According to Deutsche Bank, 2026 is going to be the hardest year for artificial intelligence. Analysts Adrian Cox and Stefan Abrudan said the technology will survive, but warned that the honeymoon period is over.
They expect AI to be hit by three themes in particular this year: disillusionment, dislocation, and distrust, particularly as concerns accelerate over OpenAI’s high cash burn.
This matters as AI investment and optimism are buoying the global economy, accounting for most of economic and earnings growth in the US last year.
While AI remains transformative, analysts believe its real-world impact has been limited so far. Benefits have been most visible to Silicon Valley and to savvy early adopters, rather than average business leaders who focus on revenues and operational improvements.
The bank also highlighted major bottlenecks across the AI supply chain, including shortages of computing power, memory, energy, and skilled talent.
AI depends on the most complex supply chain in history and any one of hundreds of thousands of components can derail the process.
-Cox and Abrudan wrote.
Memory, they believe, is by far the most critical pressure point as workloads transition from training models to using AI tools. Nevertheless, demand remains strong, with major hyperscalers continuing to invest heavily and governments pushing towards sovereign AI.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q3 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. ServiceTitan Inc. (NASDAQ:TTAN)
Number of Hedge Fund Holders: 48
ServiceTitan Inc. (NASDAQ:TTAN) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Morgan Stanley analyst Josh Baer upgraded the stock from Equalweight to Overweight with a price target of $131.00 (up from $125.00). The firm sees ServiceTitan as an underpriced compounder and a leading vertical software asset, very well positioned for AI.
Morgan Stanley’s upgrade comes nearly one year after it initiated coverage of the stock at “Equal-weight,” believing it was a great company and fairly priced. There were some concerns earlier, particularly regarding high investor expectations and valuation, success in Commerical segment, and GTM profitability.
The firm said that it is now constructive across all these areas, which makes it both a great company and a great stock. Morgan Stanley also believes that TTAN is very well-positioned for artificial intelligence.
We see ServiceTitan as an underpriced compounder – a leading vertical software asset very well positioned for AI.
The bank said that the combination of steady growth and margin expansion can drive the stock to its $131 price target. It noted that shares see an attractive upside and a 5:1 bull/bear skew on a one-year horizon, while also viewing the company as a core portfolio holding over the longer term.
It further added that ServiceTitan looks attractive on its own and also when compared to peers in the Vertical software space.
Further, ServiceTitan screens well on an absolute and relative basis to our coverage under our framework for identifying attractive Vertical end-markets and attractive Vertical Software companies.
ServiceTitan Inc. (NASDAQ:TTAN) provides an end-to-end cloud-based software platform in the US and Canada. Its platform connects and manages a range of business workflows.
9. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 63
Cloudflare, Inc. (NYSE:NET) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Citizens analyst Trevor Walsh reiterated a Market Outperform rating on the stock with a $270.00 price target.
According to the firm, new agentic AI-driven traffic will increasingly rely on backbone content delivery networks (CDNs). As such, Cloudflare’s network is well-positioned to support agentic architectures such as MCP, which help connect AI systems to external applications.
To support this view, the firm gathered insights from the CEO of a go-to-market security vendor and a Secure Access Service Edge (SASE) industry expert. Their findings underscore Cloudflare’s role in network and security architectures.
Citizens also shed light on publicly available sources, which revealed how two Cloudflare account executives had met or exceeded their quota attainment for the fourth quarter of 2025, suggesting healthy customer demand.
Overall, the firm emphasized that the company continues to maintain its strong position in the CDN market, and that its network infrastructure is a key advantage as internet traffic patterns evolve toward AI and agent-driven workloads.
Cloudflare, Inc. (NYSE:NET) is a cloud services provider that powers AI workloads through its Workers AI platform.
8. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 81
Intel Corporation (NASDAQ:INTC) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Seaport Global Securities analyst Jay Goldberg upgraded the stock to “Buy” from Neutral with a price target of $65. The firm is cautiously optimistic on the stock, noting that INTC is back on track, but a full turnaround at Intel Foundry (IFS) will take time.
According to Seaport, there are strong signals for Intel’s PC products and a gradually improving outlook for Intel Foundry Services (IFS). Analysts led by Goldberg believe the new Panther Lakes products will drive an improvement for Intel products.
Feedback from OEMs and ODMs at and following the CES event has been very positive, implying Intel could regain market share this year, particularly in consumer products.
Discussing Panther Lake, the firm noted that it is highly significant, as it is the first commercial product built on Intel’s 18A manufacturing process. This marks a return to Moore’s Law path of process improvement.
While IFS still faces execution risk and longer-term success is dependent on the 14A process, the firm anticipates near-term traction in advanced packaging. This is helped by capacity constraints at TSMC.
In the near term, we think the bulk of external IFS customers will sign up for Intel advanced packaging rather than 18AP. TSMC’s advanced CoWoS advanced packaging is highly constrained, leaving room for Intel to get its start serving external customers. For now, that is enough to keep them in the fight. We are establishing a price target of $65, based on a DCF analysis with a 12% discount rate and a 5% growth rate.
Intel Corporation (NASDAQ:INTC) designs, manufactures, and sells advanced semiconductors, computer products, and technologies, delivering data storage, computer, networking, and communications platforms.
7. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 82
ASML Holding N.V. (NASDAQ:ASML) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 16, Bernstein SocGen Group analyst David Dai reiterated an Outperform rating on the stock with a $1,528.00 price target. The firm is strongly positive on ASML as it sees structural demand upside for the stock into 2026–2029.
On January 15, TSMC “smashed” market expectations when it announced a capital expenditure guidance of $52-56 billion for 2026, a 32% year-over-year increase from its 2025 capex of $40.8 billion at the midpoint.
Bernstein believes this is “great news” for all semiconductor equipment names, particularly ASML, given the high litho intensity in advanced logic. The company also forecast revenue growth of 30%, reflecting how capex intensity remains elevated at an estimated 33%.
The allocation toward advanced logic has increased to 70-80%, up from 70% last year. The firm noted that this is partly offset by decreased allocation to equipment, as TSMC accelerated the buildout of “new clean rooms in anticipation to stronger capacity needs in 2028/2029.”
We conclude that 1. advanced logic equipment growth in 2026 is strong at around 30%; 2. equipment demand will further accelerate in 2028/29 when the new clean rooms are ready to be filled with equipments.
6. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 85
Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Citizens analyst Trevor Walsh reiterated a Market Outperform rating on the stock with a $250.00 price target. The research firm is optimistic about the cybersecurity company, citing positive industry feedback regarding its platformization potential.
According to Citizens, conversations with executives from private vendors in the cybersecurity space continue to focus on how difficult it is to displace large incumbent platforms like Palo Alto Networks. One of the executive even argued that it’s “their market to lose” provided the company doesn’t take any major strategic or executional missteps.
Moreover, industry feedback gathered by the firm has also revealed that the cybersecurity market is moving in a direction toward consolidation. Industry participants have discovered that customers continue to prefer comprehensive platform solutions from single vendors.
Similarly, a co-founder of an identity and network security company told the firm that “Nothing has changed in the competitive landscape in deals.” They also added that Palo Alto’s expanded platform capabilities are “helpful” because customers want to “consolidate single vendors in cybersecurity.”
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity.
5. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 104
ServiceNow, Inc. (NYSE:NOW) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Bernstein SocGen Group analyst Peter Weed reiterated an Outperform rating on the stock with a $219.00 price target. The firm is optimistic on NOW, citing upside catalysts in GenAI and H2 execution.
In an investor note, the firm highlighted how ServiceNow is one of the safest application stocks based on short interest metrics. This is despite having experienced sharper declines than most large-cap application peers since January 1.
Sometimes we feel like the ‘old man shouting at a cloud’ meme as we defend applications, and ServiceNow in particular.
While there have been concerns regarding NOW’s recent large acquisitions, the firm noted how applications remain relevant and that the acquisitions have been “wise.” As such, ServiceNow is the firm’s top application pick for the second half of 2026.
The firm’s CIO survey has also revealed strong customer support for the company over any application vendor, and that the company’s steady growth profile and low valuation support further upside, particularly from GenAI initiatives.
In particular, ServiceNow may even see incremental H2 revenue upside. Not just because they may show cross-sell synergy traction from Moveworks, but even more importantly the upside from their GenAI offers.
ServiceNow, Inc. (NYSE:NOW) provides an AI-native orchestration platform that integrates workflows, data, and AI to enable autonomous business operations.
4. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 105
Micron Technology, Inc. (NASDAQ:MU) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, TD Cowen analyst Krish Sankar raised the price target on the stock to $450.00 (from $300.00) while maintaining a “Buy” rating. The firm sees cycle strength, shortages, and pricing upside to continue to support MU in the medium term.
According to the firm, memory shortages are worsening rather than improving, which supports further upside to MU’s calendar 2026 earnings power even though estimates remain unchanged, as it is still early.
As DRAM and NAND prices increase and put pressure on budgets, the firm believes this favors multi-year long-term agreements, even though timings and terms remain uncertain.
TD Cowen also anticipates server average selling prices (ASPs) to peak at 200% year-over-year in the second half of 2026 and stabilize at that level. This reflects continued near-term momentum for MU despite its recent strong stock performance.
Overall, Micron is likely to continue outperforming semiconductor stocks in the near-term, but TD Cowen believes that the trade may flip in favor of semicaps in the second half of 2026.
We still think that MU may continue to outperform semicaps near-term (AMAT/LRCX up 30/35% last 1 month vs 45% for MU) as cleanroom constraints cap near-term upside. We think the trade might flip in favor of semicaps in 2H:C26. MU’s recent deal with PSMC is a recent example why we expect to see further upside revisions for semicap in CY27.
Micron Technology, Inc. (NASDAQ:MU) develops and sells memory and storage products for data centers, mobile devices, and various industries worldwide.
3. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 122
Oracle Corporation (NYSE:ORCL) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Guggenheim analyst John DiFucci reiterated a Buy rating on the stock with a $400.00 price target. ORCL remains firm’s “Best Idea” in the software sector.
The firm has addressed several factors in its report, including reviewing its thesis on ORCL, acknowledging investor concerns, and introducing incremental work on its financial model.
A few of the investor concerns Guggenheim highlighted include Oracle’s commitment to investment-grade debt and recent press issues, as well as real concerns regarding customer concentration, particularly OpenAI.
However, Guggenheim believes that these concerns are outweighed by the company’s strategic positioning, financial discipline, and long-term growth opportunity. For the firm, Oracle remains the best opportunity in the software sector.
Oracle, the firm noted, has a “better mousetrap” in cloud infrastructure built on lessons learned by others that came before it (particularly Amazon Web Services). This, combined with unique enterprise-grade technologies, enables incomparable scaling and security.
It has therefore deemed Oracle a “decade stock” that will witness growth at a “hyper rate” with cash flows that will “waterfall” over the longer term. However, it also cautioned that investors will have to wait for that to happen.
We see this as an opportunity for investors with a longer time horizon, a few years rather than a few weeks or months, to start to build a position. While we keep calling this a decade stock (because we believe it is), we expect the numbers to be irrefutable in half that time and be obvious long before that. As a result, ORCL remains our Best Idea with a $400 Price Target.
Oracle Corporation (NYSE: ORCL) is a database management and cloud services provider.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Goldman Sachs analyst Michael Ng reiterated a Buy rating on the stock with a $320.00 price target. The firm views APPL’s recent YTD drop as a buying opportunity, citing multi-year iPhone strength and Services mix.
The investment bank noted how Apple’s shares are down 5% YTD at the start of calendar 2026, likely due to commodity cost inflation and App Store concerns. However, the recent weakness presents a buying opportunity as the iPhone refresh cycle continues.
Revenue for the iPhone is projected to grow 9% in both fiscal 2026 and 2027. Moreover, for the first quarter of fiscal 2026, the firm forecasts earnings per share of $2.66, in line with FactSet consensus. First-quarter iPhone revenue is likely to increase 13% year-over-year, fueled by 5% unit growth (including 26% growth in China) and 8% stronger price and mix.
Goldman Sachs noted how future iPhone demand is going to be positively impacted by a foldable iPhone in late 2026, a shift to a biannual iPhone launch cycle, and new software upgrades.
iPhone demand in the next 2 years is likely to benefit from the iPhone Fold (Fall 2026, 4.5/25.4 mn units in F2026/F2027), the shift to a biannual iPhone launch cycle with the iPhone 18 base and iPhone Air 2 delayed from Fall 2026 to Spring 2027, and new software upgrades with iOS and Siri 2.0.
Even though App Store spending growth decelerated again to 7% year-over-year in the first quarter, the firm forecast overall Services revenue to grow 14% driven by momentum in other categories including traffic acquisition costs, iCloud+, and AppleCare+. Further tailwinds in F2026 are expected from new ad formats in the App Store.
Goldman Sachs further noted how product price/mix growth and continued mix shift toward Services are likely to support gross margins, which will help offset potential headwinds from memory cost inflation.
Apple’s recent partnership with Google Gemini and continued iPhone demand growth are also seen to reinforce AAPL’s position as a consumer device of choice.
Apple’s partnership with Google Gemini for Siri and continued iPhone demand growth against the backdrop of AI-native consumer hardware launches should demonstrate to the market that the iPhone will remain the consumer device of choice for accessing new AI tools, clearing overhangs related to competition.
Apple is a technology company known for its consumer electronics, software, and services.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 234
NVIDIA Corporation (NASDAQ:NVDA) is one of the 10 Buzzing AI Stocks Analysts are Watching. On January 20, Goldman Sachs reaffirmed its preference for Broadcom and Nvidia, highlighting that it continues to prefer both names within the compute ecosystem.
The firm developed an “investment cost curve” to compare the economies of different chipmakers’ AI solutions and their competitiveness over time. It is intended to address investor questions about the GPU versus ASIC debate in artificial intelligence computing.
The firm’s analysis indicates that Google/Broadcom’s TPU is rapidly closing the performance gap with Nvidia’s GPU solutions on compute cost performance. The TPU v7 achieves an estimated 70% reduction in cost per token compared to TPU v6, bringing it on par or slightly better than Nvidia’s GB200 NVL72 in absolute cost terms.
Even though competitive pressures exist, Goldman believes Nvidia still has advantages, particularly in its time-to-market and software. Moreover, its CUDA software remains a significant competitive moat for customers.
In comparison, Amazon’s Trainium and AMD solutions have delivered only about 30% cost reduction, lagging behind Nvidia and Google solutions on absolute cost.
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
While we acknowledge the potential of NVDA as an investment, 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 NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.
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