In this article, we will discuss the 12 Best Stocks to Buy for the AI Boom in the Second Half of 2026.
Artificial intelligence continues to dominate Wall Street’s investment narrative heading into the second half of 2026. While the recent flare-up in US-Iran and Russia-Ukraine conflicts may have investors closely monitoring inflation and interest rates, the largest tech companies continue to commit big bucks to AI infrastructure spending to support the growing compute demand from AI models and applications.
Speaking on CNBC on July 7, Deepwater Asset Management Managing Partner Gene Munster said that AI buildout is still in its early innings, and that AI-related capex growth rate for 2026, 2027, and 2028 will be higher than people expect. The Deepwater analyst noted that capex is one of the key metrics related to the health of the AI stocks trade.
“The Street is looking for 23% capex growth from the hyperscalers for next year…a few weeks ago, that was 17%…the numbers are going to be up around 37%, so much higher,” said Munster.
According to the analyst, the actual AI use remains limited at this point, and so a massive growth opportunity still lies ahead. Munster cited autonomous ride share as an example. He noted that autonomous rides are going to account for only 0.6% of the total ride share market in 2026 and about 1.5% in 2027. “So that’s on the physical AI side, not to mention on the application side,” the analyst said.
Wall Street expects AI spending to continue driving corporate profits and equity performance for the foreseeable future. In 2026, S&P 500 earnings are expected to rise by more than 26%, according to LSEG IBES.
Companies across diverse industries, including semiconductor, cloud infrastructure, software, and cybersecurity, are positioning themselves to benefit from AI adoption. For investors, the opportunities are vast and extend beyond the mega-cap tech leaders that have driven much of the recent market gains.
That said, let’s explore some of the best stocks to buy for the AI boom in the second half of 2026.
Our Methodology
For this list of the 12 best stocks to buy for the AI boom in the second half of 2026, we filtered for companies catering to the broader artificial intelligence sector. We picked stocks with at least 15% upside potential. Next, we reviewed the overall hedge fund sentiment around these stocks using Insider Monkey’s Q1 2026 database and picked out stocks backed by at least 30 hedge funds. Finally, the stocks were ranked in ascending order based on upside potential.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
Best Stocks to Buy for the AI Boom in the Second Half of 2026
12. Keysight Technologies Inc (NYSE:KEYS)
Number of Hedge Fund Holders: 66
Stock Upside Potential: 18.28%
Keysight Technologies Inc (NYSE:KEYS) is one of the best stocks to buy for the AI boom in the second half of 2026. Keysight shares are up more than 56% year-to-date and have surged more than 96% over the past year. Analysts see more upside in Keysight stock, and some 66 hedge funds have the stock in their portfolio.
Keysight Technologies Inc (NYSE:KEYS) has teamed up with WIN Semiconductors to tackle a big problem for the semiconductor industry. They have come up with a design workflow solution to help customers reduce design risk in their radio frequency (RF) development process.
This workflow solution connects multiple processes into a single point. Also, the workflow automates steps like simulation, optimization, and verification. This ensures that no analysis is skipped before the chip design is submitted for production.
According to Keysight, any flaw not detected before a chip design is sent to the foundry can lead to costly and time-consuming chip design revision work. The workflow that Keysight has built with WIN Semiconductors helps engineers avoid design flaws. Keysight said this workflow solution is suited for those developing chips for projects like 5G base stations, defense radar systems, and Wi-Fi access points.
Keysight Technologies Inc (NYSE:KEYS) provides AI solutions to speed up product design and development. Its work covers validation, emulation, and simulation. Keysight helps clients in areas like building AI networks, designing data center infrastructure, and advancing 6G research.
11. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Holders: 170
Stock Upside Potential: 20.34%
Apple Inc (NASDAQ:AAPL) is one of the best stocks to buy for the AI boom in the second half of 2026. Since the year began, Apple shares have returned more than 48%, and analysts expect them to keep rising. Elite investors continue to show confidence in Apple as the company leverages AI to make its products better. Some 170 hedge funds have positions in Apple stock.
Apple Inc (NASDAQ:AAPL) is far ahead in the smartwatch AI race. According to a market report from Counterpoint Research released on July 6, Apple accounted for 90% of AI-capable smartwatch devices shipped in Q1 2026. During that quarter, the shipment of AI-capable smartwatches increased 70% year-over-year to reach 25% market penetration.
The report focused on smartwatch devices with edge AI capabilities. These are smartwatches designed to handle AI processes locally on the device without needing to send the data to the cloud or a paired smartphone.
Apple’s smartwatch sales are tucked under the Wearables, Home, and Accessories segment. This segment revenue rose to $7.9 billion in Q1, up from $7.5 billion in the prior year.
Apple Inc (NASDAQ:AAPL) builds smartphones, laptops, tablets, and other devices. The company also provides a wide range of software and services. Apple is incorporating AI into its products to enhance their capabilities.
10. Lumen Technologies Inc (NYSE:LUMN)
Number of Hedge Fund Holders: 38
Stock Upside Potential: 29.13%
Lumen Technologies Inc (NYSE:LUMN) is one of the best stocks to buy for the AI boom in the second half of 2026. Lumen shares have returned more than 50% year-to-date, and analysts say they have more room to run. Lumen stock is in the portfolio of some 38 hedge funds.
On July 7, Lumen Technologies Inc (NYSE:LUMN) announced that it has completed the acquisition of Alkira, an on-demand networking platform. According to Lumen, Alkira will strengthen its ability to provide clients with AI-ready networking solutions across multiple IT environments.
Lumen also said that the technology that Alkira brings will help it simplify how businesses build and manage networks in increasingly complex environments. The company added that businesses need a more efficient and faster way to manage traffic through the growing complexity.
The combined offering will enable customers to connect clouds, sites, partners, and AI workloads through a single programmable platform instead of relying on separate connectivity and orchestration providers. According to Lumen CEO Kate Johnson, AI is driving surging demand for programmable networks required to move data securely and seamlessly across different environments.
Lumen Technologies Inc (NYSE:LUMN) provides the network infrastructure that powers the AI workloads. It builds fiber optic networks required for ultra-high-speed data center connectivity to support AI operations. Lumen also provides security and managed communications services.
9. Applovin Corp (NASDAQ:APP)
Number of Hedge Fund Holders: 91
Stock Upside Potential: 29.16%
Applovin Corp (NASDAQ:APP) is one of the best stocks to buy for the AI boom in the second half of 2026. Applovin shares have returned more than 50% over the past year and still carry nearly 30% upside potential, according to Street analysts. Some 91 hedge funds have confidence in the Applovin stock outlook.
Applovin Corp (NASDAQ:APP) is scheduled to release its Q2 2026 results on August 5. The provider of AI-powered advertising solutions anticipates revenue in the band of $1.9 billion to $1.95 billion. It expects adjusted EBITDA in the range of $1.62 billion to $1.65 billion, and adjusted EBITDA margin is expected in the range of 84% to 85%.
On July 7, Piper Sandler reiterated an Overweight rating on Applovin stock with a price target of $665. According to the brokerage, its research shows the gaming market continued to grow through Q2. But on e-commerce, it noted mixed data points. Additionally, the brokerage observed that Applovin could increase its sales and marketing spend in the second half of 2026 without affecting its core margins.
Applovin Corp (NASDAQ:APP) provides AI-powered advertising solutions. It helps businesses to market and monetize their mobile apps and grow their brands. Applovin has several offerings suited to different needs.
8. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 353
Stock Upside Potential: 32.36%
Amazon.com Inc (NASDAQ:AMZN) is one of the best stocks to buy for the AI boom in the second half of 2026. Analysts are projecting more than 32% upside to Amazon stock at the current level. Amazon remains hugely popular with elite investors, with some 353 hedge funds having stakes in the stock.
On July 10, Amazon Web Services introduced Loom for AWS, an open‑source platform to help enterprises build and deploy AI agents with strong security controls and governance frameworks.
Loom integrates with Amazon Bedrock AgentCore and AWS Strands Agents, offering lifecycle management at scale. It enforces required resource tagging, supports role‑based access, and provides pre‑validated blueprints for deployments. Agents are launched via configuration‑driven methods, with credentials managed through AWS Secrets Manager.
The system supports both low‑code Python agents and no‑code deployments, implements OAuth2 identity propagation, and uses human‑in‑the‑loop approvals for sensitive actions. Loom also connects to the AWS Agent Registry (in preview) to manage agent records and governance reviews.
Available now via AWS Labs on GitHub, Loom targets platform engineering teams building applications with fully managed AWS services.
On July 7, BofA Securities issued its updated AI spending estimates for Amazon.com Inc (NASDAQ:AMZN) as the company races to expand its compute capacity. The brokerage expects Amazon to spend $159 billion on AI infrastructure buildout in 2026, unchanged from the previous projection. For 2027, Amazon is now projected to spend $230 billion, up from the prior estimate of $196 billion.
All together, Amazon is projected to spend $389 billion on AI capacity expansion between 2026 and 2027.
According to BofA Securities, it costs anywhere between $25 billion and $45 billion to build 1 GW of data center capacity. The brokerage believes Amazon has the lowest data center building costs among the top hyperscalers. It estimates Amazon’s costs at $25 billion per GW, compared to $37 billion per GW for Google and $45 billion per GW for Meta Platforms.
Amazon.com Inc (NASDAQ:AMZN) has a broad presence in the AI space. Its involvement in this space includes providing the infrastructure that powers AI workloads and offering AI agents suited for various tasks. Additionally, the company uses AI to power its retail and advertising businesses.
7. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Holders: 262
Stock Upside Potential: 35.89%
Meta Platforms Inc (NASDAQ:META) is one of the best stocks to buy for the AI boom in the second half of 2026. At the current price, Meta stock carries more than 35% upside potential, according to analysts. Elite investors continue to show strong confidence in Meta Platforms, with 262 hedge funds having positions in Meta stock.
Meta Platforms Inc (NASDAQ:META) is rapidly expanding its portfolio of AI tools. On July 7, it launched an AI tool that can generate images. The tool is called Muse Image, and it joins Meta’s other AI offerings, such as Muse Spark, which targets the coding market.
With Muse Image, Meta looks to power both its flagship advertising operation and the budding subscription business. Brands and agencies will be able to use this tool to develop advertising materials more easily. At the same time, users needing extra capabilities will have to purchase Muse Image subscription plans.
Meta has been steadily building its subscription business as it seeks to diversify its revenue streams beyond advertising. The subscription business is tucked under the Other Revenue segment, where sales rose to $2.58 billion in 2025 from $1.72 billion in 2024.
Meta Platforms Inc (NASDAQ:META), the parent of Facebook, WhatsApp, and Instagram, is deeply involved in AI. The company uses AI to power its advertising business, moderate content on its social media platforms, and offer customer service. Meta also provides AI tools to developers, is developing AI chips, and plans to launch an AI infrastructure business.
6. Palantir Technologies Inc (NASDAQ:PLTR)
Number of Hedge Fund Holders: 96
Stock Upside Potential: 40.83%
Palantir Technologies Inc (NASDAQ:PLTR) is one of the best stocks to buy for the AI boom in the second half of 2026. Analysts see Palantir’s stock price rising more than 40% from the current level. Elite investors are big fans of Palantir, as the stock is in the portfolio of 96 hedge funds.
Palantir Technologies Inc (NASDAQ:PLTR) has formed a strategic partnership with German software company SNP. According to a July 8 press release, the companies will work together to develop AI-powered solutions to help enterprise customers with their SAP transformation projects.
This collaboration will leverage SNP’s expertise in SAP projects and the strength of Palantir’s AI and data platforms. It builds on SNP’s strong base of more than 3,000 customers and track record of handling 15,000 SAP transformation projects. The company’s aim is to help customers modernize their SAP environments more efficiently and securely.
Their first joint offering is called Test Data Proposal. This solution uses AI to automate the identification of test data during SAP migrations. It solves a manual step in the SAP transformation process to help reduce the time and resources required for testing.
Palantir Technologies Inc (NASDAQ:PLTR) develops data integration and analytics software. It serves enterprises and government clients. Palantir’s technology and solutions enable clients to build secure AI-powered workflows and automated agents.
5. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Fund Holders: 282
Stock Upside Potential: 47.13%
Microsoft Corp (NASDAQ:MSFT) is one of the best stocks to buy for the AI boom in the second half of 2026. Analysts see more than 47% upside potential in Microsoft stock from the current price. Microsoft is a huge favorite of elite investors, as it’s backed by 282 hedge funds.
On July 7, Bloomberg reported that Microsoft has started replacing OpenAI and Anthropic models from some of its software products, including Outlook and Excel, in a bid to reduce its AI costs. The report stated that Microsoft is replacing the third-party models with its in-house model called MAI. Microsoft’s internal models are getting better at their job, and the company now feels it can reduce its reliance on outside providers and lower its AI usage costs.
In a June 4 report, Bloomberg quoted Microsoft’s AI executive, Mustafa Suleyman, as saying that the company was looking for alternatives as Anthropic has become extremely expensive.
Microsoft Corp (NASDAQ:MSFT) provides AI infrastructure through its Azure AI cloud platform. With this, it offers the computing power and resources required to train and run AI models. Microsoft also develops its own AI models for various applications.
4. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Holders: 101
Stock Upside Potential: 48.13%
Salesforce Inc (NYSE:CRM) is one of the best stocks to buy for the AI boom in the second half of 2026. Analysts project a 48% upside potential for Salesforce shares from the current price, and some 101 hedge funds have Salesforce stock in their portfolios.
The US Air Force has picked Salesforce Inc (NYSE:CRM) to help modernize and streamline its logistics. On July 8, Salesforce announced that the Air Force will use its Missionforce national security platform to manage its global vehicle fleet.
The Missionforce platform includes AI capabilities. The Air Force will use this platform to manage its fleet of more than 84,000 vehicles across roughly 400 locations. By using Missionforce, the Air Force looks to reap benefits such as streamlined asset logistics, accelerated mission planning, and increased system reliability.
Salesforce has picked up several contracts with the Pentagon as it deepens its presence in the defense sector. In January, it signed a broad $5.6 billion, multiyear contract with the US Army to help accelerate the Pentagon’s digital transformation and mission readiness.
Salesforce Inc (NYSE:CRM) provides AI-powered CRM solutions to businesses. Its flagship autonomous AI platform, Agentforce, can plan and execute tasks without human intervention. Salesforce’s AI exposure also extends to Anthropic, where it has a large investment stake.
3. Nvidia Corp (NASDAQ:NVDA)
Number of Hedge Fund Holders: 275
Stock Upside Potential: 56.92%
Nvidia Corp (NASDAQ:NVDA) is one of the best stocks to buy for the AI boom in the second half of 2026. Nvidia stock is a favorite of elite investors, as some 275 hedge funds have positions in this AI chip stock.
On July 7, Reuters reported that Chinese tech startup DeepSeek is developing its own AI chips to reduce its reliance on Nvidia chips. That report shook Nvidia stock, with shares slipping about 1.6% in premarket trading.
However, according to Richard Windsor, analyst at Radio Free Mobile, DeepSeek’s effort is unlikely to materially affect Nvidia’s AI chip business. First, Windsor noted that Nvidia is “at zero in China and staying there,” referring to Nvidia’s already shrinking business in China due to US restrictions on chip exports.
Second, Windsor commented that DeepSeek has almost zero chance of challenging Nvidia outside China. Not only is China shut out of the world’s most advanced chip manufacturing capabilities, but designing perfect AI chips takes years and requires massive capital.
Nvidia Corp (NASDAQ:NVDA) is an American global semiconductor company. It builds powerful computer chips with a broad variety of applications. Nvidia chips are widely used to train and run large AI models. Nvidia also provides various software solutions to the AI industry.
2. Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Holders: 154
Stock Upside Potential: 66.38%
Micron Technology Inc (NASDAQ:MU) is one of the best stocks to buy for the AI boom in the second half of 2026. Micron shares are up more than 200% year-to-date and have returned more than 676% over the past year. Some 154 hedge funds have confidence in Micron as analysts continue to see upside potential in the stock.
On July 6, Citi reiterated a Buy rating on Micron Technology Inc (NASDAQ:MU) stock with a price target of $1,400, which implies roughly 48% upside potential to the current price. According to the brokerage, Micron should continue to enjoy favorable pricing in the DRAM memory market due to the surging AI processor demand. AI processors require vastly expanded memory compared to conventional processors.
Micron is expanding its production capacity to capitalize on the booming memory demand. On July 4, Bloomberg reported that Micron is building a new chip facility in Japan to produce high-bandwidth memory used alongside AI processors. Micron aims to begin fitting this facility with manufacturing equipment in the second half of 2028. The company is also expanding its manufacturing capacity in the US with additional production facilities in Boise and New York.
Micron Technology Inc (NASDAQ:MU) makes computer memory and data storage products. Its portfolio includes dynamic random-access memory, flash memory, high bandwidth memory, and solid-state drives. Micron’s high-bandwidth memory plays a crucial role in AI inference servers.
1. Palo Alto Networks Inc (NASDAQ:PANW)
Number of Hedge Fund Holders: 87
Stock Upside Potential: 96.38%
Palo Alto Networks Inc (NASDAQ:PANW) is one of the best stocks to buy for the AI boom in the second half of 2026. Palo Alto Networks shares are up almost 90% year-to-date and still have room to run. Analysts see a more than 96% upside potential in Palo Alto Networks stock from the current price, and some 87 hedge funds are backing the stock.
On July 9, Palo Alto Networks Inc (NASDAQ:PANW) CEO Nikesh Arora said on CNBC that AI token costs need to come down in order to stimulate broader enterprise adoption of AI. Arora would like to see token prices drop as much as 90%. According to the executive, the current high token pricing is a barrier to widespread uptake of AI tools by businesses.
Palo Alto Networks helps secure AI platforms and tools, so broader AI adoption by enterprises creates more business for the company. In its fiscal Q3 2026, which ended April 30, Palo Alto Networks attributed its strong results to surging cybersecurity demand fueled by AI adoption. The company’s revenue rose 31% to $3 billion, and backlog increased 36% to $18.4 billion.
On July 6, Needham raised its price target on Palo Alto Networks shares to $425 from $350 and kept a Buy rating on the stock. The brokerage pointed to the company’s improving performance.
Palo Alto Networks Inc (NASDAQ:PANW) provides cybersecurity solutions to protect AI infrastructure and AI models. It helps companies build, deploy, and manage AI systems safely. Additionally, Palo Alto Networks helps clients defend against AI-driven cyberattacks.
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