In this article, we will discuss the 10 Best Fundamentally Strong Stocks to Buy
According to UBS, companies comprising more than 80% of the S&P 500’s market capitalization have released their Q3 earnings. Overall, they delivered strong results and favorable guidance, and the breadth and magnitude of earnings beats were better than historical patterns. While there was no official data during the shutdown, Vanguard believes that the economy has picked up its momentum from earlier in the year. As a result, the investment firm lifted its FY 2025 GDP growth estimate to 1.9%.
Road Ahead for S&P 500
UBS stated that data going back to 1970 demonstrate that the S&P 500’s average annualized returns at any time were just below 10%, and increased to 12% when the broader US economy was not in recession. That being said, the investors tend to enjoy the best returns (15%) when the US economy is not in recession and the US Fed is reducing rates.
Therefore, UBS believes that, as the US Fed continues with the rate-cutting cycle, it maintains its forecast of the S&P 500 hitting 7,300 by June 2026. Furthermore, it opines that yields could decline further as the US Fed makes additional cuts. UBS expects the 10-year yield to reach 3.75% by June 2026.
Amidst such trends, we will now have a look at the 10 Best Fundamentally Strong Stocks to Buy.
Our Methodology
To list the 10 Best Fundamentally Strong Stocks to Buy, we sifted through several online rankings and used a screener to shortlist companies that have a 5-year revenue and EPS (diluted) growth of atleast 10%. After getting an extensive list, we chose the ones popular among hedge funds, as of Q2 2025. Finally, the stocks are arranged in ascending order of their hedge fund sentiments.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10 Best Fundamentally Strong Stocks to Buy
10. Arista Networks Inc (NYSE:ANET)
5-Year Revenue Growth: ~30.6%
5-Year Diluted EPS Growth: ~36.3%
Number of Hedge Fund Holders: 81
Arista Networks Inc (NYSE:ANET) is one of the Best Fundamentally Strong Stocks to Buy. On November 10, Erste Group downgraded the company’s stock to “Hold” from “Buy.” As per the analyst, Arista Networks Inc (NYSE:ANET) has been building a cross-vendor ecosystem in order to integrate AI networks with computing infrastructure, which is expected to drive high revenue growth over the medium term, albeit at a slowing pace.
Furthermore, the firm opines that operating margins are projected to dip marginally next year, and the stock seems to be expensive. In its Q3 2025 earnings call, the company stated that its Etherlink portfolio demonstrates its accelerated networking approach, resulting in a single point of network control for zero-touch automation, trusted security, traffic engineering, and telemetry to improve compute and GPU utilization.
Arista Networks Inc (NYSE:ANET) achieved ~$2.31 billion in Q3 2025, with software and services making up ~18.7% of revenue. Its product revenue rose $387.9 million, or 25.5%, for the 3 months ended September 30, 2025 as compared to the same period in 2024. This increase demonstrates higher demand for switching and routing platforms throughout its customer base.
Its non-GAAP gross margin came in at 65.2%, influenced by a favorable mix and inventory benefits. Arista Networks Inc (NYSE:ANET)’s non-GAAP net income came in at $962.3 million as compared to $769.0 million in Q3 2024. It saw 25% non-GAAP EPS growth in Q3 2025, showcasing not only healthy demand but also disciplined execution of the strategic roadmap.
9. Lam Research Corporation (NASDAQ:LRCX)
5-Year Revenue Growth: ~12.1%
5-Year Diluted EPS Growth: ~20.8%
Number of Hedge Fund Holders: 85
Lam Research Corporation (NASDAQ:LRCX) is one of the Best Fundamentally Strong Stocks to Buy. On November 12, Citi analyst Atif Malik lifted the price target on the company’s stock to $190 from $175, while keeping a “Buy” rating, as reported by The Fly. Notably, the firm lifted the wafer fab equipment estimates to exhibit increasing AI investments. Overall, the firm is constructive on the broader sector.
Lam Research Corporation (NASDAQ:LRCX)’s President and CEO believes that the company’s innovations continue to help its customers in addressing major AI-driven semiconductor manufacturing inflections. Given its expanding portfolio of products and solutions throughout the critical device segments, Lam Research Corporation (NASDAQ:LRCX) remains strongly placed for continued growth.
Inclusive of the company’s guidance for the quarter ended December, Lam Research Corporation (NASDAQ:LRCX) anticipates closing calendar 2025 with 3 consecutive quarters of over $5 billion in revenue.
In the September 2025 quarter, the company’s revenue rose 3% to $5.32 billion compared to the June 2025 quarter revenue of $5.17 billion, while net income came in at $1.56 billion compared to $1.7 billion in the previous quarter (June 2025 quarter).
The company’s performance demonstrates robust company-wide execution and the role its products and services portfolio plays in enabling the broader industry’s technology roadmap and in catering to the increase in semiconductor manufacturing complexity. Lam Research Corporation (NASDAQ:LRCX)’s revenue growth was aided by an increase in systems revenue due to the sustained investments in the Foundry market segment and increases in customer support-related revenue.
8. Costco Wholesale Corporation (NASDAQ:COST)
5-Year Revenue Growth: ~10.5%
5-Year Diluted EPS Growth: ~15.0%
Number of Hedge Fund Holders: 91
Costco Wholesale Corporation (NASDAQ:COST) is one of the Best Fundamentally Strong Stocks to Buy. On November 6, William Blair analyst Phillip Blee maintained the bullish stance on the company’s stock. The analyst’s rating is backed by the company’s impressive performance in October, highlighting Costco Wholesale Corporation (NASDAQ:COST)’s robust merchandising capabilities.
Notably, the company reported net sales of $21.75 billion for the retail month of October, 4 weeks to November 2, 2025. This reflects a rise of 8.6% from $20.03 billion last year. As per the analyst, Costco Wholesale Corporation (NASDAQ:COST) strategically changed its product focus from seasonal items to more enduring categories, including apparel and home goods.
This has been effective in maintaining customer interest and sales. This adaptability, together with a limited SKU assortment as well as a skilled team of merchants, places the company well for the holiday season. Furthermore, the analyst believes that Costco Wholesale Corporation (NASDAQ:COST) is a market leader, thanks to its curated product mix, robust value proposition, and appeal to higher-income consumers.
Despite the international markets demonstrating softer-than-expected performance, Costco Wholesale Corporation (NASDAQ:COST)’s valuation is justified considering its consistent performance in the consumer sector, added Blee.
7. ServiceNow, Inc. (NYSE:NOW)
5-Year Revenue Growth: ~24.5%
5-Year Diluted EPS Growth: ~18.9%
Number of Hedge Fund Holders: 106
ServiceNow, Inc. (NYSE:NOW) is one of the Best Fundamentally Strong Stocks to Buy. On October 31, Saiyi He, an analyst from CMB International Securities, maintained a “Buy” rating on the company’s stock, and the associated price target was $1,180.00. The analyst’s rating is backed by a combination of factors, which include its impressive financial performance and strategic advancements.
As per the analyst, ServiceNow, Inc. (NYSE:NOW)’s Q3 2025 results demonstrated a strong 22% YoY increase in total revenue to $3.4 billion, aligning with the market expectations. ServiceNow, Inc. (NYSE:NOW)’s robust execution in subscription revenue, rising 21.5% YoY to $3.2 billion, and a 21% YoY growth in current remaining performance obligations (cRPO) to $11.35 billion further aid the analyst’s rating.
The company’s subscription revenues were mainly aided by increased purchases by new and existing customers. The company’s non-GAAP operating margin stood at 33.5%, 300 bps above its guidance. This was driven by its top-line outperformance, AI OpEx efficiencies, disciplined spend management, and timing of some program spend.
ServiceNow, Inc. (NYSE:NOW) had 103 transactions with more than $1 million in net new annual contract value in Q3 2025, and ended the quarter with 553 customers with over $5 million in ACV, reflecting 18% YoY growth. On a GAAP basis, for Q4 2025, the company expects subscription revenues of between $3,420 million – $3,430 million, and cRPO growth of 23% YoY.
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
5-Year Revenue Growth: ~29.9%
5-Year Diluted EPS Growth: ~22.2%
Number of Hedge Fund Holders: 113
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the Best Fundamentally Strong Stocks to Buy. On November 12, Evercore ISI analyst Mark Lipacis lifted the price target on the company’s stock to $283 from $270, while keeping an “Outperform” rating, as reported by The Fly. As per the analyst, the firm was incrementally positive towards the company after its analyst day.
Notably, Advanced Micro Devices, Inc. (NASDAQ:AMD) detailed a transformative long-term financial model on the basis of its strategic financial priorities. These include acceleration of revenue growth, delivering strong profitability expansion, as well as allocating capital to fuel AI leadership. Advanced Micro Devices, Inc. (NASDAQ:AMD) outlined its growth targets for the next 3-5 years, with the company expecting to witness over 35% revenue CAGR, a non-GAAP operating margin of over 35%, and non-GAAP EPS surpassing $20.
In a separate release, on November 12, Harlan Sur from J.P. Morgan maintained a “Hold” rating on the company’s stock with a price objective of $270.00. As per the analyst, while Advanced Micro Devices, Inc. (NASDAQ:AMD) remains well-placed to capture market share throughout several sectors, mainly with the growth in AI-driven demand, there are some worries related to the sustainability of such growth.
5. Salesforce, Inc. (NYSE:CRM)
5-Year Revenue Growth: ~15.3%
5-Year Diluted EPS Growth: ~21.5%
Number of Hedge Fund Holders: 121
Salesforce, Inc. (NYSE:CRM) is one of the Best Fundamentally Strong Stocks to Buy. On November 7, Salesforce, Inc. (NYSE:CRM) announced that it signed a definitive agreement for the acquisition of Spindle AI, which is a leading agentic analytics platform. Spindle AI’s technology tends to combine advanced AI agents and ML with powerful data modeling to support businesses in making faster and more effective data-driven decisions.
Notably, bringing Spindle AI onboard would continue Salesforce, Inc. (NYSE:CRM)’s investment towards Agent Observability and Self-Improvement to help deliver custom agentic analytics, ROI forecasting, as well as continuous optimization for every Agentforce user. This acquisition is projected to close in Salesforce, Inc. (NYSE:CRM)’s Q4 2026, subject to customary closing conditions.
Spindle AI’s agentic technology complements renowned analytics platforms, such as Tableau, by emphasizing the next step, i.e., utilising AI to autonomously model agentic scenarios and forecast business outcomes.
Spindle AI stated that its focus remains on accelerating Agentforce with sophisticated agentic analytics as well as forecasting, which makes enterprise LLMs more reliable and valuable.
4. Mastercard Incorporated (NYSE:MA)
5-Year Revenue Growth: ~15%
5-Year Diluted EPS Growth: ~18.6%
Number of Hedge Fund Holders: 158
Mastercard Incorporated (NYSE:MA) is one of the Best Fundamentally Strong Stocks to Buy. On November 6, Tigress Financial lifted the price target on the company’s stock to $730 from $685, while keeping a “Strong Buy” rating, as reported by The Fly. As per the analyst, Mastercard Incorporated (NYSE:MA) posted robust Q3 2025 results and has been benefiting from accelerating digital payment growth.
Notably, its net revenue growth came at 17% YoY or 15% on a currency-neutral basis to $8.6 billion. This was helped by strong consumer and business spending and the continued healthy performance of its differentiated services. Its adjusted net income and diluted EPS came at $3.96 billion and $4.38, reflecting growth of 8% and 11% on the currency-neutral and YoY basis. This was mainly driven by healthy operating income growth.
Tigress Financial opines that Mastercard Incorporated (NYSE:MA) has been benefiting from the secular transition from cash to electronic and digital payments. Mastercard Incorporated (NYSE:MA) highlighted that net revenue growth includes a 1 percentage point increase from acquisitions. Notably, the remaining increase was because of organic growth in its payment network and value-added services and solutions.
For Q4 2025, Mastercard Incorporated (NYSE:MA) expects YoY net revenue growth to be at the high-end of a low double-digits range on a currency-neutral basis, excluding acquisitions.
3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
5-Year Revenue Growth: ~22.9%
5-Year Diluted EPS Growth: ~25.7%
Number of Hedge Fund Holders: 187
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the Best Fundamentally Strong Stocks to Buy. On November 10, Bank of America Securities analyst Mike Yang maintained a “Buy” rating on the company’s stock, setting a price objective of $360.00. The analyst’s rating is backed by the company’s strong sales performance in October.
On the consolidated basis, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s revenue for October 2025 came in at ~NT$367.47 billion, reflecting 11.0% growth from September 2025, and 16.9% growth from October 2024. As per the analyst, this growth was driven by the strong demand for high-end mobile devices as well as high-performance computing products, mainly in the GPU and ASIC sectors.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s ability to maintain gross margins and operating margins at the anticipated levels helps the favourable outlook. Furthermore, the demand for cloud AI infrastructure is projected to continue into 2026, thanks to the significant capital expenditures from well-established hyperscalers.
This demand, along with supply chain constraints in advanced manufacturing processes, demonstrates a strong backlog for Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s products, added Yang.
2. NVIDIA Corporation (NASDAQ:NVDA)
5-Year Revenue Growth: ~66.1%
5-Year Diluted EPS Growth: ~91.4%
Number of Hedge Fund Holders: 235
NVIDIA Corporation (NASDAQ:NVDA) is one of the Best Fundamentally Strong Stocks to Buy. On November 10, Vivek Arya maintained a “Buy” rating on the company’s stock with a price objective of $275. As per the analyst, the investors have been worrying quite a lot about the slowdown in AI spending.
This skepticism happens to be a good thing as it exhibits that the market is cautious and not overly excited, leaving room for steady gains. The recent weakness in AI chip stocks was due to the broader market issues, and there is nothing concerning about the AI story itself, added Arya.
Notably, the AI infrastructure spending remains robust, and NVIDIA Corporation (NASDAQ:NVDA) is positioned at the center of the buildout. According to the analyst, NVIDIA Corporation (NASDAQ:NVDA)’s main growth engines, AI data centers, networking, and accelerated computing, are on track.
While the analyst noted the short-term challenges, including uneven gaming sales or project delays in the new data centers, the company’s long-term outlook remains intact. Considering the dominant market position and a growing order book, the analyst believes that NVIDIA Corporation (NASDAQ:NVDA) is one of the most compelling ways to be part of the AI revolution.
1. Microsoft Corporation (NASDAQ:MSFT)
5-Year Revenue Growth: ~14.8%
5-Year Diluted EPS Growth: ~17.8%
Number of Hedge Fund Holders: 294
Microsoft Corporation (NASDAQ:MSFT) is one of the Best Fundamentally Strong Stocks to Buy. On November 12, the Wall Street Journal reported that Microsoft Corporation (NASDAQ:MSFT) has been expanding its data center build-out with an AI super factory. This is the set of two-story structures in Atlanta, focused towards connecting seamlessly with infrastructure in other areas to harness the immense computing power.
Microsoft Corporation (NASDAQ:MSFT) has been doubling its total data-center footprint over the upcoming 2 years. WSJ also reported that the tech giant spent over $34 billion on capex during its Q1, and it plans to increase total infrastructure investments over the upcoming fiscal year.
Furthermore, Microsoft Corporation (NASDAQ:MSFT) happens to be among several tech companies focused on investing a combined $400 billion into AI efforts this year, amidst increased demand for AI computing and companies highlighting the requirement for more capacity.
At its Q1 2026 earnings call, Microsoft Corporation (NASDAQ:MSFT) highlighted that, with accelerating demand, along with growth in RPO balance, it is increasing its spend on GPUs and CPUs. As a result, it expects that its total spend will increase sequentially, and it now anticipates the FY 2026 growth rate to be higher than FY 2025.
While we acknowledge the potential of MSFT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than MSFT and that has 100x upside potential, check out our report about this cheapest AI stock.
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