10 High Quality Stocks to Buy According to Hedge Funds

In this article, we will take a look at the 10 High Quality Stocks to Buy According to Hedge Funds. 

According to a report from BNP Paribas Wealth Management, quality stocks could continue outperforming as investors lean toward companies with strong fundamentals and reliable growth prospects during economic uncertainty. The firm said many of the leading quality companies, especially in technology, continue to generate healthy cash flow, maintain solid balance sheets, and hold strong market positions.

Those strengths, the report noted, can help companies manage slower economic growth while still growing profits. Businesses linked to artificial intelligence were also highlighted as a major source of future earnings growth. The report said the opportunity extends beyond technology. Sectors such as luxury goods, pharmaceuticals, healthcare, and industrials were identified as areas that could benefit from long-term trends, including aging populations and growing demand for weight-loss drugs.

BNP Paribas also pointed to the ongoing AI infrastructure buildout as another long-term growth driver. The firm believes that trend could create demand across several industries over the coming years, from software to commodities and industrial businesses. In addition to this, slowing global growth, political tensions, and election-related uncertainty could create a tougher environment for weaker companies. Businesses with stable earnings, pricing power, and strong competitive positions have historically performed better during economic slowdowns and later stages of the market cycle.

The firm added that quality investing should not only be viewed as a defensive strategy. In its view, it can also offer exposure to long-term global growth themes. At the same time, the report emphasized the importance of diversification rather than relying too heavily on a single investing style.

Given this, we will take a look at some of the best quality stocks according to hedge funds.

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Our Methodology:

For this list, we screened for quality companies with solid balance sheets, sound financials, and strong dividend histories. We picked 10 companies that were the most popular among hedge funds, deriving data from Insider Monkey’s Q4 2025 database.

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. QUALCOMM Incorporated (NASDAQ:QCOM)

Number of Hedge Fund Holders: 78

On May 18, Melius Research raised its price recommendation on QUALCOMM Incorporated (NASDAQ:QCOM) to $220 from $170. It reiterated a Hold rating on the shares. The firm said that while “nothing really emerged as incrementally good from Trump going to China,” it was feeling “incrementally good” about memory and AI semiconductor companies. The analyst raised long-term estimates and price targets for all of the firm’s Buy-rated “bottleneck stocks.” These included Micron, Sandisk, AMD, Intel, and Marvell. The firm also said it still believes semiconductor companies will continue taking market value, or at least more upside potential, from traditional software firms and other non-chip companies within the Magnificent Seven over the long term.

Earlier, on May 13, Freedom Broker downgraded Qualcomm to Hold from Buy while raising its price target to $200 from $165. The firm described Qualcomm’s fiscal Q2 report as mixed and said the company’s fiscal Q3 outlook was “disappointing across the board.” Freedom Broker expects Qualcomm’s handset segment revenue to decline nearly 15% in fiscal 2026, followed by another 16% drop in 2027.

QUALCOMM Incorporated (NASDAQ:QCOM) develops and commercializes foundational technologies for the wireless industry. Its business includes 3G, 4G, and 5G wireless connectivity, along with high-performance and low-power computing technologies, including on-device artificial intelligence.

9. Texas Instruments Incorporated (NASDAQ:TXN)

Number of Hedge Fund Holders: 78

On May 19, Mizuho raised its price recommendation on Texas Instruments Incorporated (NASDAQ:TXN) to $300 from $255. It reiterated a Neutral rating on the shares. The firm increased price targets across the semiconductor sector after reviewing the impact of AI data centers on the analog and memory markets. According to the analyst, channel checks showed that analog chips continue to benefit from AI server ramp-ups. Memory markets are also seeing continued strength across NAND and DRAM due to growing AI server demand. Mizuho expects supply conditions to remain tight through the first half of 2027 and pointed to a potential Samsung strike as another factor to watch.

During the company’s Q1 2026 earnings call, CEO Haviv Ilan highlighted Texas Instruments’ agreement to acquire Silicon Labs as a major strategic move. He said the transaction was expected to close in the first half of 2027, subject to regulatory approvals.

CFO Rafael Lizardi said the company reported net income of $1.5 billion, or $1.68 per share, for the quarter. He added that earnings per share benefited by $0.05 from items not included in the company’s original guidance, primarily related to discrete tax benefits.

Discussing shareholder returns and the company’s balance sheet, Lizardi said Texas Instruments paid $1.3 billion in dividends and repurchased $158 million worth of shares during the quarter. He also noted that the company maintained a strong balance sheet, supported by $5.1 billion in cash and short-term investments.

Texas Instruments Incorporated (NASDAQ:TXN) designs, manufactures, tests, and sells analog and embedded processing chips. Its products are used across industrial, automotive, personal electronics, communications equipment, and enterprise systems markets.

8. The Williams Companies, Inc. (NYSE:WMB)

Number of Hedge Fund Holders: 80

On May 12, Scotiabank analyst Brandon Bingham raised the firm’s price recommendation on The Williams Companies, Inc. (NYSE:WMB) to $86 from $85. The analyst reiterated an Outperform rating on the shares. The analyst said the Q1 reporting season highlighted the ability of midstream companies to generate strong earnings during periods of turbulence and market shocks. He shared those views in a research note to investors.

Also on May 12, UBS analyst Manav Gupta raised the firm’s price goal on Williams to $91 from $89 and kept a Buy rating on the stock. According to the analyst, Williams continues to stand out by expanding its business at a faster pace than expected. In a research note, the firm said the company’s Power Innovation business could add EBITDA upside potential of $1.93 billion by 2029 based on projects already announced. These projects include Socrates, Atlas, Apollo, Aquila, Socrates the Younger, and Neo.

The Williams Companies, Inc. (NYSE:WMB) owns and operates energy infrastructure focused on natural gas delivery. Its business segments include Transmission, Power & Gulf, Northeast G&P, West, and Gas & NGL Marketing Services.

7. General Motors Company (NYSE:GM)

Number of Hedge Fund Holders: 81

On May 11, Bloomberg reported that General Motors Company (NYSE:GM) plans to cut hundreds of salaried employees from its information technology division as part of a broader effort to reduce costs and make room for workers with different technology skills.

The job cuts are expected to affect around 500 to 600 employees, according to people familiar with the matter. Management started informing affected workers on Monday morning, the sources said, while asking not to be identified because the matter is private. GM confirmed that some positions were being eliminated after responding to questions from Bloomberg News. In a statement, the company said the reductions are tied to an effort to reshape its IT department and better prepare the business for the future.

The cuts come at a time when the automaker is trying to improve profits despite weak US sales at the start of the year. Back in October, GM also reduced hundreds of salaried roles, along with thousands of factory workers, as the company struggled with investments in electric vehicles that did not perform as expected.

General Motors Company (NYSE:GM) designs, builds, and sells trucks, crossovers, cars, and automotive parts. The company also provides software-enabled services and subscription offerings around the world. Its business segments include GMNA, GMI, Cruise, and GM Financial.

6. Analog Devices, Inc. (NASDAQ:ADI)

Number of Hedge Fund Holders: 86

On May 19, Analog Devices, Inc. (NASDAQ:ADI) and Empower Semiconductor said they had signed a definitive agreement under which ADI will acquire Empower in an all-cash deal worth $1.5 billion. As AI computing grows, the challenge is no longer only about how much power systems use. Power density has started to matter just as much. Companies are now under pressure to deliver efficient, high-density power directly where computing happens, especially as workloads change quickly.

ADI and Empower said the deal is aimed at improving power delivery architecture for AI and other compute-intensive systems. Bringing power conversion closer to the processor can shorten the delivery path and improve efficiency. That becomes important as companies push for faster and denser computing systems. ADI said the acquisition also supports its broader push in high-performance power management. The company is investing more heavily in system-level platforms to improve performance, density, and efficiency from the grid all the way to the processor core.

Under the terms of the agreement, which has already been approved by both companies’ boards, ADI will pay Empower shareholders $1.5 billion in cash. The deal is expected to close in the second half of calendar year 2026.

Analog Devices, Inc. (NASDAQ:ADI) develops semiconductor technologies used across a range of industries. The company designs and sells integrated circuits, software, and subsystems built around analog, mixed-signal, and digital signal processing technologies.

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