In this article, we take a look at the 10 Best AI Stocks to Watch in May.
On Monday, Bridgewater Associates emphasized the threat that legacy software companies are facing amid the rapid rise of artificial intelligence (AI), according to a report by Reuters. The global macro investment firm likened the current scenario to that in the 1990s, when fear loomed for the fate of traditional bookstores when Amazon began selling books online.
“With the latest release of Claude Code, an upstart competitor has created existential risk for major businesses, much as Amazon posed to Barnes & Noble,” Bridgewater Associates said in a client note.
In the past year, the S&P 500 Software and Services Index has fallen 16.6% amid concerns that newly released AI models could upend traditional software companies.
“Markets have started pricing in the risk to application software companies, and companies will either co-evolve with AI or face disruption,” the Bridgewater co-chief investment officers said.
In contrast to legacy software firms, the rise of AI has resulted in growth for other industries, such as the semiconductor sector. According to the latest base-case estimates by McKinsey & Company, the semiconductor industry could reach $1.6 trillion in revenue by 2030, a significant jump from $775 billion in 2024, driven by the emergence of new computing models, domain-specific architectures, advanced chipsets, and other next-generation technologies.
While the future looks bright for the industry, McKinsey emphasized the need for semiconductor companies to make bold strategic moves to capture the next wave of value brought by the AI boom.
“To compete in an industry where advantage is increasingly concentrated among a few highly successful companies, semiconductor leaders must act now. The leaders that will shape the next era will be those that translate insight into commitment, making the required portfolio and performance moves at full scale and then adhering to a strategic core to accelerate innovation and resilience. The path is demanding, but the payoff is equally significant. By making deliberate choices now—about where to lead, how to build, and with whom to align—companies can define the industry’s next wave of value creation,” McKinsey said in a report in March.
With this backdrop, let’s take a look at the 10 Best AI Stocks to Watch in May.
Our Methodology
To compile our list of best AI stocks to watch in December, we relied on financial media, ETFs, and screeners to identify AI stocks with significant upside potential. We considered not only pure-play AI stocks but also companies that leverage AI to enhance their businesses. From this pool, we selected the 10 stocks most widely owned by hedge funds, based on Q4 2025 filings from Insider Monkey’s database. These names were then ranked by the number of hedge funds holding positions in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows 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).
Note: All pricing data is as of market close on April 30, 2026.
10. Baidu Inc. (NASDAQ:BIDU)
Potential upside: 41.90%
Number of Hedge Fund Holders: 57
Baidu Inc. (NASDAQ:BIDU) is one of the best stocks to watch in May. On April 28, the company announced the launch of GenFlow 4.0, an upgraded version of its general AI agent. Jointly released by Baidu Wenku and Baidu Drive, GenFlow 4.0 comes with a fully revamped Office Agent at its core, which allows users to invoke PowerPoint, Excel, and Word Agents in parallel from a single prompt.
Additionally, the company said the AI agent is also deeply integrated with OpenClaw, which can be deployed in one click from the Baidu Drive PC or mobile app, turning Baidu Drive into a personal AI workspace.
In the past year, Baidu’s stock surged 44.08%, while it posted a 15.82% year-to-date decline. Based on 37 analyst ratings compiled by CNN, the Baidu stock has an average price target of $179.55, a 41.90% upside from the current price of $125.76.
On April 1, Baidu announced that, in partnership with the Roads and Transport Authority (RTA), it has launched a fully driverless commercial ride-hailing service in Dubai via the Apollo Go app, marking the platform’s first international app deployment and a major milestone in the region. The company said the launch was done through Apollo Go’s strategic collaboration with Dubai Taxi Company (DTC), the emirate’s leading mobility service provider, bringing strong local operational expertise to support the service.
Baidu said Dubai marks a key strategic hub in Apollo Go’s growing global network, as it continues to expand its footprint worldwide. As of February 2026, Apollo Go has completed over 20 million rides worldwide, with weekly rides peaking at more than 300,000 during Q4 2025.
Baidu is a leading AI company with a strong internet foundation. It offers a full AI stack of four layers, including cloud infrastructure, an in-house developed deep learning framework, PaddlePaddle, self-developed ERNIE foundation models, and applications.
9. Snowflake Inc. (NYSE:SNOW)
Potential Upside: 68.54%
Number of Hedge Fund Holders: 90
Snowflake Inc. (NYSE:SNOW) is one of the best AI Stocks to watch in May. On April 28, Snowflake and enterprise software company Appian launched a technology partnership to enhance the latter’s data fabric tool. Under the partnership, Appian serves as the AI orchestration layer while Snowflake’s AI Data Cloud combines data aggregation, model training, and process orchestration to enable immediate business value. This aims to equip agents with deep enterprise context and allows them to interact directly with Snowflake Cortex AI to drive intelligent, data-backed decisions.
Earlier this month, Snowflake announced updates in its Snowflake Intelligence and Cortex Code products, noting that these enhancements enable organizations to connect even more data sources, enterprise systems, and AI models. It added that the enhancements also allow enterprises to align their data, tools, and workflows with AI agents built on Snowflake, which will enable more seamless action on data.
Based on 51 analyst ratings compiled by CNN, Snowflake has a median price target of $230, a 68.54% upside from the current price of $136.47. On April 21, UBS Analyst Karl Keirstead lowered his price target on Snowflake shares to $210 from $235 while maintaining a Buy rating on the stock. The analyst pointed out the year-to-date decline in the company’s shares despite the company projecting a stable revenue growth of 20% to 30%. He attributed the stock’s weakness to investor concerns about the potential disruption of AI models from Anthropic and OpenAI in the data software market over time.
In the fourth quarter of its fiscal year ending January 31, Snowflake registered product revenue of $1.23 billion, a 30% rise from the previous year. This resulted in a 29% growth in full-year product revenues to $4.47 billion.
Snowflake CFO Brian Robins emphasized that the company’s strategy for durable growth is focused on landing new customers and expanding them into strategic, long-term relationships. He added:
“We delivered strong new logo momentum, adding 740 net new customers, up 40% year-over-year, while continuing to deepen engagement across our base. We now have 733 customers spending more than $1 million on a trailing 12-month basis, and a record number exceeding $10 million. As we look ahead, our focus remains on driving stability and operational rigor to support sustained, long-term growth.”
Snowflake Inc. (NYSE:SNOW) provides cloud data warehousing software to enterprise clients. The company’s AI Data Cloud platform allows clients to build, use, and share data, applications, and AI.
