Even amidst the DeepSeek frenzy, artificial intelligence remains the most prevalent theme in the market today. Surging enterprise adoption, expanding use cases, and increasing artificial intelligence infrastructure have led to the AI surge. DeepSeek’s claims that its AI models are more efficient and less costly have now been deemed “largely understated” by several analysts and investors in the tech world. More importantly, tech giants continue their AI investment sprees, demonstrating that the global AI arms race is far from over.

READ NOW: Weekend Roundup: Top 10 AI Stocks on Latest News and Ratings and Top 14 AI Stocks on Wall Street: News and Analyst Ratings

Recent earnings reports signify that the combined capital expenditures for these tech giants are set to exceed $320 billion in 2025. This is despite investors questioning whether such huge AI spending is even justified when AI models can be developed cheaper and more efficiently. These people are worried that the AI arms race may turn into an expensive gamble. Tech executives are not worried, however. According to them, cheaper artificial intelligence is only going to lead to a higher demand for AI products.

Some analyst firms seem to agree. Here is what Dan Ives from Wedbush Securities has to say:

“Huge week for Big Tech earnings as Zuckerberg, Nadella, Cook, and Musk doubled down on their AI visions and what this means for each of these tech stalwarts looking ahead,” he said in an X post last month. “This is an AI arms race and the Temu of AI DeepSeek not changing that…AI Revolution just starting.”

Even Sundar Pichai, Google’s CEO, has been all praises for DeepSeek, stating that it has done good work that showed how global artificial intelligence is. He stated how he previously anticipated that his company would be the leading player in the AI space, but noted that others would be there in that space too.

With AI investments soaring and competition heating up, the market continues to reward companies that demonstrate strong execution in the artificial intelligence sector. These companies are capitalizing on the AI boom through their strategic investments, market leadership, and strong earnings growth. Let’s move on to explore them.

For this article, we compiled an initial list of AI stocks using ETFs and financial media reports. From this pool, we selected the best-performing AI stocks based on their year-to-date (YTD) performance, as of February 14. 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)

10. Micron Technology, Inc. (NASDAQ:MU)

Year-to-Date (YTD) Performance: 18.25%

Number of Hedge Fund Holders: 107

Micron Technology, Inc. (NASDAQ:MU) is a US-based innovative memory and storage solutions provider. On February 13, Wells Fargo analyst Aaron Rakers maintained a “Buy” rating on the stock and set a price target of $140.00. Despite Micron lowering its gross margin guidance for the upcoming quarter attributed to lower pricing and a higher mix of consumer products, analyst firms such as Wells Fargo and Citi remain optimistic about the stock.

This is because they are counting on Micron’s operational strategy, particularly its anticipated increase in bit shipments and revenue growth. The company also boasts stable DRAM data center demand and is making considerable progress in the High Bandwidth Memory (HBM) sector. Wells Fargo also highlighted Micron’s plans to ramp up 12H stack production. Moreover, Citi also remains optimistic about Micron due to its artificial intelligence high bandwidth memory opportunity. It strongly believes that the DRAM market will recover during the spring.

9. International Business Machines Corporation (NYSE:IBM)

Year-to-Date (YTD) Performance: 18.86%

Number of Hedge Fund Holders: 56

International Business Machines Corporation (NYSE:IBM) is a multinational technology company and a pioneer in artificial intelligence, offering AI consulting services and a suite of AI software products. IBM shares have gained 19% year-to-date.

Last month, the company posted strong Q4 results with artificial intelligence growth boosting its software business. It posted adjusted earnings of $3.92 per share on $17.55 billion in revenue, while analysts polled by LSEG had expected earnings to come in at $3.75 per share and revenues reaching $17.54 billion.

In particular, the company’s software business grew 10% year-over-year backed by growing artificial intelligence demand and its operating system known as Red Hat Linux. According to CEO Arvind Krishna, IBM posted $5 billion in bookings for its generative AI segment.

“We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat. Clients globally continue to turn to IBM to transform with AI.”

– CEO Arvind Krishna