In this article, we discuss 10 AI news you should take a look at.

DeepSeek has gained attention for creating a high-performing model, R1, at a fraction of the typical cost. Its efficient use of resources and open-source approach has prompted discussions on the traditional reliance on expensive AI chips. Despite concerns about reduced demand for high-end semiconductors, experts argue that the growing need for compute power, driven by large-scale AI models, continues to fuel demand for advanced AI infrastructure.

Growing AI Competition Promises Exciting Advancements and Opportunities

As AI continues to evolve, new advancements are pushing the boundaries of performance, cost-efficiency, and accessibility, creating a dynamic landscape for both established players and new competitors. Bernstein analyst Peter Weed highlighted DeepSeek’s potential to drive AI adoption by offering cost-efficient inferencing, which could lead to increased demand.

While some speculate on the impact on AI infrastructure vendors, the firm suggested that software vendors providing data infrastructure, identity management, observability, and communications may be the key beneficiaries. Lower AI model costs could accelerate enterprise adoption, moving projects from proof-of-concept to production faster, and benefit a range of software vendors that have previously lagged behind hyperscalers in growth.

Weed noted:

“If Deepseek puts pressure to further bring down model cost, it may not only increase the number of viable projects but also may accelerate the pace of new projects going into production. This would benefit all the software consumption infrastructure above the hyperscaler level.”

Additionally, in a post on X, Sam Altman acknowledged DeepSeek’s R1 model as impressive, especially for its cost, but emphasized that OpenAI plans to release superior models. He expressed excitement about the competition and reiterated OpenAI’s focus on its research roadmap, highlighting the growing demand for AI and the importance of increased computing power to achieve advancements, including AGI.

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. Oklo Inc. (NYSE:OKLO)

Number of Hedge Fund Holders: N/A

Oklo Inc. (NYSE:OKLO) develops advanced nuclear power plants that recycle nuclear waste to provide clean, reliable energy, supporting sustainable solutions for the increasing power demands of AI.

Craig-Hallum initiated coverage on OKLO with a Buy rating and a $44 price target and noted the potential to exceed $80 as it leads in the advanced modular reactor (AMR) market. AMRs address global energy needs by providing 24/7 zero-emission power with better safety, faster deployment, and lower costs compared to traditional nuclear power. OKLO’s build-own-operate model simplifies adoption and accelerates regulatory timelines as it caters to growing demand from AI and data centers. Significant partnerships with companies like Equinix and Switch have expanded its commercial pipeline to over 14 GW, potentially generating $11 billion annually.

9. Nayax Ltd. (NASDAQ:NYAX)

Number of Hedge Fund Holders: 3

Nayax Ltd. (NASDAQ:NYAX) is a fintech company offering payment solutions and management platforms for retailers worldwide, serving industries such as vending, EV charging, self-service kiosks, and unattended machines.

On January 27, Nayax Ltd. and SECO S.p.A. formed a strategic partnership to integrate Nayax’s payment platform into SECO’s products, starting with a smart screen for vending machines and self-service retail. The collaboration combines secure payments with remote machine management, AI-driven business intelligence, and IoT capabilities. The joint solution, powered by SECO’s IoT-AI software, enables real-time data analysis, intelligent automation, and business insights. The partnership aims to lower operational costs, improve telematics, and offer OEMs a cost-optimized, fully integrated solution across various industries, including vending and electric vehicle supply.

8. BlackSky Technology Inc. (NYSE:BKSY)

Number of Hedge Fund Holders: 7

BlackSky Technology Inc. (NYSE:BKSY) delivers geospatial intelligence, satellite imagery, and analytics services to government and commercial clients in fields such as national security and supply chain management.

On January 28, BlackSky (NYSE:BKSY) secured a seven-year, $100 million contract with an international defense partner for real-time space-based monitoring services. The agreement ensures access to Gen-2 and future Gen-3 imagery and AI-enabled analytics through 2032, with annual capacity guarantees. BlackSky’s high-cadence constellation, Spectra platform, and subscription model enable seamless integration of Gen-3 features, such as 35 cm resolution imagery and sub-hourly revisit times. CEO Brian O’Toole emphasized the deal’s significance in meeting evolving customer needs for reliable, low-latency intelligence.

7. Ciena Corporation (NYSE:CIEN)

Number of Hedge Fund Holders: 40

Ciena Corporation (NYSE:CIEN) offers hardware and software solutions for video, data, and voice traffic delivery, including networking platforms, automation software, and global services for communication networks worldwide.

On January 28, JPMorgan upgraded Ciena (NYSE:CIEN) to Overweight from Neutral and raised its price target to $88 from $84. Analyst Samik Chatterjee noted limited near-term impact on CIEN’s fundamentals despite concerns over AI model capital efficiency. The upgrade was made due to strong cloud provider capex, telecom recovery, and investments from MOFN providers in data center connectivity. Key drivers include recovering telecom capex, rapid data center interconnect investments, and attractive valuation at 19x CY26 EPS. JPMorgan forecasts 8%-11% growth for FY25 and FY26, attributing a 24x target multiple for upside. Chatterjee noted:

“While we remain cautious about lofty valuations for Optical companies, the recent pullbacks offer attractive opportunities. Among Optical names, our relative rank order is COHR, followed by LITE, and then CIEN. In Optical components, we see stronger growth and margin levers tied to datacenter densification and next-generation datacom technologies, offering more premium opportunities compared to system providers like CIEN.”

6. Teradyne, Inc. (NASDAQ:TER)

Number of Hedge Fund Holders: 43

Teradyne, Inc. (NASDAQ:TER) develops automated test systems and robotic solutions, focusing on AI-driven technologies for semiconductor testing, wireless evaluations, and manufacturing processes.

Shane Brett CFA from Morgan Stanley maintained a Sell rating on Teradyne (NASDAQ:TER), with a price target of $117, due to a revised revenue and EPS outlook for 2026, TipRanks reported on January 27. The company is expected to lower its revenue target from $4.25 billion to $3.9 billion and EPS from $6.50 to $6.00. Additionally, Teradyne’s testing segment faces challenges such as uncertain forecasts and extended lead times, contributing to the cautious outlook despite some positive developments, including Apple’s AI server chip.

5. Vertiv Holdings Co (NYSE:VRT)

Number of Hedge Fund Holders: 91

Vertiv Holdings Co (NYSE:VRT) designs and manufactures critical digital infrastructure solutions, offering power management, thermal systems, and lifecycle services for data centers, communication networks, and industrial environments across multiple regions.

On January 28, Melius Research downgraded Vertiv Holdings (NYSE:VRT) to Hold from Buy, with a $125 price target, along with other companies like Eaton, Johnson Controls, and Trane. The firm is not concerned about earnings results for 2025 or 2026 but highlighted that the AI-driven capex boom may have peaked which could lead to potential challenges in valuation multiples. While the market’s recent reaction has priced in some risk, Melius sees limited potential for outperformance and noted that the positive capex revision cycle appears to have peaked for the sector as a whole.

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

Number of Hedge Fund Holders: 107

Advanced Micro Devices, Inc. (NASDAQ:AMD) develops semiconductors, offering processors and graphics solutions for gaming, data centers, and embedded systems, with a focus on high-performance computing for AI tasks.

On January 28, Melius Research downgraded AMD from Buy to Hold, lowering its price target to $129 from $160. The firm highlighted increased long-term concerns about AMD’s x86 server and PC markets, primarily due to Nvidia’s growing competition with Arm-based CPUs and custom chips. Despite a previous sales reduction in January, Melius remains cautious about AMD’s future outlook, particularly regarding the potential market share loss to Nvidia.

3. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 115

Alibaba Group Holding Limited (NYSE:BABA) integrates AI into various applications, such as chatbots for customer support, NLP, and machine learning for text analysis, as well as advanced tools like AI translation and text-to-video generation. It also invests heavily in AI development.

On January 28, Alibaba Cloud unveiled Qwen2.5-VL, a multimodal model available in sizes up to 72 billion parameters, including instruction-tuned versions. The flagship model is accessible through Qwen Chat and excels in visual tasks, video analysis, and generating structured outputs for documents. Enhancements like a dynamic Vision Transformer improve speed and multimodal capabilities.

The Qwen2.5-1M series supports 1 million tokens, offering advanced long-context processing through techniques like long data synthesis and fine-tuning, making it efficient for tasks requiring extensive context.

2. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 193

NVIDIA Corporation (NASDAQ:NVDA) focuses on AI-powered solutions, providing platforms for data centers, autonomous vehicles, robotics, and cloud computing.

On January 27, Nvidia posted its comments about Deepseek. It highlighted it as a prime example of Test Time Scaling, showcasing how new models can be developed using existing resources while requiring extensive GPUs and high-performance networking for inference. The firm said:

“DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling. DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant. Inference requires significant numbers of NVIDIA GPUs and high-performance networking. We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling.”

Additionally, Cantor Fitzgerald views DeepSeek’s V3 LLM release as highly positive for compute demand and NVIDIA, dismissing concerns about peak GPU spending. It believes the push toward AGI and Jevons Paradox will drive increased demand for compute and suggests NVDA shares are a buy during any weakness.

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) provides AI-powered services such as cloud solutions, productivity tools, and business applications to improve operations and security, while heavily investing in AI research and development.

Reuters reported on January 28 that President Trump stated that Microsoft is in talks to acquire TikTok and expressed interest in a bidding war for the app. Microsoft declined to comment, and TikTok and ByteDance did not respond immediately. Trump mentioned ongoing discussions about TikTok’s future, including a potential acquisition by Elon Musk, though Musk has not publicly addressed the offer. Additionally, AI startup Perplexity AI proposed a merger with TikTok, with the U.S. government potentially receiving up to half of the new entity. This marks the second time Microsoft has been linked to a TikTok acquisition after talks in 2020 were unsuccessful, the report stated.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.