In this article, we take a look at the 10 Must-Buy AI Stocks to Invest In.
Artificial intelligence (AI) was one of Morgan Stanley’s four megatrends in 2025. The bank’s analysts predicted that AI would move from foundations to early game-changing applications. And as a result, companies with AI-adjacent operations would reap significant growth. This is exactly what happened, if a Bloomberg analysis published on December 31, 2025, is anything to go by. According to Bloomberg, 2025 was a massive bull market, with the S&P 500 Index closing the year near 17%. This was a third consecutive year of gains, and enthusiasm around AI was the main driver.
Bloomberg added that leadership within the AI theme rotated from just chipmakers to companies providing data storage and data‑center infrastructure for hyperscalers. This led to new entrants in the index, which all posted triple-digit gains and ranked among the top 20 performers.
Be that as it may, 2026 may see even more groundbreaking developments in the AI sector. And to be specific, Blue Whale Growth Fund’s Stephen Yiu thinks the AI market may splinter. Yiu told CNBC on December 25 that the Q4 2025 pattern of sharp tech sell-offs and rallies was early evidence that AI investors were starting to differentiate between business models rather than buying AI indiscriminately. Yiu split AI companies into three camps: private/start‑up model developers (e.g., OpenAI and Anthropic), listed AI spenders (Big Tech platforms), and AI infrastructure providers (semis, data‑center hardware).
Yiu added that: “So far, every company seems to be winning, but AI is in its early innings… It’s very important to differentiate between different types of companies, which is what the market might start to do.” Most importantly, Yiu argued that investors should strive to be on the receiving end of AI spend; that is, they should invest in infrastructure providers with tangible cash flows rather than in companies that are still burning cash with no clear monetization.
Our Methodology
We used the Finviz stock screener, alongside financial publications, to curate the initial list of companies with significant exposure to the AI sector. We then picked companies with consensus Strong Buy ratings. We also considered institutional interest using Q3 2025 hedge fund holdings data from Insider Monkey and ranked the stocks in ascending order by the number of hedge funds invested in them.
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).
Note: The upside potential data is as of January 3, 2026.
Must-Buy AI Stocks to Invest In
10. Credo Technology Group Holding Ltd (NASDAQ:CRDO)
Stock Upside: 52.51%
Number of Hedge Holders: 56
Credo Technology Group Holding Ltd (NASDAQ:CRDO) is one of the must-buy AI stocks to invest in. On December 16, BofA cut its price target on Credo Technology Group Holding Ltd (NASDAQ:CRDO) to $200 per share from $240. The investment bank kept a Buy rating on the stock.
According to BofA, 2026 is the halfway point in an 8- to 10-year process of overhauling old IT systems to handle faster AI tasks, like processing huge amounts of data quickly. This upgrade journey, noted the analysts, is driven by the need for more powerful AI, but it’s not without bumps. For instance, stocks in this space might stay volatile because investors are closely watching whether AI investments pay off and how big tech companies manage their spending.
On the brighter side, BofA noted that challenges from greater scrutiny of AI returns and hyperscaler cash flows could be balanced out by two factors. First, quicker progress in building large language models (the brains behind AI chatbots). And, second, specialized AI factories, which would boost demand for companies like Credo.
Meanwhile, on December 11, Barclays maintained a Buy rating on Credo with a $220 price target. Like their counterparts at BofA, Barclays’ analysts cited optimism about Credo’s ability to capture more market share as hyperscalers build out AI factories and upgrade their data centers as the key factor in their decision.
Credo Technology Group Holding Ltd (NASDAQ:CRDO) is a semiconductor company that develops high-speed connectivity solutions for data infrastructure. The company’s portfolio of optical and electrical interconnect products enables efficient data transfer within AI data centers.
9. Nebius Group N.V. (NASDAQ:NBIS)
Stock Upside: 96.17%
Number of Hedge Holders: 65
Nebius Group N.V. (NASDAQ:NBIS) is one of the must-buy AI stocks to invest in. On December 17, Nebius Group N.V. (NASDAQ:NBIS) released Nebius AI Cloud 3.1, an updated version of its full-stack AI cloud platform. The platform is designed specifically for intensive AI workloads.
According to Nebius, the new update introduces next-generation NVIDIA Blackwell Ultra compute capabilities. The capabilities will support customers transitioning from AI experiments to large-scale production deployments. Some of the enhancements in the new update include higher compute, capacity management and transparency, as well as a raft of developer and ecosystem features.
These advancements deliver supercomputer-class performance, stated Nebius. Specifically, the GB300 NVL72 platform now enables rack-scale operations that function like a single giant GPU. This supports demanding tasks such as large-scale model training and high-throughput inference. Also, Nebius AI Cloud 3.1 now expands its ecosystem with a new native integration with Dstack for streamlined workflows. There is also simplified access to NVIDIA BioNeMo NIM microservices without requiring NGC keys or NVIDIA AI Enterprise licenses.
On security and governance, the update strengthens the features with object storage data-plane audit logs supporting HIPAA compliance. There is also per-object access controls, VPC security groups, and enhanced identity management via Microsoft Entra ID integration. Nebius plans a technical walkthrough webinar for the release on January 29, 2026.
Nebius Group N.V. (NASDAQ:NBIS), headquartered in Amsterdam, develops and operates AI cloud infrastructure designed for training and inference of advanced machine learning models. The company offers full-stack GPU clusters and networking solutions through its Nebius AI Cloud platform.
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