traveler experience and revenue potential. The group has used PROS Request-Specific Pricing since 2022 to deliver personalized offers, while the new Dynamic Ancillary Pricing adjusts the cost of additional services dynamically.

5. IREN Limited (NASDAQ:IREN)

Number of Hedge Fund Holders: 28

IREN Limited (NASDAQ:IREN) operates bitcoin mining data centers and offers high-performance computing solutions, including AI cloud services.

On January 21, IREN Limited (NASDAQ:IREN) provided a business update, highlighting plans to expand its mining capacity, implement liquid-cooling technology, and advance data center developments. The company announced a $1 billion at-the-market facility to support general operations, including increasing its capacity to 57 EH/s by late 2025 and integrating liquid-cooling systems for scaling cloud and colocation services.

Construction at Sweetwater is progressing, with a 1,400MW substation expected to be operational by April 2026. IREN is also developing new data center sites and evaluating various capital sources to optimize funding. The company continues to focus on operational efficiency, cost reduction, and potential AI-related opportunities.

4. MongoDB, Inc. (NASDAQ:MDB)

Number of Hedge Fund Holders: 49

MongoDB, Inc. (NASDAQ:MDB) provides a general-purpose database platform. Bernstein suggested that MongoDB and Snowflake may benefit from increased inferencing. If inferencing costs decline and smaller language models become more accessible, more companies could develop generative AI applications. This would lead to a rise in database queries, positively impacting both firms over time. Overall, MongoDB has been covered by 37 analysts with an average price target of $400, a 42% increase from current levels on January 29.

3. ASML Holding N.V. (NASDAQ:ASML)

Number of Hedge Fund Holders: 64

ASML Holding N.V. (NASDAQ:ASML) designs, manufactures, and services advanced semiconductor equipment, including lithography, metrology, and inspection systems, serving global chipmakers.

On January 29, Bernstein analyst Sara Russo noted that ASML exceeded expectations for Q4 and 2024, driven by strong installed base services and better-than-expected costs for High-NA EUV system acceptance. Bookings stood out at €7.1 billion, far above the €3.5 billion consensus. Q4 revenue reached €9.3 billion, surpassing estimates, with a gross margin of 51.7% and EPS of €6.85. Memory sales remained stable, making up 39% of system sales and bookings.

For Q1 2025, ASML guided sales at €7.75 billion and a 52.5% gross margin, while full-year guidance remains at €32.5 billion in sales and 52% gross margin. The company will stop reporting quarterly bookings, shifting to annual backlog updates. China’s system revenue share dropped to 27% in Q4, with full-year 2024 at 41%, expected to normalize to 20% in 2025. While results were strong, Bernstein remains cautious about AI-related demand uncertainties. Russo noted:

“While overall a solid set of results, and the strong bookings number should reassure investors about 2025, we believe there is still a lot to play out in AI demand as the DeepSeek impact becomes clearer. Longer-term, we remain bullish on the opportunity for $ASML, but caution may prevail until near-term implications are better understood.”

2. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 107

Advanced Micro Devices, Inc. (NASDAQ:AMD) develops semiconductors, providing processors and graphics technologies for gaming, data centers, and AI-driven high-performance computing. On January 29, Susquehanna reduced its price target for AMD to $165 from $200, maintaining a Positive rating on the stock. The firm expects generally in-line quarterly results, with potential upside from Server and PC segments. However, it highlighted the likely removal of the full-year MI300 guidance, which could be a slight negative for AMD AI supporters.

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) delivers cloud, productivity, and business solutions driven by AI, enhancing operational efficiency and security while making substantial investments in AI development.

On January 29, Bloomberg reported that Microsoft and OpenAI are investigating whether a group linked to Chinese AI startup DeepSeek improperly accessed data from OpenAI’s technology. Microsoft’s security team reportedly observed individuals, possibly connected to DeepSeek, extracting large amounts of data via OpenAI’s API. DeepSeek recently launched R1, an open-source AI model that claims to rival leading U.S. AI models at a lower cost. OpenAI acknowledged that some Chinese groups use distillation to replicate U.S. AI models and is reviewing indications that DeepSeek may have done so improperly. DeepSeek, however, maintains that its R1 model was built using open-source AI systems rather than proprietary technology from OpenAI, the report states.

While we acknowledge the potential of Microsoft Corporation (NASDAQ:MSFT) 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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