According to Wells Fargo’s senior equity analyst Aaron Rakers, the semiconductor industry is poised to grow to one trillion dollars in revenue in 2026. This is up 29% year-on-year, followed by another year of double-digit expansion in 2027.
“I think we’re still seeing that we’re moving from a heavy AI training investment cycle to inferencing starting to proliferate, and that’s carrying the chip sector,” said Rakers, in an interview with CNBC TV.
In the CNBC interview, Rakers pointed to strong quarterly results from TSM, an evidence of broad-based strength across AI chips. This has reinforced the firm’s bullish outlook on several notable names such as AMD, Nvidia, and Broadcom.
The evolving demand mix is helping extend the AI-driven upcyle as inferencing workloads are increasingly driving chip utilization across sectors.
On Nvidia and Broadcom, the firm noted how it wants to be involved with both these names. Broadcom is diversifying its custom AI base of business, and Nvidia is anticipated to have a good print this next cycle.
“We think that they are playing a different ballgame. This notion of extreme co-design up and down the stack makes them a clear, differentiated platform provider, so we continue to like that name as well.”
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.
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11. HP Inc. (NYSE:HPQ)
Number of Hedge Fund Holders: 42
HP Inc. (NYSE:HPQ) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Barclays downgraded the stock to “Underweight” from Equal Weight, stating that it sees too many “secular challenges” across both HP’s PC and printing businesses.” The firm has reduced its price target to $18.00 from $24.00.
“While we see the stock as inexpensive, we believe secular challenges across both PCs and Printing, combined with a lack of catalyst, will cause the stock to remain pressured in 2026. Additionally, we expect the current memory cycle to pressure HPQ’s PC business (~30% of Personal Systems is Consumer) with further downside potential in the year.”
The firm highlighted the current memory cycle as a factor anticipated to pressure HP’s PC business. They noted that an estimated 30% of the company’s Personal Systems segment is consumer-focused, which may face further downside potential this year.
Analysts on Wall Street have a consensus “Buy” rating on the stock. The average price target of $25 implies a 22.73% upside; however, the Street-high target of $30 implies an upside of 47.28%.
HP Inc. (NYSE:HPQ) is a technology company that specializes in personal computing and printing solutions.
10. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 51
Dell Technologies Inc. (NYSE:DELL) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Barclays upgraded the stock to “Overweight” from Equal Weight with an unchanged price target of $148. Firm analysts see DELL poised for upside, driven by AI server momentum, enterprise recovery, and disciplined operating expenses.
Dell holds robust strength in AI server orders, with analysts growing more comfortable with the margin profile of its AI server business. While gross margins remain pressured, operating margins have been resilient.
“We are more positive on DELL given the strength in AI server orders, stability of AI op margins, expanding opportunities in enterprise server and storage, and DELL’s consistent disciplined opex management. We are encouraged by what we are seeing now and upgrading the name to OW from EW as we see more upside to come. We maintain our price target of $148.”
The firm noted how it was previously concerned about the dilutive gross margins associated with AI servers. While they are still likely to be in the high-single-digit-range, the dynamic is largely understood now with analysts adding that they are encouraged by the company’s ability to deliver mid-single-digit operating margins in the AI server business.
Dell’s plans to ship an estimated $9.4 billion of AI servers in Q4, which would lift full-year AI server shipments to $25 billion. Firm analyst now models 155% and 60% growth in AI orders in fiscal 2026 (FY26) and FY27.
“Enterprise server/storage. We believe both end markets are recovering. DELL continues to increase the mix of its IP offerings in storage. For traditional servers, DELL still has 70% of the installed base consisting of old gen products, which calls for considerable upgrade opportunities to come. We think DELL’s supply chain leadership can help better navigate the current commodity environment.”
Dell Technologies Inc. (NYSE:DELL) provides IT solutions, including servers, storage, networking, and personal computing devices, to businesses and consumers worldwide.
9. Atlassian Corporation (NASDAQ:TEAM)
Number of Hedge Fund Holders: 60
Atlassian Corporation (NASDAQ:TEAM) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, BTIG analyst Allan Verkhovski reiterated a “Buy” rating on the stock with a $220.00 price target. The rating affirmation follows Atlassian’s announcement of updated pricing for existing Data Center subscriptions.
Firm analysts highlighted in an investor note how Atlassian updated its new pricing for existing data center subscriptions on list pricing plans. There will be a 15% increase on list and lower tier pricing for Jira, Confluence, and Jira Service Management across all user tiers, effective February 17, 2026.
Analysts noted how this increase is considerably lower than the 25% price hike announced during the same period last year.
Explaining why the company hasn’t increased its DC pricing as much as the previous year, they highlighted how Atlassian announced on September 8, 2025 that it plans to end-of-life its Data Center deployment offering by March 28, 2029. Atlassian is currently transitioning customers to its Cloud services through its Ascend program.
Owing to positive customer response on TEAM’s Ascend program, migrations have contributed more than expected
“Last quarter, TEAM highlighted customer response to Ascend (program that helps customers jumpstart their migration planning) has been incredibly positive, and as such, increased its FY26 Cloud revenue growth outlook to reflect migrations driving a mid-to-high single-digit contribution to Cloud revenue growth, up from the prior expectation of a mid-single-digit contribution. We believe the smaller magnitude of this year’s Data Center price increase reflects positive traction among Data Center customers migrating to Cloud, reducing the need for TEAM to push pricing as aggressively. We had factored in a ~15% pricing increase in our base case, so our estimates are not under review.”
Atlassian Corporation (NASDAQ:TEAM) is a global software company that designs, develops, licenses, and maintains various software products worldwide.
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 113
Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Wells Fargo analyst Aaron Rakers reiterated an “Overweight” rating on the stock with a $345.00 price target. Firm analysts view AMD as a leading beneficiary of data center compute demand, deeming it a ‘Top Pick’ for 2026.
Rakers sees a significant upside potential (+55%) driven by strength in CPU leadership, AI GPUs, and AMD’s Helios systems momentum. He believes that the company’s path to $20+/sh. EPS by calendar 2029 may become more visible as the company moves forward this year.
“We think AMD’s path to $20+/sh. EPS by calendar 2029 could become more visible as we move through 2026, as strong product roadmap execution continues to intersect our maintained view of insatiable data center compute demand.”
Analysts on Wall Street have a consensus “Buy” rating on the stock. The average price target of $290 implies a 25.09% upside; however, the Street-high target of $380 implies an upside of 63.91%.
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.
7. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 120
Tesla, Inc. (NASDAQ:TSLA) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 16, Barclays reiterated Tesla and Rivian as “Equal Weight,” stating that fundamentals remain an “afterthought” for both stocks.
“We would describe the 2025 stock performance of TSLA and RIVN as heavy on the narrative, with fundamentals seemingly an afterthought.”
On the previous day, Goldman Sachs reiterated Tesla as “Neutral.” The firm is cautious on the stock heading into Tesla earnings later January.
The firm noted that its 4Q EPS estimate is similar to the Street. It’s 2026 auto delivery forecast is below Visible Alpha consensus, and analysts anticipate a soft 1Q26. However, it also expects Tesla to launch the Y L in the US/Europe early to mid-year and that this will help volumes especially in the second half of the year.
Analysts on Wall Street have a consensus “Buy” rating on the stock. The average price target of $470.56 implies a 7.58% upside; however, the Street-high target of $600 implies an upside of 37.14%.
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 130
Alibaba Group Holding Limited (NYSE:BABA) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Morgan Stanley analyst Gary Yu reiterated an Overweight rating on the stock with a $180.00 price target.
Firm analysts believe Qwen’s AI assistant rise plays a critical role in BABA’s agentic AI pivot, anticipating 2C applications and agentic AI developments to be the “key AI focus this year.”
Morgan Stanley noted how Qwen AI assistant can now perform over 400 daily tasks through integration with the Alibaba ecosystem, offering one-stop solutions across various services. The application has seen rapid user adoption, with monthly active users (MAU) surpassing 100 million within two months of its launch.
The company anticipates 60-70% of digital-world tasks to be completed by artificial intelligence in the next two years, with the technology significantly improving efficiency for remaining tasks.
2C applications and agentic AI developments are likely to be the key AI focus this year, with Qwen likely to become an all-in-one superapp and life assistant within Alibaba’s ecosystem.
“Our view: We expect 2C applications and agentic AI developments to be the key AI focus this year, and we note that internet platforms (Bytedance, Tencent) have been actively ramping up 2C offerings recently. Leveraging the Alibaba ecosystem, including Taobao/Eleme (e-com/QC), Fliggy (travel), Amap (map) and Alipay (payment), we view Qwen as well positioned to become an all-in-one AI superapp and life assistant. Tencent is catching up on AI model enhancement, though agentic product launches may come later. We expect Qwen’s DAU uptick and further improvement in agentic capabilities (such as using external tools) for future iterations of Qwen models to be another shareprice driver in addition to cloud revenue growth (est. 35%+ in F3Q and +40% in F27). However, higher marketing spending on 2C adoption may result in higher all other losses (est. RMB7bn in F3Q).”
Alibaba Group Holding Limited (NYSE:BABA) is an internet giant that offers e-commerce services in China and internationally.
5. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 183
Broadcom Inc. (NASDAQ:AVGO) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Wells Fargo analyst Aaron Rakers raised the price target on the stock to $430 from $410, upgrading to Overweight from Equal-weight.
With recent pullback in shares seen as an attractive re-entry point, analysts have expressed confidence in AVGO’s long-term AI driven revenue and margin durability.
“We think the recent pull-back in shares of Broadcom, coupled with increasing confidence in potentially meaningful incremental catalysts looking through 2026, gives us the opportunity to get constructive.”
The firm has increased its calendar 2026 and 2027 estimates for the company, from $97.0B / $103.6B and $130.5B / $139.0 to $108.4B / $115.3B, respectively. The revised estimates are a reflection of higher projections for Broadcom’s AI semiconductor revenue, now expected to reach $52.6 billion (up 116% year-over-year) in 2026 and $93.4 billion (up 78% year-over-year) in 2027.
Analysts noted how this reflects AI Compute revenue at $36.6B (+131% y/y) and $66.2B (+81% y/y), with AI Networking revenue at $16.1B (+87% y/y) and $27.2B (+69% y/y), respectively.
While non-AI chip business for Broadcom may be flat, its software business is strong and margins should stay high. This means concerns about falling profitability are overstated.
“We maintain a relatively flat calendar 2026 and 2027 revenue estimate for Broadcom’s aggregate non-AI semiconductor revenue. We model Broadcom’s Infrastructure Software revenue in line with the company’s guidance of low double-digit growth in FY26. Broadcom exited FY25 with a ~$73 billion Infrastructure Software backlog, up from $49 billion exiting FY24. From a margin perspective, we model Broadcom’s semiconductor GM% to decline to ~65% in our early estimates (vs. 68.2% in FY25) to reflect systems contributions; we believe concerns over a material decline (sub-60% GM%) are overdone. Our estimates reflect an expectation that Broadcom can maintain a ~65%+ EBITDA margin.”
Broadcom is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets.
4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 194
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, BofA Securities analyst Brad Lin raised the price target on the stock to $470.00 (from $430.00) while maintaining a “Buy” rating. Firm analysts are confident in TSM’s tech leadership, underpinned by strong pricing power, capacity stability, and dominance in premium nodes.
They noted that TSMC’s tech leadership should sustain, lifting blended wafer pricing by an estimated 30% CAGR from 2025 to 2027 compared to a 17% CAGR from 2020-2025.
This reflects higher pricing at advanced nodes, wider premiums for new nodes, and a mix shift on capacity optimization. It estimates wafer capacity and shipment to stay stable, with advanced node growth offset by declines in mature nodes.
Analysts also anticipate strong pricing and sustained utilization to allow TSMC’s sales to outgrow depreciation at a 20% CAGR, expanding gross margins.
“We estimate its wafer capacity and shipment could stay stable, with advanced node +15% CAGR from ’25–’27 balanced by decline in mature nodes. The strong pricing and sustaining utilization should allow its sales to outgrow depreciation (+20% CAGR), expanding its GMs to 64%/65% in ’26/27 (vs. its structural GMs of 56%+).”
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells advanced chips used in artificial intelligence applications.
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 219
Alphabet Inc. (NASDAQ:GOOGL) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, RBC Capital analyst Brad Erickson raised the price target on the stock to $375.00 (from $315.00) while maintaining an “Outperform” rating.
Firm analysts see AI ad rollout momentum, an expanding SMB total addressable market, and expectations that Olympics-specific CTV auction will drive future inflationary lift.
They highlighted how that AI Overviews (AIO) ads are now fully flowing from Pmax, Search, and other platforms. Meanwhile, AI Mode ads are only available for AI Max adopters with mixed feedback so far. They observed that pricing didn’t increase as much as META, even though conversion was stable.
The tech giant has reduced customer data requirements for targeting from 1,000 to 100 users, expanding to Demand Gen and broadening the total addressable market for a new cohort of SMBs. This allows a new cohort of advertisers’ access to the latest model improvements for probabilistic targeting, following a similar rollout for Search in May 2025.
A separate CTV product and auction is being launched by the company specifically for the Olympics, which should maximize inflation. RBC anticipates this approach to extend to newer AI surfaces as an auction inflation driver.
“Broad keyword matching still being used for AI Mode & AIO (vs. exact word/phrase match), highlights difficulty/uncertainty of those new surfaces (read for OpenAI), but expect ongoing improvement as GOOGL figures out. We are raising our PT to $375 based on 29.5x P/’27E EPS (prior 28x based on P/’26E EPS), estimates remain unchanged.”
Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 234
NVIDIA Corporation (NASDAQ:NVDA) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Wolfe Research analyst Chris Caso reiterated an Outperform rating on the stock with a $250.00 price target. Firm analysts see minimal impact from newly announced tariffs, calling it a mechanism for pre-agreed payments.
The White House recently announced a 25% tariff on certain advanced semiconductors, anticipating it to be application on Nvidia’s H200 shipments to China. Wolfe Research noted how this tariff mechanism allows the U.S. government to collect an pre-agreed payment in exchange for granting NVIDIA permission to export H200 chips to China.
“That payment was arranged as a tariff, and is applied as the H200 is imported to the US, before being transshipped to China. That unusual arrangement provides a legal framework for the government to collect the agreed payment. Therefore, this announcement only provides the mechanism for what was agreed earlier and therefore isn’t materially new.”
Analysts further noted how Nvidia previously indicated that $2–5B/qtr of China shipments would be possible if they had permission for such shipments. While the US has allowed them to ship, China is yet to provide permission from their end.
“This arrangement would also apply to AMD China shipments as well, should AMD choose to pursue the opportunity. Our discussions with AMD management however suggest that China shipments are a much lower priority to AMD, due to capacity constraints and higher value opportunities elsewhere.”
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 332
Amazon.com, Inc. (NASDAQ:AMZN) is one of the 11 AI Stocks Analysts Are Watching Closely. On January 15, Raymond James analyst Josh Beck lowered the price target on the stock to $260.00 (from $275.00) while maintaining an “Outperform” rating. While artificial intelligence is seen as a key driver for AMZN, analysts have cut their price target on Agentic Commerce risks.
Firm analysts view Amazon as sitting in the middle in the AI Stack framework, with the AI narrative anticipated to be a key swing factor for internet multiples despite expectations of a robust fundamental backdrop.
Its price target cut reflects a more cautious stance on agentic commerce risks that may benefit non-Amazon ecommerce platforms. However, this is offset by above Street estimates on AWS and upside from robotics.
The firm remains positive on the stock in the near term, driven by strong holiday trends, positive ad checks, and beatable AWS estimates.
“More tactically, we are constructive heading into Q4 supported by robust holiday trends, favorable ad checks (Ads, Cloud) and beatable AWS estimates (see our bottom-up build across XPU, GPU, RPO etc.) though believe the AI Narrative is likely the primary factor influencing stock performance in the year ahead and look for meaningful progress against Trainium/Neuron, Nova/Kira, Alexa+/Rufus, Zoox/Prime Air Drones and/or Robotics to improve AI Stack positioning.”
Amazon.com Inc. (AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions.
While we acknowledge the potential of AMZN 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 AMZN and that has 100x upside potential, check out our report about this cheapest AI stock.
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