The growing reliance on debt to finance multi-billion-dollar artificial intelligence and AI-infrastructure investments has come under increasing scrutiny. Oracle has emerged as the prominent example of this trend. In an early December report, CNBC cited Citi analyst Tyler Radke, who estimated that Oracle could raise around $20-$30 billion in debt each year over the next three years for its AI build-out.
To highlight broader credit concerns, the same CNBC report quoted Daniel Sorid, head of U.S. investment-grade credit strategy at Citi. He noted,
There is something inherently uncomfortable as a credit investor about the transformation of the sort we’re facing that is going to require an enormous amount of capital.
And Oracle is not alone. Many large companies are piling on debt to fund the buildout of their artificial intelligence capabilities. In a January 5 report, Bloomberg noted that companies issued $37 billion in U.S. investment-grade bonds on the very first Monday of 2026. It also quoted a survey of debt underwriters, which indicated that around $215 billion of high-grade debt will be sold in January alone.
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That said, rising leverage carries its own risks. As debt levels increase, corporate defaults may rise as well. Companies with minimal or no debt often have greater financial flexibility and tend to experience less operational and cash flow volatility during downturns. At the same time, an entirely debt-free approach can also limit growth if it constrains investment opportunities. In practice, there should be an optimal balance to capitalize on such growth opportunities.
With that balance in mind, for the purposes of this article, we define “debt-free” as companies with net cash positions, where enterprise value is lower than market capitalization, indicating that cash and liquid investments exceed total debt.
With that framework in mind, let’s explore our selection of the best debt-free stocks to buy now.
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Our Methodology
To identify the best debt-free stocks, we first compiled a list of U.S. stocks with a market capitalization of at least $2 billion. For the resulting list of stocks, we compared their enterprise value (EV) to their market capitalisation (EV-to-market cap ratio) and shortlisted those with a ratio below 1.0. A ratio of 1.0 or below indicates that the company has no debt or minimal debt. From this refined list, we identified the top 12 stocks with a potential upside of at least 15%, and the highest hedge fund ownership by leveraging data from Insider Monkey’s Q3 2025 hedge fund database. Finally, we ranked these stocks in ascending order by the number of hedge funds holding positions.
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: All pricing data is as of market close on January 15, 2026.
12. Coinbase Global Inc. (NASDAQ:COIN)
Potential Upside: 48.4%
Number of Hedge Fund Holders: 73
Coinbase Global Inc. (NASDAQ:COIN) is among the best debt-free stocks to buy now, with renewed analyst optimism after a recent sharp pullback. According to a January 8 report from The Fly, BofA upgraded the stock’s rating to Buy from Neutral and maintained its price target of $340.
While BofA acknowledged the 40% decline in the stock since its July all-time high, it believes the pullback was driven by a crypto-led correction and is unrelated to underlying fundamentals or company-specific issues. Rather, the report highlighted the expansion of the total addressable market and a faster pace of feature rollouts (product velocity), indicating that the company continued to strengthen its strategic positioning amid volatility.
The firm also highlighted Coinbase’s recent expansion into stock and ETF trading and its entry into prediction markets. With this, the company should be able to broaden the platform beyond pure crypto trading. BofA viewed this as supportive of management’s push toward becoming an “everything exchange” and an opportunity to cross-sell additional products to its existing user base.
On the flip side, in a note published around the same time, Barclays maintained its cautious stance on the stock, assigning an Equal Weight rating and reducing its price target from $291 to $258. Barclays is pencilling in several headwinds in its Q4 model, including lower trading volumes, slower USDC growth, and continued volatility in crypto asset prices.
The company is scheduled to report Q4 results in the third week of February, and it seems like a lot is riding on that. However, the overall consensus appears favorable, with just under two-thirds of analysts covering it rating it Buy and estimating a 1-year upside of nearly 55%.
11. Insmed Inc. (NASDAQ:INSM)
Potential Upside: 34.0%
Number of Hedge Fund Holders: 73
Insmed Inc. (NASDAQ:INSM) is among the best debt-free stocks to buy now. On January 9, 2026, the company reported strong preliminary 2025 results, with total revenue reaching approximately $606 million, up 67% year over year, driven by continued ARIKAYCE growth and the first full year of BRINSUPRI, both of its leading therapies. This topline growth came in at the top end of the current consensus and was 11% above the consensus average of $545 million.
On a full-year basis, ARIKAYCE generated about $434 million globally, exceeding guidance, while BRINSUPRI contributed roughly $173 million in U.S. sales, supported by solid adoption by medical professionals. Management also outlined a robust 2026 outlook, including an expected EU launch of BRINSUPRI, ARIKAYCE revenue guidance of $450-$470 million, and multiple upcoming late-stage clinical readouts.
Just before the results, Morgan Stanley analyst Maxwell Skor reviewed Insmed Inc. (NASDAQ:INSM) and lowered his price target marginally to $157 from $158, keeping his Equal Weight rating intact. The analyst remains cautious on large-cap biopharma names, including INSM, as he believes these companies will be affected by the loss of exclusivity for some of their best-selling medicines, commonly referred to as “the patent cliff.”
However, the analyst’s view remains favorable toward U.S. small- to mid-cap biotech, as he expects this space to outperform in 2026 as well.
Insmed Inc. (NASDAQ:INSM) is a biopharmaceutical company that develops and commercializes therapies for patients with serious and rare diseases. The company’s most advanced programs focus on pulmonary and inflammatory conditions.
10. Palo Alto Networks Inc. (NASDAQ:PANW)
Potential Upside: 22.5%
Number of Hedge Fund Holders: 85
Palo Alto Networks Inc. (NASDAQ:PANW) is among the best debt-free stocks to buy now. According to a January 13 report by The Fly, UBS cut its price target on the company’s stock from $220 to $215 and maintained a Neutral rating.
UBS remains constructive on the cybersecurity sector as it estimates that spending in this industry will exceed growth in the overall IT budgets. Moreover, the firm expects further improvement through consolidation and increased commercialization of AI-enabled solutions.
That said, the firm cautions that stock selection is likely to remain challenging in the current environment. It favours stocks in the mid-cap security platform space that are still in the early stages of their product ecosystems and growth.
Data from TipRanks indicate that UBS has maintained a cautious stance on Palo Alto Networks Inc. (NASDAQ:PANW) for an extended period and continues to do so in its latest update. As noted in its last update in November, UBS’s cautious outlook was driven by softness in platformization deals and a potential deceleration in service revenue growth.
In the first week of January, Guggenheim upgraded Palo Alto Networks Inc. (NASDAQ:PANW) to Neutral from Sell, citing the underperformance over the last year. The firm also cited the company’s recent acquisitions as one reason, noting that these strategic deals will bolster its competitive position and support a more positive outlook.
Palo Alto Networks Inc. (NASDAQ:PANW) provides security solutions to help secure enterprise users, networks, clouds, and endpoints, with platforms such as Prisma Access, Prisma Cloud, and Cortex.
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