In this article, we will look at the 10 Best Quality Stocks to Buy Before 2026.
On December 24, Dan Ives, Global Head of Tech Research at Wedbush Securities, appeared on a CNBC International Live interview to discuss his bull case for the tech sector and AI heading into 2026. Ives has called 2026 an inflection point for AI and the tech sector in general. He elaborated that by inflection, he means monetization of AI through software applications and agentic products. He named Palantir, Snowflakes, and MongoDB as some of the few names that have already started showing the application of AI advancements through their software products. Ives added that 2026 is the “prove it moment” of AI and investors, and analysts are mostly underestimating the scale and numbers for 2026. Therefore, he is bullish on the AI trade. He added that the market is still in the 3rd year of the 8-year-long AI bull cycle.
Ives believes that tech stocks will rise at least 20% in 2026, driven by two main factors. Firstly, the underestimation of investors and analysts is going to help the tech companies beat earnings. Secondly, Ives highlighted that only 3% of the US companies have started to take on AI. As more companies take on AI, the demand will continue to rise, thereby helping AI companies to show earnings and return on investment in their balance sheets.
Stocks
Our Methodology
To compile the list of 10 Best Quality Stocks to Buy Before 2026, we reviewed ETFs including iShares MSCI USA Quality Factor ETF, Invesco S&P 500 Quality ETF, and JPMorgan U.S. Quality Factor ETF. Using these ETFs, we aggregated a list of quality stocks for which analysts expect more than 25% upside in the next 12 months. Next, we cross-checked the upside potential from CNN and ranked the stocks in ascending order of the number of hedge fund holders sourced from Insider Monkey’s Q3 2025 database. Please note that the data was recorded on December 24, 2025.
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 Quality Stocks to Buy Before 2026
10. Marvell Technology, Inc. (NASDAQ:MRVL)
Analyst Upside Potential: 36.86%
Number of Hedge Fund Holders: 77
Marvell Technology, Inc. (NASDAQ:MRVL) is one of the Best Quality Stocks to Buy Before 2026. On December 17, Moody’s Ratings upgraded the company’s senior unsecured ratings to Baa2 from Baa3 and maintained a stable outlook.
The rating firm noted that Marvell Technology, Inc. (NASDAQ:MRVL) has built a portfolio of technologies that enable accelerated computing and high-speed networking in data centers. The firm added that the upgrade to Baa2 is based on the expectations that the company’s credit profile will continue to improve, driven by improved profitability. Moreover, Moody’s also expects the company to grow its revenue by more than 20% and reach $10 billion by fiscal 2027. This demand is expected to be driven by a demand recovery in carrier infrastructure and enterprise networking segments.
That said, on December 10, Stifel had reiterated a Buy rating on Marvell Technology, Inc. (NASDAQ:MRVL) with a $114 price target. The firm noted the company to be one of the only vendors offering a comprehensive and vertically integrated stack for modern AI systems. Stifel believes that the company’s portfolio positions it uniquely as it provides end-to-end connectivity solutions that span every layer of data-center technology.
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors, focusing heavily on data centers.
9. NIKE, Inc. (NYSE:NKE)
Analyst Upside Potential: 30.80%
Number of Hedge Fund Holders: 89
NIKE, Inc. (NYSE:NKE) is one of the Best Quality Stocks to Buy Before 2026. The share price of NIKE, Inc. (NYSE:NKE) has fallen more than 10.8% since the release of its fiscal Q2 2026 earnings on December 18. As a result, Wall Street adjusted its price targets accordingly. However, the general analyst consensus remains positive with the 12 month average price target reflecting more than 31% upside from the current level.
The decline in share price came despite the company beating expectations. During the quarter, NIKE, Inc. (NYSE:NKE) grew its revenue by 0.59% year-over-year to $12.43 billion, surpassing estimates by $218.31 million. The EPS of $0.53 also topped expectations by $0.16. The falling investor sentiment was mainly due to the company’s gross profit margins that declined by 300 basis points and a 17% decline in China Sales. On the bright side, the wholesale revenue in North America increased 20%, indicating that management has made progress in repairing its relationship with retail partners.
Following the release, on December 19, Paul Lejuez from Citi reiterated a Hold rating on NIKE, Inc. (NYSE:NKE) and lowered the price target from $70 to $65. On the same day, Jay Sole from UBS also reiterated a Hold rating on the stock and lowered the price target from $71 to $65.
Analyst Sole of UBS noted that the second quarter results depict that the company’s turnaround is taking longer than expected. He added that this suggests that the company might need more time to resize its inventory. Sole noted that despite the falling investor sentiment, NIKE, Inc. (NYSE:NKE) is expected to return to mid-single-digit percentage sales growth and approximately 10% EBIT margin over the long term.
NIKE, Inc. (NYSE:NKE) designs, markets, and distributes athletic footwear, apparel, equipment, and accessories for sports and fitness activities worldwide.
8. ServiceNow, Inc. (NYSE:NOW)
Analyst Upside Potential: 49.00%
Number of Hedge Fund Holders: 104
ServiceNow, Inc. (NYSE:NOW) is one of the Best Quality Stocks to Buy Before 2026. On December 15, ServiceNow, Inc. (NYSE:NOW) announced the completion of the acquisition of Moveworks.
Moveworks is an AI assistant company specializing in enterprise search and conversational AI. Management noted that the deal combines the company’s backend strengths in agentic AI and intelligent workflows with Moveworks’ user-friendly frontend for natural language interactions, search, and reasoning. As a result, ServiceNow, Inc. (NYSE:NOW) has come up with a unified platform that serves as an “AI-native front door” for employees.
Management further added that the acquisition strategically aligns with the company’s goal to embed AI everywhere in business operations. ServiceNow, Inc. (NYSE:NOW) highlighted that they already handle complex tasks autonomously by using AI to resolve 90% of IT tickets and 89% of support requests. Moveworks adds a “Reasoning Engine” for smarter query handling and integrates with 100+ tools, trusted by giants like Siemens, Toyota, and Unilever.
That said, on December 19, Stifel lowered its price target on the stock from $1,150 to $230 and maintained a Buy rating. The reduced price target comes after the company announced a 5 for 1 stock split. The firm noted that the long-term prospects and fundamentals of the company remained unchanged, and the price target was adjusted to reflect the number of outstanding shares.
ServiceNow, Inc. (NYSE:NOW) is an American software and technology company. It provides an AI platform that helps organizations digitize, automate, and manage workflows for enterprise operations.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Analyst Upside Potential: 34.48%
Number of Hedge Fund Holders: 115
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the Best Quality Stocks to Buy Before 2026. Advanced Micro Devices, Inc. (NASDAQ:AMD) has risen more than 76.9% year-to-date. The share price moved further up on December 17, after South China Morning Post reported the company’s chair and CEO, Lisa SU met with the Chinese minister of industry and information technology.
According to the report, Lisa Su affirmed the commitment to deepen its investment in China. The chief executive also noted that China will offer greater corporate opportunities for foreign enterprises, including Advanced Micro Devices.
This report comes as President Trump released a statement suggesting eased export control on Nvidia’s H200 chips and also indicated potential relaxation for Intel and Advanced Micro Devices. This is an important update for the company as during fiscal 2024, China and Hong Kong combined generated roughly $6.2 billion in revenue for the company, thereby making it the second largest market for AMD.
That said, Wall Street also maintains a positive outlook on the stock. On December 19, Vijay Rakesh from Mizuho Securities reiterated a Buy rating on the stock but slightly lowered the price target from $279 to $277. On the same day, William Stein from Truist Financial also reiterated a Buy rating on the stock with a $201.06 price target.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor company that manufactures GPUs, microprocessors, and high-performance computing solutions and serves a number of high-growth industries like gaming, data centers, and AI.
6. Salesforce, Inc. (NYSE:CRM)
Analyst Upside Potential: 27.55%
Number of Hedge Fund Holders: 119
Salesforce, Inc. (NYSE:CRM) is one of the Best Quality Stocks to Buy Before 2026. On December 17, Salesforce, Inc. (NYSE:CRM) announced that Novartis (NYSE:NVS) has selected the company’s Agentforce Life Sciences for Customer Engagement to connect patients and Healthcare professional experiences.
Novartis has already invested in the company through Agentforce Health, 360 for Health & Life Sciences, MuleSoft for Life Sciences, and Agentforce Marketing. Now it plans to unify the engagement across marketing, sales, patient services, medical affairs, market access, and other teams. As per the deal, the company will deploy Agentforce 360 for Life Sciences globally over the next five years.
That said, Wall Street is also bullish on Salesforce, Inc. (NYSE:CRM). On December 17, Allan Verkhovski from BTIG initiated the stock with a Buy rating and $335 price target. Earlier on December 16, Gregg Moskowitz from Mizuho Securities also reiterated a Buy rating on the stock with a $340 price target.
Analyst Verkhovski from BTIG likes the company’s re-architecture of its core platform. He added that Salesforce’s management has expressed confidence that net new annual order value will accelerate and outpace overall annual order value through next year. The firm projects that the company will return to double-digit subscription revenue growth in fiscal Q4 2027.
Salesforce, Inc. (NYSE:CRM) offers customer relationship management technology, which connects companies and customers.
5. Netflix, Inc. (NASDAQ:NFLX)
Analyst Upside Potential: 41.71%
Number of Hedge Fund Holders: 154
Netflix, Inc. (NASDAQ:NFLX) is one of the Best Quality Stocks to Buy Before 2026. Netflix, Inc. (NASDAQ:NFLX) has been all over the news after the company announced on December 5 announced to acquire Warner Bros in a deal valued at $82.7 billion. To talk about this, Kevin Simpson, CEO and Founder of Capital Wealth Planning, appeared on a CNBC television interview on December 5.
Simpson noted that despite the stock price staying low, the deal represents huge value for the company. He highlighted that trimming Netflix, Inc. (NASDAQ:NFLX) at this point would be a mistake, as this deal represents the second-largest merger/acquisition in the post pandemic period internationally. Simpson highlighted that the deal can easily take over a year to start showing results for Netflix. Moreover, Simpson likes the prospective value of this deal for the company and also the efforts of the management in not only winning the bid but also keeping the competitors out.
Other research firms have mixed views on the deal. On December 5, Huber Research downgraded the stock from Neutral to Underweight with a $102.82 price target. The firm noted that they had been overweight on the stock for over the past 10 years; however, they are stepping aside. The firm added that the company has been very successful over the last 15 years in developing its own content and has stayed away from doing sizable deals such as the recent Warner Bros deal. Huber Research noted they did not see the need to change what had been working for Netflix, Inc. (NASDAQ:NFLX).
On the other hand, Baird also released a note on the same day, noting that they understand the initial investor hesitation as the company deviates from its historical approach. However, the firm sees long-term benefits of this deal, which will eventually surpass the near-term risks.
Netflix Inc. (NASDAQ:NFLX) provides entertainment services and offers TV series, documentaries, feature films, and games across various genres and languages.
4. Broadcom Inc. (NASDAQ:AVGO)
Analyst Upside Potential: 31.68%
Number of Hedge Fund Holders: 183
Broadcom Inc. (NASDAQ:AVGO) is one of the Best Quality Stocks to Buy Before 2026. Broadcom Inc. (NASDAQ:AVGO) topped Wall Street estimates during its fiscal Q4 2025 earnings, released on December 11. However, the stock price has fallen more than 16% since the release.
To talk about the earnings and the market selloff that followed, Kim Forrest, founder and chief investment officer at Bokeh Capital Partners LLC, and William Kerwin of Morningstar appeared on a Schwab Network interview on December 13. Kim noted that at the first appearance, the numbers looked great as they exceeded Street expectations, and demand looked good as well. However, the earnings call shifted the sentiment based on some products waiting for shipment, larger than anticipated backlog, and a 100 basis point decline in margins. Kim added that while the results were not bad, the AI investor sentiment has shaped in a way that if a company does not exceed expectations greatly, the sentiment turns negative.
William also expressed surprise over the market reaction. He noted that the investment case for Broadcom Inc. (NASDAQ:AVGO) remains intact, driven by accelerating AI demand. He highlighted that the company enjoys a significant benefit based on its co-designed TPU chip with Google, which has also seen immense demand. William added that Morningstar remains bullish on the stock, similar to Kim Forrest of Bokeh Capital Partners.
Broadcom Inc. (NASDAQ:AVGO) designs, develops, and supplies various semiconductor devices and infrastructure software solutions worldwide. The company operates in two segments: Semiconductor Solutions and Infrastructure Software.
3. NVIDIA Corporation (NASDAQ:NVDA)
Analyst Upside Potential: 32.13%
Number of Hedge Fund Holders: 234
NVIDIA Corporation (NASDAQ:NVDA) is one of the Best Quality Stocks to Buy Before 2026. Wall Street remains bullish on NVIDIA Corporation (NASDAQ:NVDA) despite the ongoing challenges stemming from increased competition in the AI chip sector and uncertainty regarding exporting to China amidst the geopolitical challenges.
Amidst this situation, Wall Street’s 12 month average price target on the stock represents more than 38% upside from the current level. A recent December 21 report by CNBC highlighted recent analysts’ ratings explaining the Street’s optimism.
The report noted Bernstein’s analyst Stacy Rasgon’s December 19 rating. The analyst maintained a Buy rating on the stock with a $275 price target. Rasgon maintained his bullish sentiment after a virtual meeting with Stewart Stecker, senior director of investor relations at Nvidia. The analyst noted that the company’s $500 billion outlook released in October is expected to see further upside, driven by new recent deals with Anthropic, OpenAI, and the collaboration with the Middle East.
Moreover, the talk with Stewart Stecker highlighted that NVIDIA Corporation (NASDAQ:NVDA) acknowledges that Google is at least two years ahead of the company due to its TPU program. However, the senior director of investor relations at Nvidia noted that Google will find it difficult to deploy these chips as they are designed for specific model structures. Therefore, Nvidia’s programmable platform solutions remain the best for cloud infrastructure.
In addition, on December 14, Blayne Curtis from Jefferies also reiterated a Buy rating on the stock with a $250 price target.
NVIDIA Corporation (NASDAQ:NVDA) highlighted that Nemotron 3 Nano is capable of delivering 4x higher throughput than Nemotron 2 Nano. Also, it delivers the most tokens per second for multi-agent systems at scale through the breakthrough hybrid mixture-of-experts architecture.
2. Meta Platforms, Inc. (NASDAQ:META)
Analyst Upside Potential: 26.70%
Number of Hedge Fund Holders: 273
Meta Platforms, Inc. (NASDAQ:META) is one of the Best Quality Stocks to Buy Before 2026. According to a report by The Wall Street Journal released on December 18, Meta Platforms, Inc. (NASDAQ:META) is set to release two new and significant AI developments in 2026.
The company is developing its next large language model called Avocado, along with a new image and video generation AI model called Mango. The chief AI officer of Meta, Alexandr Wang, noted that these models are expected to be launched in the first half of 2026. Moreover, Wang also highlighted that the company is making the next LLM better at coding. In addition, the chief AI officer also pointed out that Meta Platforms, Inc. (NASDAQ:META) is in the early stages of developing World Models, which are AI models that learn about their environment through visual inputs.
That said, on December 18, Meta Platforms, Inc. (NASDAQ:META) was reiterated with a Buy rating and a $810 price target by Bank of America. The firm noted the company’s 2026 expense guidance and its LLM launch planned for the first half of 2026 as major catalysts behind the bullish sentiment. For long-term investors, BofA suggests that they should follow the company’s returns from heavy AI spending across core apps, ad monetization, and new ventures.
Meta Platforms, Inc. (NASDAQ:META) is focused on developing AI-powered social platforms and immersive technologies, including Messenger, Instagram, and WhatsApp.
1. Microsoft Corporation (NASDAQ:MSFT)
Analyst Upside Potential: 29.61%
Number of Hedge Fund Holders: 312
Microsoft Corporation (NASDAQ:MSFT) is one of the Best Quality Stocks to Buy Before 2026. On December 22, Dan Ives of Wedbush Securities appeared on a CNBC Television interview to talk about his bull case for Microsoft Corporation (NASDAQ:MSFT). He says that investors are underestimating Microsoft and Azure growth.
Ives highlighted that during the last month, the company witnessed a 20% to 25% acceleration in deals, as a result of AI use cases finally exploding. He added that with the company expected to release earnings in January, Microsoft Corporation (NASDAQ:MSFT) is a table pounder, and 2026 is its call year. Ives also believes that among hyperscalers, Microsoft has been the most overlooked and least respected.
Regarding valuation concerns of the AI hyperscalers and whether Microsoft Corporation (NASDAQ:MSFT) is immune to these valuation threats, Ives noted that investors are still underestimating the growth numbers. He elaborated that the demand-to-supply ratio stands at 12 to 1, suggesting huge room for growth. Ives believes that the Street is underestimating Microsoft’s 2026 growth figures by at least 15% to 20%.
That said, Dan Ives maintained an Overweight rating on Microsoft Corporation (NASDAQ:MSFT) with a $625 price target, suggesting more than 28% upside from the current level.
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.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
