No conservation about artificial intelligence today stands complete without the mention of DeepSeek. As reported by The Information, the Chinese AI startup that has startled the world of AI with its self-proclaimed cheaper and more efficient AI models is now looking for outside funding. The startup has drawn interest from names such as Alibaba and state funds, the report noted. These low-cost AI models that DeepSeek has presented recently have stirred up investor skepticism, making it quite evident that China is leaving no stone unturned to keep up in the AI arms race.

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With fame, however, comes challenges. For DeepSeek, the surge in demand has caused outages at the small startup. Due to this reason, the company needs more AI chips and servers so that it can handle the fast-growing usage of its models, all while supporting model development. According to the report, funds that have contacted DeepSeek include China Investment Corp and the National Social Security Fund. It further noted that the startup’s executives and hedge fund parent, High-Flyer Capital Management, are also discussing the potential shift to building a business that generates revenue, eventually profiting from research.

The move is in line with China’s efforts to bolster the country’s economy and advance its technological capabilities. This has been made evident from China’s President Xi Jinping’s recent meeting with private sector business leaders, including Alibaba co-founder Jack Ma and Liang Wenfeng, founder of DeepSeek.

“It’s a tacit acknowledgement that the Chinese government needs private-sector firms for its tech rivalry with the United States. The government has no choice but to support them if it wants to compete with the United States.”

-Christopher Beddor, deputy China research director at Gavekal Dragonomics in Hong Kong.

In a similar move announced before this news, OpenAI also plans to revamp its for-profit arm into a public benefit corporation. The move intends to ease restrictions imposed by its current non-profit parent and also increase investments.

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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15. SentinelOne, Inc. (NYSE:S)

Number of Hedge Fund Holders: 37

SentinelOne, Inc. (NYSE:S) is one of the leading artificial intelligence-powered cybersecurity providers. On February 19, Hamza Fodderwala from Morgan Stanley maintained a “Hold” rating on the stock with a price target of $27.00. Fodderwala’s hold rating stems from the pricing pressures from competitors that SentinelOne is facing. This is despite expectations for growth in products such as Cloud Security and Purple AI. Since larger platform players can offer higher discounts, it is restraining the company from capturing a considerable market share.

Moreover, the company is also dealing with rising cloud hosting costs and increased investment efforts, leading to declining gross margins. The forecasted EBIT margin for Fiscal Year 2026 is expected to stay flat, a point of concern for the firm. Overall, even though the stock valuation may look attractive, declining margins and growth challenges have led the analyst to maintain a hold rating.

14. Fortinet, Inc. (NASDAQ:FTNT)

Number of Hedge Fund Holders: 47

Fortinet, Inc. (NASDAQ:FTNT) is a cybersecurity company that provides enterprise-level next-generation firewalls and network security solutions, leveraging artificial intelligence across its cybersecurity products. On February 19, the company announced significant enhancements to FortiAnalyzer, Fortinet’s powerful and streamlined log management, analytics, and reporting platform that offers broad coverage for on-premises and cloud environments.

The enhancements have transformed FortiAnalyzer into an AI-driven security operations platform specifically tailored for teams and midsize enterprises facing cyber skills shortages. Some enhancements that the FortiAnalyzer incorporates are a unified data lake for centralized visibility, advanced threat detection and AI-powered analysis, automated incident response, and embedded GenAI assistance.

“Security teams today are stretched thin, yet they’re expected to defend against increasingly complex and targeted threats. With the latest advancements in FortiAnalyzer, we’ve eliminated the need for additional SecOps tools, making it the ideal turnkey AI-driven security operations platform supporting on-premises and cloud environments. This is a game-changer for lean security teams, allowing them to enhance threat detection, automate incident response, and streamline critical security operations functions from a single platform.”

-Nirav Shah, Senior Vice President, Products and Solutions at Fortinet.