DeepSeek Isn’t Public Yet: Here Are 5 AI Stocks To Watch Instead

• The launch of DeepSeek’s low-cost, efficient chips has disrupted the market, particularly affecting Nvidia’s stock.
• Despite its success, DeepSeek remains a private company, leaving investors seeking alternatives to tap into the AI boom.
• Sage Group, Innodata and Softcat are some stocks to monitor.

Sage Group

Sage Group (LSE: SGE) is a prominent player in enterprise software, specializing in accounting and payroll services.

The company’s integration of AI into its product suite has led to increased automation and improved analytics, driving an 80% increase in its share price over the past five years, with shares currently trading at £13.35 as of Jan. 29.

The company’s strategy appears to be working, evidenced by a 21% rise in underlying operating profits to £529 million and a 220 basis point increase in its margin to 22.7%.

However, despite its solid performance, Sage stock remains relatively expensive, with a price-to-earnings (P/E) ratio of 42.4.

Sage has also announced a share buyback program , repurchasing nearly 300,000 shares as part of its strategy to enhance shareholder value. The company also reiterated its commitment to boosting earnings per share by reducing the number of shares in circulation.

Softcat

Softcat (LSE: SCT) is an IT infrastructure provider offering a range of services, from software licensing to cloud computing. The company has seen impressive growth, driven by its ability to integrate innovative AI solutions.

For 2024, Softcat reported a 9.3% increase in operating profit, reaching £154.1 million.

With shares trading at a multiple of 26.5 times earnings, Softcat’s valuation is significantly higher than the FTSE 250 average of 12.9. But it’s trading lower than competitors like Sage.

While the company operates in a high-growth sector, it faces risks from market saturation and the constant demand for innovation.

Over the past three years, Softcat has grown its earnings per share (EPS) by 7.2% annually. While this growth rate isn’t extraordinary, it indicates steady expansion.

However, despite consistent EBIT margins, Softcat has experienced a dip in revenue, which raises concerns about its future growth potential.

On a more positive note, Softcat’s insiders have a significant stake in the company, holding 33% of shares, valued at £1.0 billion.

Additionally, the CEO’s compensation package, valued at £1.6 million, is below the median for similar-sized companies, suggesting alignment between management and shareholders.

Twilio

Twilio (NYSE: TWLO) is expanding its generative AI capabilities to enhance customer engagement. Its Customer AI technology, launched in June 2023, integrates platform data with AI and large language models (LLMs) to strengthen brand relationships.

Strategic partnerships have further fueled Twilio’s AI expansion. Collaborations with Google Cloud and OpenAI are enhancing its customer engagement solutions, including Twilio Flex and Twilio Engage, by integrating GPT-4 to create more personalized experiences.

Twilio achieved its first-ever GAAP operating profit in the fourth quarter of 2024. Revenue rose by 11% year-over-year to $1.19 billion. The company reported a full-year revenue of $4.46 billion, up 7% from 2023, while significantly improving profitability.

CEO Khozema Shipchandler credited the performance to Twilio’s financial discipline and innovation, emphasizing Twilio’s focus on enhancing digital engagement through AI-driven solutions.

Broadcom

Broadcom (NASDAQ: AVGO) has seen strong growth, fueled by rising demand for its custom AI accelerators (XPUs) and networking solutions.

The company’s AI connectivity revenues surged fourfold, driven by global shipments of its Tomahawk and Jericho solutions. Broadcom’s chips are essential in data center infrastructure, supporting major industries.

The acquisition of VMware has strengthened Broadcom‘s software offerings and expanded its partner network, which includes giants like Alphabet, Meta, Arista Networks and Dell Technologies.

Currently, Broadcom is trading 18% below its 52-week high. For the year ending October 2025, projected revenue and earnings growth rates are 18% and 30%, respectively.

In the fourth quarter of 2024, Broadcom reported revenue of $14.05 billion, up 51% year-over-year, with semiconductor revenue reaching a record $30.1 billion.

AI-related revenue grew 220%, driven by demand for its AI XPUs and Ethernet networking solutions. For the full fiscal year, adjusted EBITDA rose 37% to a record $31.9 billion.

Broadcom has consistently increased its dividend for 14 years, with $5.6 billion in operating cash flow in the latest quarter. The company pays a quarterly dividend of $0.59 per share, yielding 1.2%.

Innodata

Innodata (NASDAQ: INOD) is a global leader in data engineering with operations in the U.S., U.K., Netherlands and Canada.

The company provides AI data preparation services, including data collection, annotation, and model training, and focuses on data transformation and compliance.

In the third quarter of 2024, Innodata generated $30.6 million in revenue from a major tech client, contributing to an impressive 707% rise in stock price over the past year and a 50% increase in 2025 year-to-date. This growth is driven by accelerating demand for AI solutions.

Innodata’s financial performance reflects its strength, with 96% revenue growth in 2024, surpassing initial projections.

Adjusted EBITDA surged 250% year-over-year, and the company ended the year with $46.9 million in cash. It also has a $30 million untapped credit facility.

For 2025, Innodata projects 40% revenue growth , likely to be revised upwards as new opportunities emerge. The company secured an additional $24 million in annualized revenue from its largest customer, boosting its total to $135 million.

With increasing AI adoption and growing partnerships in tech and enterprise sectors, Innodata is well-positioned for long-term growth .

The company’s strong performance, new contracts, and expanding customer base have earned it a ‘strong buy’ consensus rating from Wall Street . This signals confidence in its ability to capitalize on emerging AI opportunities.