In this article, we will take a look at some of the best AI chip stocks that are currently being highly favored by hedge funds.
On March 9, Morgan Stanley published a comprehensive research report examining how artificial intelligence has evolved from a technology theme into a macroeconomic variable influencing national GDPs, corporate earnings, credit markets, and geopolitical strategy. According to the firm’s estimates, the world economy is expected to spend almost $3 trillion in AI-linked infrastructure by 2028.
In its research, Morgan Stanley analyzed 3,600 stocks regarding their potential ties to artificial intelligence, noting that currently 21% of the S&P 500 list mentions the benefits of artificial intelligence, compared to 10% in 2024. According to the firm, companies implementing artificial intelligence that can deliver on their promises of improved performance are experiencing cash flow margins of approximately twice the global average.
Morgan Stanley encourages investors to distinguish between real AI winners and general tech exposure. They should monitor companies that stand to gain from their efforts to achieve self-sufficiency in terms of energy sources, key materials, and production capabilities. Focus should also pivot towards businesses that are preparing against the disruptions brought about by artificial intelligence, such as job losses and advancements in life sciences.
With that background, let’s explore our 10 Best AI Chip Stocks to Buy According to Hedge Funds.
Our Methodology
To identify relevant stocks for this article, we conducted a screening of U.S.-listed companies that are involved in designing and developing AI chips or are key enablers of chip manufacturing. For our search, we ensured market capitalizations above $2 billion. Next, we identified the number of hedge funds that held positions in these stocks by the end of the fourth quarter of 2025. Finally, we selected 10 stocks with the highest number of hedge funds holding stakes and ranked them in ascending order.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. KLA Corp. (NASDAQ:KLAC)
KLA Corp. (NASDAQ:KLAC) is one of the 10 best AI chip stocks to buy according to hedge funds.
On March 30, Cantor Fitzgerald increased the price target on KLA Corp. from $1,850 to $2,000. The firm maintained an Overweight rating on the stock, which now yields an adjusted upside potential of almost 32% at the prevailing level.
The firm attributed this adjustment to certain favorable trends within the industry. According to Cantor Fitzgerald, this marks the beginning of a multi-year secular upturn within the Semi Equipment industry.
On March 13, Blayne Curtis from Jefferies reduced the price target on KLA Corp. from $1,850 to $1,700. The analyst reaffirmed his Buy rating on the stock, which still offers potential upside in excess of 12% despite the downward revision.
Curtis retains a positive sentiment towards the company’s near-term prospects. He also reflected upon a higher level of capital intensity and market share expected by 2030. This would result in company revenues reaching $26 billion, along with earnings per share of $84.
KLA Corp. engineers and markets process control and yield management systems for the semiconductor and electronics industry around the world. To help chipmakers make their processes efficient the company provides a wide range of wafer inspection tools, metrology equipment, and specialized software. It also offers etch, deposition, and direct imaging technologies.
9. Texas Instruments Inc. (NASDAQ:TXN)
Texas Instruments Inc. (NASDAQ:TXN) is one of the 10 best AI chip stocks to buy according to hedge funds.
On March 5, Texas Instruments Inc. announced a collaboration with NVIDIA Corporation (NASDAQ:NVDA) to ensure fast and safe integration of humanoid robots in the real-world environment. Through this cooperation between TI’s real-time motor control, sensing, radar, and power technologies with Nvidia’s robotic compute, ethernet-based sensing, and simulation capabilities, robotics developers will be able to test their perception, actuation, and safety earlier than ever before.
Texas Instruments Inc. provides a connection to Nvidia’s physical AI compute from concept through deterministic control, sensing, power, and safety at each joint and subsystem of the humanoid robot. This initiative seeks to make developers go from simulation environments much faster towards producing and deploying safe and scalable robotics.
The company has also produced a sensor fusion platform through combining its mmWave radar technology with Nvidia’s Jetson Thor through the use of Nvidia’s Holoscan Sensor Bridge to provide fast 3D perception and safety in motion in humanoid robots. The TI’s sensor fusion solution was presented at Nvidia GTC, an event that happened on March 16-19 in San Jose, California.
Texas Instruments Inc. develops a wide range of semiconductors for the global electronics market. The company supplies essential power management solutions, signal chain products, and microcontrollers to support industrial and automotive applications. It also commercializes wireless connectivity hardware, radar systems, and application-specific integrated circuits.
8. Analog Devices Inc. (NASDAQ:ADI)
Analog Devices Inc. (NASDAQ:ADI) is one of the 10 best AI chip stocks to buy according to hedge funds.
On March 30, Arete upgraded Analog Devices Inc. rating from Neutral to Buy. The firm forecasted a target price of $389, which results in a potential upside of more than 22% at the current level.
According to the firm, an incremental growth of 71% can be driven for this business cycle through the company’s “structural” businesses. Sales for fiscal year 2028 are projected to be $19.3 billion, topping the consensus of $16.7 billion.
On March 3, Analog Devices Inc. Executive Vice President and CFO Richard Puccio discussed the company’s growth trajectory at Morgan Stanley’s Technology, Media & Telecom Conference. Puccio noted nine consecutive quarters with strong performance beyond seasonality, which was driven by the rapid growth of the automated testing equipment segment at over 40% yearly growth because of the high-performance compute trend.
He noted that the data center segment reported 50% yearly growth for three consecutive quarters, whereas the automotive segment reported consecutive records. According to Puccio, more than 90% of the expected component movement from the cyclical peak has taken place, and the channel inventory issue has been sorted out. He thinks that the AI capex cycle will remain an outstanding tailwind in the medium term, especially in the aerospace and defense segment.
Analog Devices Inc. develops integrated circuits, software, and subsystems. A large chunk of its business comes from power management technology and building data converters. It provides services to customers in a number of sectors, such as healthcare and defense. Along with specialized microwave hardware and micro-electro-mechanical systems, it also provides digital signal processors.
7. Synopsys Inc. (NASDAQ:SNPS)
Synopsys Inc. (NASDAQ:SNPS) is one of the 10 best AI chip stocks to buy according to hedge funds.
On March 4, Lee Simpson from Morgan Stanley maintained a price target of $480 for Synopsys Inc. while reiterating an Equal Weight rating on the stock. This leads to a potential upside of more than 21% at the current level.
The analyst highlighted that the fiscal year 2026 marks the first full year of business as a combined Synopsys-Ansys entity. The integration of Ansys helps the company achieve the cost synergy target of $400 million, earlier than the expected three-year timeframe.
Earlier on March 2, Synopsys Inc. executed an accelerated share repurchase agreement with The Bank of Nova Scotia to repurchase its stock worth $250 million. According to the terms of the agreement, Synopsys will initially receive about 513,000 shares.
All other outstanding shares will be settled by the end of 1st June. The total number of repurchased shares is expected to be determined based on the average daily volume-weighted share price of the company.
Synopsys Inc. develops intellectual property solutions and electronic design automation tools for the semiconductor and electronics industries. Digital integrated circuit designs and hardware verification systems account for a large share of the company’s revenue. It also oversees silicon prototyping for components of pre-verified intellectual property.
6. Intel Corp. (NASDAQ:INTC)
Intel Corp. (NASDAQ:INTC) is one of the 10 best AI chip stocks to buy according to hedge funds.
On April 2, Reuters reported that Intel Corp. announced plans for investing an extra $15 million in Samba Nova Systems, a chip startup that is led by the company’s CEO Lip-Bu Tan.
This investment will see Intel’s stake in Samba Nova rise to 9%, after the previous $35 million investment the company made in February. The move signals Intel’s continued commitment to expanding its presence in the artificial intelligence chip market through strategic partnerships.
On April 2, DA Davidson maintained a Neutral rating on Intel Corp.. The firm estimated a price target of $45 for the stock. The rating came after the company announced a finalized deal worth $14.2 billion for acquiring a 49% equity stake held in the joint venture related to Fab 34, based in Ireland. According to the firm, the deal provides a good prospect for the Intel turnaround and will boost the financial position of the company.
Intel Corp. is a global provider of computing-related goods and services. The company manufactures edge connection solutions, discrete graphics units, and server CPUs. Along with enhanced driver assistance and autonomous car technologies, it also works on commercializing wafer fabrication services.
5. ASML Holding N.V. (NASDAQ:ASML)
ASML Holding N.V. (NASDAQ:ASML) is one of the 10 best AI chip stocks to buy according to hedge funds.
On March 25, SK Hynix Inc. announced its plans to spend roughly $8 billion for the purchase of Extreme Ultraviolet (EUV) lithography chip production equipment from ASML Holding N.V. by the end of 2027. According to Reuters data, ASML’s order backlog stood at €38.8 billion at the end of 2025.
The move is aimed at competing with Samsung Electronics Co., Ltd. (OTC:SSNLF) to supply DRAM and HBM memory chips, according to Bloomberg’s reporters Yoolim Lee and Sarah Jacob. The purchase agreement between the two companies remains valid until 2027.
On March 5, Didier Scemama from Bank of America Securities increased the price target on ASML Holding N.V. from 1,868 to $1,886. The analyst reaffirmed a Buy rating on the stock that now offers an adjusted upside potential of more than 43% following the upward revision.
According to Scemama, the company increased its estimates due to constrained Foundry and DRAM supply. Consequently, the firm marginally increased its earnings per share estimates by a range of 4% to 6% for the calendar years 2026 to 2028.
ASML Holding N.V. offers advanced lithography solutions to the semiconductor manufacturing industry. The company provides the deep and extreme UV systems needed for patterned integrated circuits. Additionally, it uses electron beam equipment, optical metrology systems, and computer software for thorough chip defect investigation.
4. Lam Research Corp. (NASDAQ:LRCX)
Lam Research Corp. (NASDAQ:LRCX) is one of the 10 best AI chip stocks to buy according to hedge funds.
As of the April 3 closing, consensus sentiment for Lam Research Corp. was strongly bullish. The stock received coverage from 28 analysts, 24 of whom assigned Buy ratings and 4 gave Hold calls. With no Sell rating, it has a projected median 1-year price target of $283.81, which results in an upside potential of almost 30%.
On April 2, Stephan Lingnau from Erste Group downgraded Lam Research Corp. to Hold from Buy. The company’s reliance on helium for tool production is one of the supply chain risks for Lam. According to Lingnau, there is a greater chance that gross and operational margins would decline.
On March 10, Tom O’Malley from Barclays increased the price target on Lam Research Corp. from $250 to $255. The analyst maintained an Equal Weight rating for the stock, which leads to a revised upside potential of almost 17% at the prevailing level. O’ Malley increased estimates for the wafer fab equipment companies, quoting a strong investment environment.
Lam Research Corp. is a manufacturer and global supplier of semiconductor processing equipment that is useful for the fabrication of integrated circuits. The company specializes in thin film deposition, wafer cleaning, plasma etch, and photoresist strip. It also offers products like Da Vinci, DV-Prime, and EOS for wafer cleaning applications.
3. Applied Materials Inc. (NASDAQ:AMAT)
Applied Materials Inc. (NASDAQ:AMAT) is one of the 10 best AI chip stocks to buy according to hedge funds.
On March 30, Cantor Fitzgerald raised the price target on Applied Materials Inc. from $470 to $500. The firm reiterated an Overweight rating on the shares, which now offer an adjusted upside potential of more than 43%. This may signify the beginning of a multi-year secular uplift for the Semi equipment industry, the firm believes.
Back on February 25, Morgan Stanley maintained an Overweight rating while increasing the price target from $420 to $432 on Applied Materials Inc.. This yields a revised upside of 24% following the upward adjustment.
The stock was previously named as the Top Pick within the United States Semiconductor Production Equipment industry. According to the firm, the company has increased its wafer fab equipment market growth for the years 2026 and 2027. Forecasts for the company increased to 23% and 27% from 13% and 19%, and were driven by higher spending on DRAM memory.
Applied Materials Inc. develops software and equipment for materials processing for the semiconductor and related industries worldwide. The company provides necessary hardware for ion implantation, chemical mechanical planarization, etching, and deposition. Additionally, it also markets cutting-edge wafer packaging technology and factory automation solutions.
2. Advanced Micro Devices Inc. (NASDAQ:AMD)
Advanced Micro Devices Inc. (NASDAQ:AMD) is one of the 10 best AI chip stocks to buy according to hedge funds.
On April 1, Wells Fargo maintained the price target on Advanced Micro Devices Inc. at $345 while reiterating an Overweight rating. The firm recently placed AMD in its second-quarter Tactical Ideas List. According to the firm, the company is exhibiting a favorable setup as it heads towards its first quarter results.
The positive outlook is driven by strong demand for EPYC server CPU, along with new GW-scale AI GPU announcements. The upcoming Accelerating AI event in July will likely serve as another positive driver for the company.
On April 2, UBS reiterated a Buy rating and $310 price target on Advanced Micro Devices Inc., citing confidence in revenue growth for 2027. The firm believes that beyond the engagements with OpenAI and Meta Platforms, additional potential exists for a third gigawatt-scale deal, and Microsoft would likely be the best candidate.
As per UBS, because of the shipment of MI450 in 2026 under the OpenAI deal, and subsequently the shipment by Meta, AMD presents a compelling investment case for the second half of this year.
Advanced Micro Devices Inc. is a multinational semiconductor company that designs high-performance computing, graphics processing units, and visualization technologies. The company also offers AI accelerators, microprocessors, embedded processors, and SoC products. The business is structured around three segments, i.e., Data Center, Client & Gaming, and Embedded.
1. Micron Technology Inc. (NASDAQ:MU)
Micron Technology Inc. (NASDAQ:MU) is one of the 10 best AI chip stocks to buy according to hedge funds.
On March 15, Micron Technology Inc. made the announcement of its acquisition of the P5 site of Powerchip Semiconductor Manufacturing Corporation on March 15 after signing the agreement on January 17, 2026. The new site would act as an extension of Micron’s vertically integrated mega campus in Taichung, which is about 15 miles away, along with nearly 300,000 sq. ft. of cleanroom capacity for the 300mm wafers.
Construction of the retrofit for the existing cleanrooms begins immediately after the deal closing, and product shipments are anticipated starting in fiscal 2028. Moreover, Micron Technology is also planning to continue its expansion plans with the construction of another similar site at Tongluo before the end of fiscal 2026, which will add approximately 270,000 sq. ft. of cleanroom area to the new facility.
The purpose of the new facility is to produce advanced DRAM products, such as HBM, to meet the rising demands due to increased AI usage. Speaking at the event, Executive Vice President of Global Operations Manish Bhatia expressed his views regarding the importance of the memory for product performance and said that the new facility gives Micron a stronger edge towards exploiting future opportunities.
Micron Technology Inc. is engaged in the development of storage and memory solutions. It offers products such as high-bandwidth memory, CXL-based memory, graphics memory, and LPDDR components and modules. The company also provides various types of multichip packages (MCP), such as flash storage-based, multimedia card-based, and NAND-based MCPs.
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