We recently published a list of the 10 AI Stocks Making Headlines This Week. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other AI stocks that are making headlines this week.
China is aggressively working to close the AI competitiveness gap with the United States. According to CEO of Chinese startup 01.AI Lee Kai-fu, the country is now as close as three months in some areas. This is because companies such as DeepSeek have figured out how to use chips and apply algorithms more efficiently.
Lee has told Reuters that startup DeepSeek has said that China has pulled ahead in areas such as infrastructure software engineering, severely challenging the US’s attempts to hold back China’s AI sector through its sanctions.
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“Previously I think it was a six to nine month gap and behind in everything. And now I think that’s probably three months behind in some of the core technologies, but actually ahead in some specific areas.”
-Lee Kai-Fu
At the same time, a report by MIT Technology Review reveals how 80% of China’s newly built computing resources remain unused.
“The growing pain China’s AI industry is going through is largely a result of inexperienced players—corporations and local governments—jumping on the hype train, building facilities that aren’t optimal for today’s need.”
-Jimmy Goodrich, senior advisor for technology to the RAND Corporation.
That said, energy is being wasted, data centers have become “distressed assets,” but the country is doing all it can to stay ahead in the AI arms race.
While sanctions from the US had been successful in curbing China’s progress toward AI, they were only successful in the short term. The country has now learned to operate under constraints, developing its own algorithms and open-sourcing technologies to reduce reliance on Western technology.
Some experts even assert that China’s open-sourcing strategy may become strong enough to challenge the West’s model of AI monetization.
“The fact that DeepSeek are able to figure out the chain of thought with a new way to do reinforcement learning is either catching up with the U.S., learning quickly, or maybe even more innovative now.”
-Lee
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. The hedge fund data is as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Ken Wolter / Shutterstock.com
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On March 26, TD Cowen analysts noted that Microsoft has abandoned data center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months. This is because of an oversupply relative to its current demand forecast.
Analysts led by Michael Elias said in a note that these withdrawals from new capacity leasing have been largely driven by the company’s decision not to support additional training workloads from OpenAI. The firm’s supply checks also reveal that Microsoft’s pullback has led to Alphabet’s Google and Meta stepping in to backfill the capacity in international markets and the U.S., respectively. In response, Microsoft noted that “strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions”.
Overall, MSFT ranks 2nd on our list of AI stocks that are making headlines this week. While we acknowledge the potential of MSFT 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 time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.
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