With OpenAI having started the AI arms race through its groundbreaking advancements, there are no signs that the AI startup may stop any time soon. In its latest, the company said on Tuesday, January 14, that it is introducing a beta feature called Tasks to ChatGPT. The move is said to highlight the company’s entry into the virtual assistant space, competing with Apple’s Siri and Amazon’s Alexa. Through Tasks, ChatGPT users will be able to request tasks to be performed at a future time, including one-time reminders. This includes tasks such as fetching daily weather updates or even news briefings.
READ ALSO: Top 10 AI Stocks on Latest Analyst Ratings and News and 10 Must-Watch AI Stocks on Investors’ Radar
ChatGPT maker OpenAI also revealed that it has finalized a version of its new reasoning AI model o3 mini. According to CEO Sam Altman, the finalized version will be launched in a couple of weeks. Altman further wrote in a post on social media platform X that the company has listened to user feedback, and will be releasing the application programming interface (API) and ChatGPT simultaneously.
OpenAI plans to launch the o3 mini by the end of January, and the full o3 afterwards. This move may be because there may be robust large language models that could outperform existing models and attract new investments and users. Currently, the o1 models are capable of reasoning through complex tasks. According to the company, they can solve more challenging problems than previous models in science, coding, and math.
While OpenAI is racing toward reaching the next levels in AI outpacing its competitors, it is just as much concerned about the country’s policy toward it. The company has recently laid out an economic blueprint with its vision for artificial intelligence in the US. “Chips, data, and energy are the keys to winning AI”, it said. It also said that the U.S. needs to act now to craft nationwide rules that will help secure its advantage.
“There’s an estimated $175 billion sitting in global funds awaiting investment in AI projects, and if the U.S. doesn’t attract those funds, they will flow to China-backed projects —strengthening the Chinese Communist Party’s global influence”.
-OpenAI said in the document.
The company has also outlined proposals for export controls on AI models. According to them, adversary nations should be unable to access them as they are more likely to misuse the technology.
After raising $6.6 billion last year, the company plans to turn itself into a for-profit business so that it can capture even more funds to stay ahead in the AI race.
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.
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).
A businessman examining a portfolio of stocks and bonds as he plans his next move.
10. Soluna Holdings, Inc. (NASDAQ:SLNH)
Number of Hedge Fund Holders: 3
Soluna Holdings, Inc. (NASDAQ:SLNH) is a developer of green data centers for intensive computing applications including Bitcoin mining and AI. On January 8, the company released its December 2024 business updates, highlighting significant achievements and developments in its AI endeavors. It has reached 100 GWh of curtailed energy monetization at Project Dorothy, equivalent to powering an estimated 11,500 H100s for a year. Some other key developments include the company having signed AI deals with a San Francisco Compute Company as well as Atlas Cloud, a company offering cutting-edge cloud solutions and IT services. The company has also launched its partnership with Gynger, an embedded financing platform, to offer flexible financing options for AI enterprises.
9. SiTime Corporation (NASDAQ:SITM)
Number of Hedge Fund Holders: 18
SiTime Corporation (NASDAQ:SITM) is a precision timing company. The firm markets micro-electromechanical systems designed to improve performance in data centers, 5G networks, and AI-driven applications. On January 15, the company announced the differential-ended SiT5977 Super-TCXO®, a single-chip timing solution designed to deliver resilient performance for AI compute-nodes with high bandwidth and network synchronization. The timing solution delivers tighter synchronization, improved network telemetry, and high-speed 800G bandwidth connectivity. Some applications of the newest member of the SiTime Elite RF™ family include smart network interface cards (Smart NICs), acceleration cards, switches and compute nodes. Together, it is a $200 billion data center infrastructure market.
“Improving AI workload efficiency to reduce energy consumption and carbon emissions is an industry-wide challenge. Precision timing is one of the approaches to help solve this problem. SiTime is the only semiconductor company fully dedicated to developing innovative timing solutions required for the complex scaling of today’s AI datacenters”.
-Dave Altavilla, president and principal analyst at HotTech Vision & Analysis.
8. DigitalOcean Holdings, Inc. (NYSE:DOCN)
Number of Hedge Fund Holders: 22
DigitalOcean Holdings, Inc. (NYSE:DOCN) is a public cloud provider that can support AI workloads. On January 17, Morgan Stanley upgraded DigitalOcean Holdings, Inc. (NYSE:DOCN) from Neutral to “Buy” and assigned a price target of $41. The firm is quite optimistic about DigitalOcean Holdings’ artificial intelligence opportunity. The cloud infrastructure provider has been expanding its product offerings to deal with the needs of its larger customers. It has also expanded its geographical presence, as well as introduced new offerings such as DigitalOcean Kubernetes, the App Platform, and Managed Databases. The transition towards the company’s “Scaler” customers is anticipated to bring about increased growth and improved unit economics. According to Morgan Stanley, the market hasn’t fully appreciated the company’s potential for developing artificial intelligence and machine learning strategies. Its AI/ML platform enables customers to build sophisticated AI applications. Customers can build and deploy AI models without the complexities of large cloud providers.
7. Pegasystems Inc. (NASDAQ:PEGA)
Number of Hedge Fund Holders: 28
Pegasystems Inc. (NASDAQ:PEGA) develops, markets, licenses, hosts, and supports enterprise software. On January 14, KeyBanc analyst Devin Au assumed coverage of Pegasystems with an “Overweight” rating and a $118 price target. The rating indicates a positive outlook on the company’s potential for growth. Pegasystems has been successful in growing its customer base and has adopted effective strategies to acquire new clients. The introduction of its GenAI blueprint has also been successful, which is a collaborative workspace that uses generative AI to design applications faster. According to the firm’s analysis, the GenAI blueprint and Pegasystems’ refined go-to-market strategy are expected to lead to an acceleration in Annual Contract Value (ACV) growth for Pegasystems. The growth is in turn supported by the company’s strong fundamentals.
6. Keysight Technologies, Inc. (NYSE:KEYS)
Number of Hedge Fund Holders: 36
Keysight Technologies, Inc. (NYSE:KEYS) is a global technology company that provides electronic design and test solutions. On January 15, the company announced that it will be showcasing a range of solutions aimed to accelerate the development of intelligent networks at DesignCon 2025. Some highlights of the event include emulation and test solutions for electrical and optical transmissions, data center interconnect applications, memory test applications, and design and simulation of chiplet interconnects. The company will be presenting several sessions at the event which is scheduled for January 29 and 30, and will also be including technical discussions and tutorials.
5. NetApp, Inc. (NASDAQ:NTAP)
Number of Hedge Fund Holders: 38
NetApp, Inc. (NASDAQ:NTAP) provides storage and data management solutions, with a particular focus on hybrid cloud environments, AI-driven data storage, cloud integration, and data services. On January 15, NetApp Inc. revealed that it has agreed to sell a portfolio of cloud software assets to Flexera, the global leader in technology spend and risk management. NetApp will be divesting its “Spot” by NetApp FinOps business to Flexera which it acquired back in July 2020. According to Bloomberg, the move is said to streamline its business and strengthen its core operations. Meanwhile, it is also going to ensure that the Spot business can scale effectively within Flexera’s ecosystem, allowing NetApp to focus on its core areas of expertise.
“This decision reflects NetApp’s sharpened focus and underscores our commitment to intelligent data infrastructure and long-term growth opportunities. After a thorough evaluation, it is clear that Flexera’s established expertise and global reach provide the ideal environment for the Spot business to thrive and scale. This move not only allows the Spot team and portfolio to unlock their full potential within Flexera’s ecosystem but also reinforces our dedication to driving value creation and achieving our ambitious growth objectives.”
-Haiyan Song, Executive Vice President, Intelligent Operations Services, at NetApp.
4. TE Connectivity plc (NYSE:TEL)
Number of Hedge Fund Holders: 44
TE Connectivity plc (NYSE:TEL) manufactures and sells connectivity and sensor solutions that are critical for building and operating AI infrastructure. On January 18, BofA lowered the firm’s price target on TE Connectivity (TEL) to $167 from $171 and kept a “Buy” rating on the shares. According to the firm, currency headwinds have led the firm to anticipate TE’s fiscal Q1 results to fall below guidance. The firm also expects that the company’s Q2 revenue will be boosted by artificial intelligence. However, it may be offset by factors such as weaker auto production, persistent weakness in the industrial end and market, and unfavorable currency moves. The firm still expects Q2 earnings per share guidance of $1.90, below the Street’s $1.99 estimate. Even though the auto production backdrop may be weak, the company is still expected to deliver solid overall profitability and growth.
3. Dynatrace, Inc. (NYSE:DT)
Number of Hedge Fund Holders: 45
Dynatrace, Inc. (NYSE:DT) provides a software intelligence platform for monitoring and optimizing applications, infrastructure, and user experiences. On January 14, the company, together with the Formula Racing team Visa Cash App Racing Bulls (VCARB), announced that starting with the 2025 racing season, Dynatrace has become the official Observability and Performance Analytics Technology partner of the VCARB team. Since every millisecond counts in Formula 1, the Dynatrace AI-powered observability and analytics platform will help revolutionize how VCARB observes, monitors, and analyzes the millions of interconnected data points involved in running an F1 team. This will allow VCARB to respond to intricate performance challenges with greater accuracy and reliability, extract real-time insights from their data, and provide insights into vehicle dynamics, driver performance, and race optimization throughout the racing season.
“VCARB and Dynatrace share the same value of being performance obsessed, and we are continually looking to push the boundaries of what’s possible for technological innovation. Our partnership will enable VCARB to turn its data into an asset to help the drivers, engineers, and racing strategists make instant, race winning decisions in critical moments. Similar to how we support our customers around the world, we look forward to Dynatrace contributing to impactful outcomes for VCARB”.
-Laura Heisman, Chief Marketing Officer, Dynatrace.
2. Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 47
Elastic N.V. (NYSE:ESTC) is a search AI company offering cloud-based solutions. On January 17, Cantor Fitzgerald analyst Thomas Blakey initiated coverage of 18 names in infrastructure and artificial intelligence software, one of which is Elastic N.V. (NYSE:ESTC). The firm initiated coverage of Elastic (ESTC) Company with a “Neutral” rating and a $108 price target. The analysts told investors in a research note that the value proposition of infrastructure software is going to increase further, driven by the ongoing secular expansion of AI and generative AI. These trends “fuel the need” for observable infrastructure, unified, secure, and highly integrated data systems, real-time computing and networking capabilities, and enhanced workflows and collaboration. Increased usage and consumption are likely going to drive the monetization of artificial intelligence.
1. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 49
MongoDB, Inc. (NASDAQ:MDB) provides a general-purpose database platform worldwide that integrates operational, unstructured, and AI-related data to streamline building applications. On Thursday, January 16, Cantor Fitzgerald initiated MongoDB, Inc. (NASDAQ:MDB) with an “Overweight” rating and a $344 price target. MongoDB, leading in NoSQL databases, has witnessed its rating upgrade due to its fast-growing cloud service, MongoDB Atlas. MongoDB Atlas is a fully managed cloud database service that makes up 71% of revenue. According to the firm, AI-driven demand could push growth into the mid-20% range for FY25, beating Wall Street’s 17% estimate. The company’s AI-driven demand is due to its ability to deal with unstructured data, large datasets, and support for real-time data analytics. Moreover, the MongoDB Atlas simplifies cloud deployment, making it a preferred choice for businesses making AI-powered applications.
While we acknowledge the potential of MDB 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 MDB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
Hedge Fund Resource Center