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. (NASDAQ:KLAC) 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. (NASDAQ:KLAC) 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. (NASDAQ:KLAC) 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.
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