Escalating costs for developing bigger and more powerful artificial models has always been a big problem. Over the years, the cost of creating AI models has ranged between a thousand to million dollars, depending on complexity, project scope, and the need for specialized resources. The development of advanced and more powerful graphics processing units costing thousands of dollars has only fueled the costs.

In comes, DeepSeek, a Chinese AI startup that has shown it is possible to develop AI models without spending much. It maintains that its R1 AI model, despite being constructed at a fraction of the cost, competes with or surpasses top US AI models on various industry standards.

As the tech sector attempts to figure out how DeepSeek accomplished the feat, the fallout from the R1 launch is rapidly spreading around the world. DeepSeek’s achievements are fueling the race to develop cost-effective AI models.

Cohere is in the process of launching an AI model to conduct complicated business tasks while running on just two A100 H100 chips. It is significantly less than the number of chips required for some large models and also less than what DeepSeek’s system is thought to need. Similarly, Google has unveiled an AI model that runs on a single advanced AI chip.

Nevertheless, tech giants are still spending billions of dollars on data centres, semiconductors, and personnel. However, the latest releases also allude to a drive within the industry to create AI software that operates as effectively as possible. The fervor surrounding the Chinese startup might only hasten the development of robust, cost-effective AI models.

DeepSeek has disrupted numerous beliefs within Silicon Valley regarding the financial aspects of creating AI, the optimal technical approaches for developing the technology, and the degree of the United States’ advantage over rivals in China. For the longest time, the burgeoning AI sector has assumed that achieving superior AI heavily relies on substantial investments in advanced chips and significantly larger data centres to accommodate them.

“The release of DeepSeek AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win,” US President Donald Trump said.

Our Methodology

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 in 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).

10. SEALSQ Corp (NASDAQ:LAES)

Number of Hedge Fund Holders: 4

SEALSQ Corp (NASDAQ:LAES) is a technology company that designs, develops, and markets semiconductor chips. It offers semiconductors like VaultIC secure elements, a secure arm platform, and smart card reader chips. The company confirmed the appointment of Mark Minevich to its Advisory Board on March 12. The appointment affirms the company’s commitment to artificial intelligence and quantum technology advancements.

Minevich joins the company with vast experience as a recognized digital cognitive AI strategist and serves on various prestigious boards, including the International Data Centers Authority and Franklin Templeton AI’s corporate advisory board.

“We are thrilled to welcome Mark to the SEALSQ Advisory Board. His deep expertise in AI, global technology strategy, and investment will significantly enhance our mission to drive the adoption of secure AI and Quantum solutions,” said CEO and Founder, Carlos Moreira.

9. AudioCodes Ltd. (NASDAQ:AUDC)

Number of Hedge Fund Holders: 10

AudioCodes Ltd. (NASDAQ:AUDC) is a technology company that provides advanced communications software, products, and productivity solutions for the digital workplace. It offers solutions, products, and services for unified communications, contact centers, hosted business services, Voice.AI, and service provider businesses. On March 12, the company confirmed strengthening AudioCode Live services with AI-powered applications to modernize customer experience and employee experience.

Voca CIC, an AI-first Omni channel contact center solution that integrates with Microsoft Teams is one of the new products. AudioCodes Ltd. (NASDAQ:AUDC) has also introduced Meeting Insights, a generative AI-powered meeting productivity solution, and Interaction Insights, a cloud-based compliance recording solution. The strategic addition of AI-powered services to AudioCodes’ Live offering may significantly impact the company’s revenue base. With the per-user, per-month price model, the launch of subscription-based AI services Voca CIC, Meeting Insights, and Interaction Insights creates the possibility of recurring revenue streams.

“With AudioCodes Live’s latest suite of value-added services, they can unlock new revenue opportunities and increase margins through the automated and efficient delivery of AI-powered enterprise solutions that elevate both CX and EX,” stated Lior Aldema, Chief Business Officer at AudioCodes.

8. MeiraGTx Holdings plc (NASDAQ:MGTX)

Number of Hedge Fund Holders: 15

MeiraGTx Holdings plc (NASDAQ:MGTX) is a clinical-stage genetic medicine company committed to harnessing the full potential of genetic therapies for both rare and prevalent diseases. It focuses on treatment for ocular, salivary gland, and central nervous system disorders. On March 13, the company announced the inking of a strategic collaboration with Hologen Limited, a leading developer of multi-modal generative AI foundation models of real-world clinical data.

In return, the companies agreed to form a joint venture dubbed the Hologen Neuro AI Ltd. MeiraGTx will receive $200 million in upfront cash as part of the deal. On the other hand, Hologen Neuro Ltd is to receive up to $230 million from Hologen to fund the development of AAV GAD for treating Parkinson’s disease. Combining Hologen’s AI models with MeiraGTx’s clinical datasets offers a fresh way to pinpoint patient subgroups that are more likely to react and adjust trial design settings.

“The use of Hologen’s AI to elucidate brain circuitry in this complex heterogeneous disease has already significantly de-risked the AAV-GAD Phase 3 program when applied to MeiraGTx’s Phase 2 clinical data sets and has identified disease modifying changes in the physiology of the brain in response to AAV-GAD treatment,” Alexandria Forbes, PhD, co-founder, president and CEO of MeiraGTx stated.

7. Infosys Limited (NYSE:INFY)

Number of Hedge Fund Holders: 27

Infosys Limited (NYSE:INFY) is a leading provider of next-generation digital and consultation services. It specializes in helping businesses navigate their digital transformation through technology, outsourcing, consulting, and next-generation digital services. It’s also integrating AI into its solutions to help enterprises navigate complex technical policy and AI governance structures. The company announced on March 12 the expansion of its strategic collaboration with Citizen, the oldest and largest financial institution in the US.

The strengthened partnership paves the way for citizens to leverage Infosys Limited’s (NYSE:INFY) deep expertise in financial services and innovative technologies, including artificial intelligence, cloud, and automation, to develop native domain platforms. The expanded collaboration enhances Infosys’ credentials in AI-powered transformation at a pivotal juncture in the industry when IT service providers are increasingly required to differentiate themselves in AI capabilities.

Dennis Gada, EVP and Global Head of Banking and Financial Services at Infosys, said, “We are excited to strengthen our collaboration with Citizens by leveraging our AI expertise with Infosys Topaz, to advance their transformation objectives and business growth. As we transition to an AI-first world, this collaboration aspires to redefine the possibilities in banking, combining the strengths of both Infosys and Citizens in banking and technology.”

6. NICE Ltd. (NASDAQ:NICE)

Number of Hedge Fund Holders: 28

NICE Ltd. (NASDAQ:NICE) is a technology company that provides cloud platforms for AI-driven digital business solutions. It offers CXone, a cloud-native open platform, and enlightens an AI engine for the customer engagement market. The company received a significant boost on March 13 as Prince George’s County in Maryland selected one of its AI-powered solutions, NICE Justice, to enhance its prosecutorial effectiveness.

Nice Justice is to help transform how state attorneys and office staff receive, interact, manage and share digital evidence. The solution features built-in AI and automation capabilities for object detection, automated case building, audio transcription, and automation capabilities. The agreement with Prince George’s County confirms NICE’s AI-powered evidence management technology and marks a strategic expansion for the organization in the judicial sector.

Executive Vice President NICE, Chris Wooten, commented, “Achieving justice for victim’s hinges on uncovering the truth. However, finding that truth can be elusive without a centralized location to gather and assemble complete digital evidence. Our AI-powered NICE Justice optimizes digital evidence management by incorporating AI, analytics, and workflow automation. This platform provides attorneys with a single, secure, and efficient place to manage, locate, connect, and share digital evidence to uncover the truth and prosecute cases effectively.”

5. Tower Semiconductor Ltd. (NASDAQ:TSEM)

Number of Hedge Fund Holders: 36

Tower Semiconductor Ltd. (NASDAQ:TSEM) is an independent semiconductor foundry that provides technology, development and process platforms for integrated circuits. It also manufactures analog integrated circuits, key to speeding up data transfers and improving power efficiency in AI and data centre applications. On March 12, the company confirmed a successful demonstration of the 400G/lane modulator PH18DA integrated silicon photonics platform.

The demonstration, which was conducted in partnership with OpenLight, achieved a better than 3.5db extinction ratio using PAM-4 modulation format at 0.6 volts peak-to-peak drive voltage. The successful tests addressed critical challenges in data centre and AI optical connectivity, whereby silicon modulators cannot support 400G bit rates.

Tower Semiconductor’s ability to enable 3.2Tb solutions spanning CWDM wavelengths places it at the nexus of two rapidly expanding markets, AI infrastructure and silicon photonics. Likewise, it boasts as a competitive advantage in meeting the demands of next-generation optical communication since it can provide a scalable, manufactured solution.

“This is a significant step toward providing scalable, reliable, high-performance and manufacturable solutions for the next generation of optical communication technology,” said Russell Ellwanger, CEO of Tower Semiconductor. “By utilizing Tower’s PH18DA platform, this collaboration allows OpenLight’s heterogeneous integration technology to provide a secure path to higher speeds without the need for complex and expensive integration alternatives like Thin Film Lithium Niobate (TFLN), BTO or polymers.”

4. SentinelOne, Inc. (NYSE:S)

Number of Hedge Fund Holders: 46

SentinelOne, Inc. (NYSE:S) is an AI-powered cybersecurity firm that provides unified endpoint, cloud, and identity protection solutions. It also offers real-time threat detection, prevention, and response across an organization’s security estate. On March 12, the company delivered fourth quarter and fiscal 2025 results that affirmed solid execution and accelerated adoption of its AI-powered platform solutions.

Revenue in the fourth quarter was up 29% year-over-year to $225.5 million as annualized recurring revenue increased 27% to $920.1 million. Customers with more than $100,000 annual recurring revenue increased by 25% to 1,411. The company’s chief executive officer, Tomer Weingarten, reiterated they are on course to surpass $1 billion in ARR revenue this year as increased focus on artificial intelligence and machine learning capabilities pays off.

“For more than a decade, we’ve patented leading machine learning security models — now, we’re pioneering fully autonomous, agentic AI workflows. We’re solidifying Singularity as the preeminent AI security platform of the future,” Weingarten said.

3. HubSpot, Inc. (NYSE:HUBS)

Number of Hedge Fund Holders: 73

HubSpot, Inc. (NYSE:HUBS) is a technology company that offers an AI-powered customer platform that provides software, integrations, and resources to connect marketing, sales, and customer service. It also integrates AI into its solutions to enhance marketing, sales, and service productivity by automating tasks. On March 12, Barclays upgraded the stock to an Overweight stock from Equal Weight and set the price target at $815.

The upgrade comes amid growing optimism that HubSpot is well-positioned to capitalize on AI-driven monetization and pricing changes to accelerate growth. While the research firm initially raised concerns about its limited expansion opportunities within small and medium-sized business customer bases, it sees AI as a key driver that will unlock valuable opportunities. The company’s net revenue return is on track to rise to 110% attributed to AI pricing tailwinds and expansion into larger customers.

2. Nebius Group NV (NASDAQ:NBIS)

Number of Hedge Fund Holders: 66

Nebius Group NV (NASDAQ:NBIS) is a technology company that builds a full-stack infrastructure for AI, including large-scale GPU clusters, cloud platforms, and developers’ tools and services. It boasts of an AI-centric cloud platform built for intensive AI workloads. On March 12, Stevens Institute of Technology confirmed it is collaborating with Nebius Academy to launch a laboratory for AI in Mathematics Education.

The lab will look into how large language models (LLMs) and other AI technologies can be utilized to improve mathematical reasoning abilities and change teaching methods. The lab’s broad mandate is to explore and encourage creative uses of AI in math research and education. The partnership seeks to test LLM technologies in math teaching, find new hypotheses, enhance student performance, and use AI to solve open math issues.

“Our collaboration with Stevens has consistently advanced the integration of modern technology in math education,” said Vlad Stepanov, CEO of Gradarius. “With the creation of this lab and Nebius’s machine learning expertise, we’ll refine the use of AI and develop specialized models to address the unique challenges of teaching mathematics effectively in diverse educational contexts.”

1. Accenture Plc (NYSE:ACN)

Number of Hedge Fund Holders: 79

Accenture Plc (NYSE:ACN) is a technology company providing strategy, consulting, technology, and operation services. It also offers systems integration, application management data, AI, and automation services. On March 12, the company partnered with CrowdStrike to drive cybersecurity transformation.

The collaboration will result in the merging of Accenture’s security services with the CrowdStrike Falcon cybersecurity platform. The integrated offering should result in transformative improvements and cost efficiencies in areas of security operations, continuous threat exposure management and AI workload protection.

“Accenture’s deep expertise with the Falcon platform and SIEM transformation has directly assisted organizations in upleveling their cybersecurity programs from device to cloud to datacenter. Accenture plays a key role in guiding organizations to embrace the AI-native SOC, leaving legacy SIEMs, point products, and manual SOC operations behind for automated, resilient, and machine-speed cybersecurity platform controls,” said George Kurtz, founder and CEO of CrowdStrike.

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