Goldman Sachs raised its target price for Chinese stocks today. They estimate that AI adoption could significantly boost earnings growth and possibly bring in $200 billion of inflows. DeepSeek’s AI breakthrough has led these tech stocks on a strong rally, reigniting investor interest and optimism in Chinese technologies and capabilities. The firm raised its 12-month target price for China’s CSI300 to 4,700 from 4,600. It also raised its price target for MSCI China to 85 from 75.
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The Chinese startup may be all the rage for Chinese stocks, but some countries are exercising caution all the same. In the latest news, South Korea’s data protection authority has suspended new downloads of the Chinese AI app from DeepSeek. This is after DeepSeek acknowledged failing to take into account some of the agency’s rules on protecting personal data. The Personal Information Protection Commission (PIPC) has notified that the app service will be resumed once improvements are made according to the country’s privacy law. Even though DeepSeek’s web service remains accessible in the country, new downloads of the app are restricted.
Previously, the US Navy also instructed its members to avoid using artificial intelligence technology from China’s DeepSeek. According to the Navy, DeepSeek’s AI was not to be used “in any capacity” due to “potential security and ethical concerns associated with the model’s origin and usage”. In a similar move, Italy’s data protection authority, the Garante, has also ordered DeepSeek to block its chatbot in the country. This is because it failed to address the regulator’s concerns over its privacy policy.
Notably, BBC reported that the the first member of a Western government to raise privacy concerns about DeepSeek has been Australia’s science minister, Ed Husic. Husic has raised “data and privacy management” concerns over DeepSeek.
“I would be very careful about that, these type of issues need to be weighed up carefully”.
DeepSeek has failed to respond to requests for comment on these issues.
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.
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A closeup of a digital newsroom, highlighting the complexity of the modern media landscape.
10. Informatica Inc. (NYSE:INFA)
Number of Hedge Fund Holders: 22
Informatica Inc. (NYSE:INFA) is a leader in enterprise AI-powered cloud data management. On February 14, Goldman Sachs downgraded Informatica (INFA) to “Neutral” from Buy with a price target of $20, down from $38. The downgrade, issued after the company’s fourth-quarter results, reflects on its key metrics falling short of consensus expectations. The firm cited several reasons for the downgrade, particularly its slower-than-expected transition of Informatica to cloud services.
The company’s guidance for fiscal year 2025 suggests a 25% growth in Cloud ARR. This guidance fell short of the firm’s estimate of 35% and was also beneath the company’s previous mid-term guidance of a 31-33% compound annual growth rate from fiscal years 2023 to 2026. This target has now been withdrawn. For both cloud and self-managed/maintenance ARR, excluding migrations, the company has been experiencing higher churn rates which is partly due to weaker execution on renewals.
Another factor negatively impacting overall revenue growth has been customers opting for shorter-duration self-managed contracts. The accelerated shift from maintenance to cloud modality, despite demonstrating strong expansion once customers transition to Informatica’s AI-powered Intelligent Data Management Cloud (IDMC) has also led to a short-term reduction in net new ARR. This is due to the accounting treatment of subscription credits when a maintenance customer fully migrates to the cloud.
9. Bloom Energy Corporation (NYSE:BE)
Number of Hedge Fund Holders: 25
Bloom Energy Corporation (NYSE:BE) develops solid-oxide fuel cell systems for on-site power generation, helping meet the growing energy demands of AI data centers. On February 14, Andrew Percoco from Morgan Stanley maintained a “Buy” rating on the stock with a price target of $28.00.
Percoco’s buy rating stems from Bloom’s recent partnership with Chart Industries for carbon capture technology. This collaboration will allow Bloom to enhance the deployment of its fuel cells by enabling near zero-carbon power solutions, particularly useful for data centers that want to meet emission targets.
The firm further noted that AEP’s earnings call and regulatory filings strengthen Bloom Energy’s outlook, suggesting how Bloom’s partnership with Chart is a compelling option for data centers seeking clean and reliable energy sources.
8. Upstart Holdings Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 29
Upstart Holdings Inc. (NASDAQ:UPST) offers an AI-powered lending platform to help consumers secure personal and auto refinance loans as well as home equity lines of credit. On Friday, February 14, Morgan Stanley analyst James Faucette upgraded the stock to “Equal Weight” from Underweight with a price target of $70, up from $12. The firm said that it sees an improving environment for the artificial intelligence lending company.
“Upgrading UPST to EW as the environment remains favorable for it from both a funding and macro perspective, the latter of which hinges on employment stability.”
7. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On February 13, Matthew Cost from Morgan Stanley maintained a “Hold” rating on the stock with a price target of $470.00, up from $365. The rating follows Applovin’s Q4 beat and the announcement that the company is set to divest its first-party games business in Q2.
In particular, ad revenue, driven by its AI-driven advertising platform and expansion into new markets, is performing well above forecasts. However, the hold rating stems from the structural changes going on in AppLovin, such as its plans to sell its first-party games business and focus more on its ad network. Moreover, there is optimism surrounding non-gaming ad revenue, but the developments are still in the early stages.
6. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 52
Twilio Inc. (NYSE:TWLO) is a leading cloud communications platform-as-a-service (CPaaS) company. On February 15, Robert W. Baird analyst William Power reiterated a “Buy” rating on the stock and retained the price target of $160.00 based on its financial performance and strategic initiatives. Even though there was a slight sequential decline in adjusted gross margin in Q4, the company reported strong revenue growth of 11% year-over-year. This growth aligned with previous estimates and demonstrated resilience.
The company also maintained its full-year guidance, reflecting on its growth momentum and strong communications revenue. It also authorized an additional $2 billion share buyback, highlighting its commitment to returning value to shareholders. In addition, Twilio has been engaging with AI-centric companies and has also been developing AI-driven products, demonstrating potential for future innovation and market expansion.
5. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 60
Cisco Systems, Inc. (NASDAQ:CSCO) is an American technology company that provides information technology and networking services. On February 13, BofA raised the firm’s price target on the stock to $76 from $72 and kept a “Buy” rating on the shares. The firm noted that fiscal Q2 results and Q3 and FY25 guidance came in above expectations.
One reason is the strong demand for AI infrastructure buildouts across Cloud, SP, and Enterprise verticals. Moreover, the macro demand backdrop is also picking up following a few years of inventory absorption. The analysts further added that they anticipate continued growth in the second half and 2026 for Cisco.
4. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity. On February 17, Saiyi He from CMB International Securities maintained a “Buy” rating on the stock with the associated price target lowered to $230.30. The firm noted Palo Alto’s robust financial performance and strategic positioning as a reason for the buy rating. In particular, revenue for the company increased 14.3% year-over-year for the second quarter of fiscal year 2025.
This growth has been driven by optimized sales and marketing expenses along with increasing demand for Palo Alto’s security solutions in the AI sector. In particular, its Next-Generation Security products have grown substantially, especially its AI-powered SASE and Prisma Cloud offerings. By focusing on platformization, the company has secured large deal wins which will likely lead to market share expansion and margin improvement.
3. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets. On February 17, Analyst Fang Boon Foo of DBS maintained a “Buy” rating on the stock and retained the price target of $250.00. Broadcom’s strategic acquisitions and strong financial performance have led to Boon Foo’s optimism. In particular, the analyst highlighted the recent acquisition of VMware which has boosted Broadcom’s position in the infrastructure software market.
Being a key player in the custom AI chip market, it is well-positioned to benefit from the AI boom with substantial revenue growth anticipated. The company also has a solid growth trajectory driven by its impressive 10-year compound annual growth rate in revenue and EBITDA and its strategic shift towards software. Finally, the firm anticipates strong business momentum due to the company’s AI-chip demand and the VMware acquisition.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company. On February 13, Bloomberg reported that the company is planning to launch a product on February 19. Chief Executive Tim Cook has described the product as the “newest member of the family”. Posting on X, Cook released a short animation of a metallic Apple logo along with the message, without releasing more details.
One possible clue caught through Cook’s animation, which shows the shape of the home button disappearing, is that the new device will be the end of the home button. Bloomberg News further reported that the new model will also include Apple Intelligence and the A18 chip, which is currently featured in the iPhone 16. Moreover, the model will also be Apple’s first device with an in-house cellular modem chip.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. One of the biggest analyst calls for Friday, February 14, was for Nvidia Corporation.
Jefferies analyst Blayne Curtis reiterated a “Buy” rating and $185.00 price target on the stock, stating that investors should buy the dip in shares of Nvidia.
“Foxconn offered a notable improvement in tone this week with the release of their January revenue figures (+3%). Management now suggesting sequential revenue growth in 1Q25 likely to be “better than average” vs the “roughly similar levels” guidance proposed during their earnings call last month. The shift is a welcome sight for investors concerned about ongoing delays with NVDA’s Blackwell rollout and suggests the ramp is fully underway. We continue to believe that most of the supply chain data points out of Asia are just noise and that the fears of a down quarter or air pocket are overblown. Please reach out for a copy of AI Accelerator Model”.
While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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