12 Best Stocks to Invest In According to Two Sigma Advisors with Huge Upside Potential

In this article, we will look at the 12 Best Stocks to Invest In According to Two Sigma Advisors with Huge Upside Potential.

Two Sigma is one of the largest quantitative hedge funds in the world, with more than $70 billion in assets under management. The firm was founded in 2001 by Mark Pickard, John Overdeck, and David Siegel, and it operates via two entities: Two Sigma Investments, LP (TSI) and Two Sigma Advisors, LP (TSA). TSI is the primary arm that builds and tests proprietary algorithmic trading models, which it then licenses to TSA. TSA, in turn, uses those models to trade on behalf of its customized portfolios and private fund clients, and it leans quite heavily on artificial intelligence and data science to drive its investment decisions.

That AI-based approach appears to be paying off, because it may have helped Two Sigma outperform many of its rivals in the first quarter of this year. According to a Bloomberg report, the quarter, and especially the month of March was a chaotic one for markets, which saw the S&P 500 fall by about 5%. Yet Two Sigma’s Spectrum fund rose 2.5% in March alone, while its Absolute Return fund gained 3%. For the year, those two funds were up 3% and 3.7%, respectively, as of March 31. This performance was better than that of many multistrategy peers, whose results ranged from meager gains to outright losses, Bloomberg noted.

This focus on AI isn’t contrarian, either, because the rest of the industry is racing to catch up. A June 24 Bloomberg analysis, citing a Barclays survey, found that half of long-only managers and the majority of hedge funds now use AI on a daily basis, largely for research. The survey also established that the technology is increasingly supporting risk management and modeling work.

Against this backdrop, this article explores 12 stocks favored by Two Sigma that have substantial upside potential.

Our Methodology

To create this list, we scanned through Two Sigma Advisors’ Q1 2026 portfolio, focusing only on the top 1000 holdings, and obtained their upside potential based on Wall Street analysts’ 12-month price targets as of June 29, 2026. We filtered the list for names with upside potential of at least 50%. We also considered the overall hedge fund sentiment for each stock using Q1 2026 13F holdings data from Insider Monkey’s database. The list is in ascending order of 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 Invest In According to Two Sigma Advisors with Huge Upside Potential

12. Trip.com Group Limited (NASDAQ:TCOM)

Stock Upside Potential: 51.29%

Number of Hedge Fund Holders: 38

Two Sigma Advisors’ Stake: $124,020,567

Trip.com Group Limited (NASDAQ:TCOM) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 25, Citi analyst Brian Gong cut his price target on Trip.com Group Limited (NASDAQ:TCOM) to $64 from $82 while maintaining a Buy rating.

According to the analyst, the call was made because of Trip.com’s disappointing Q2 2026 guidance, where the company projected revenue growth of just 3% to 8%. In his view, this expectation is too sharp of a deceleration from the 17% year-over-year growth the company posted in Q1 2026. The analyst however acknowledged the challenges the company is facing, especially elevated fuel costs, which is a huge factor suppressing travel demand. The suppressed travel demand is feeding directly into the weaker revenue outlook for the current quarter, Gong noted.

Regardless, the analyst’s position is that the fundamental long-term case for Trip.com remains intact. This means that the lower target is essentially a recalibration of short-term expectations.

On the same day, Benchmark’s Fawne Jiang also cut his target on Trip.com from $72 to $65 and kept a Buy rating on the stock. Like Gong, Jiang explained that his decision came down to Trip.com’s “softer-than-expected second-quarter 2026 guidance.” Jiang added that his firm lowered its FY2026 forecasts to factor in a cautious demand outlook in the near term, as well as limited visibility through the year’s second half.

Trip.com Group Limited (NASDAQ:TCOM) is an online travel company. It operates a portfolio of travel booking platforms including Trip.com, Ctrip, Skyscanner, and Travelfusion, offering hotel reservations, flight ticketing, packaged tours, and corporate travel management services primarily across China and international markets.

11. Insulet Corporation (NASDAQ:PODD)

Stock Upside Potential: 52.78%

Number of Hedge Fund Holders: 55

Two Sigma Advisors’ Stake: $159,971,314

Insulet Corporation (NASDAQ:PODD) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 23, Deutsche Bank analyst Kieran Ryan initiated coverage on Insulet Corporation (NASDAQ:PODD) with a Buy rating and a price target of $190.

Ryan views Insulet as the dominant player in the tubeless insulin pump market, and that it has one of the strongest and most durable growth profiles in the medical device space. The analyst considers the company a market leader whose fundamentals remain intact despite the stock’s poor run since late last year.

Nonetheless, Ryan acknowledged that Insulet faces rising competition in the tubeless pump space. It also faces pressure from the pharmacy channel, which is a distribution route where rivals could chip away at Insulet’s market share. However, the analyst’s position is that the stock has already been discounted enough to account for both of these concerns, making further downside from here less likely.

For context, one of the broader fears weighing on diabetes device stocks, including Insulet, has been the rise of GLP-1 weight-loss drugs like Ozempic and Wegovy. Investors have worried these drugs could shrink the pool of patients who need insulin delivery devices. Deutsche Bank, however, views those fears as exaggerated and already factored into the current valuation.

Insulet Corporation (NASDAQ:PODD) is a medical device company. It develops, manufactures, and markets insulin delivery systems for people with diabetes, with its Omnipod platform providing tubeless, wearable insulin pumps.

10. NVIDIA Corporation (NASDAQ:NVDA)

Stock Upside Potential: 53.87%

Number of Hedge Fund Holders: 275

Two Sigma Advisors’ Stake: $1,959,252,328

NVIDIA Corporation (NASDAQ:NVDA) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 28, Firmus Technologies, an Australian AI infrastructure startup, announced an eight-year strategic partnership with NVIDIA Corporation (NASDAQ:NVDA) under which Firmus will purchase NVIDIA hardware and sell NVIDIA-powered cloud services to AI companies.

The core of the deal is a 360-megawatt Nvidia DSX AI Factory campus to be built on Batam Island, Indonesia. The island is a strategic location just off the coast of Singapore, and the campus will be co-developed with Singapore-based digital infrastructure firm DayOne. In fact, according to Firmus, the campus is already under construction.

The agreement covers up to 170,000 NVIDIA AI accelerator chips to be delivered between Q1 2027 and early 2028. Firmus will access the infrastructure through a revenue-sharing and credit support arrangement with NVIDIA. Firmus projects the deal will yield between $25 billion and $30 billion in revenue over the first six years, and that the yield is backed by committed customer off-take agreements.

According to Firmus, the core aim of the partnership is to close a cost and access gap in the AI industry. That is, large tech companies with strong credit ratings and scale advantages have long been able to procure AI infrastructure cheaply, while smaller and fast-growing AI startups cannot. As such, the deal will change that by giving those emerging players affordable access to the same high-performance computing.

NVIDIA Corporation (NASDAQ:NVDA) is a technology company. It designs graphics processing units and AI computing platforms for data centers, gaming, professional visualization, and automotive markets.

9. Hewlett Packard Enterprise Company (NYSE:HPE)

Stock Upside Potential: 55.37%

Number of Hedge Fund Holders: 58

Two Sigma Advisors’ Stake: $252,280,926

Hewlett Packard Enterprise Company (NYSE:HPE) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 17, Hewlett Packard Enterprise Company (NYSE:HPE) announced that Vultr had selected the company and NVIDIA to build Vultr’s next-generation AI data center infrastructure. Vultr is the world’s largest privately held hyperscaler. Hewlett Packard made the announcement at its HPE Discover Las Vegas 2026 conference.

The company said the AI data center infrastructure is designed to serve rapidly growing enterprise demand for private cloud, model training, and large-scale AI inference workloads. Hewlett Packard will supply and integrate Nvidia GB300 NVL72 systems, which it will then connect with Nvidia Spectrum-X Ethernet networking. These are all part of the NVIDIA AI Computing by HPE portfolio, a joint offering that combines NVIDIA’s accelerated computing and networking stack with Hewlett Packard’s systems integration and deployment expertise.

Beyond the hardware, Hewlett Packard will provide its full AI factory architecture. This includes rack-scale system design, liquid cooling technology to manage the immense heat generated by high-density GPU clusters, specialized AI services, deployment expertise, and long-term lifecycle support.

According to Antonio Neri, Hewlett Packard’s President and CEO, the partnership with Vultr and NVIDIA is “building AI infrastructure designed for the future of AI and the agentic enterprise.”

He added: “Vultr represents a new generation of AI cloud providers, and the company’s selection of HPE validates the importance of AI data center architectures designed to support the next wave of global AI growth.”

Hewlett Packard Enterprise Company (NYSE:HPE) is an information technology company. It provides servers, storage, networking, and cloud computing solutions to enterprises, government agencies, and service providers.

8. MarketAxess Holdings Inc. (NASDAQ:MKTX)

Stock Upside Potential: 56.46%

Number of Hedge Fund Holders: 42

Two Sigma Advisors’ Stake: $86,453,480

MarketAxess Holdings Inc. (NASDAQ:MKTX) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 18, MarketAxess Holdings Inc. (NASDAQ:MKTX) launched TraX Tape, a new bond market data solution that consolidates trading activity from across global markets into a single, standardized feed. The company said the feed is enriched with real-time analytics and AI-powered pricing intelligence.

According to MarketAxess, the product is built on its existing TraX data infrastructure, which aggregates bond trading data from a global network of dealers and clients. TraX Tape adds a layer of proprietary data cleansing that the company has been refining for over a decade to remove duplicate or noisy records before they reach the end user, the company stated.

MarketAxess noted that what makes TraX Tape more than just a data aggregator is its enrichment layer. That is, the product appends each trade with a directional indicator, which shows whether a trade was a buy or sell, yield and spread calculations, and pricing context sourced from MarketAxess’ AI-powered pricing engine called CP+. The engine draws on live activity from one of the world’s largest electronic credit trading platforms.

What this means is that a bond trader or portfolio manager receives a cleaner interpretation of market conditions. This is particularly useful as the volume of required regulatory disclosures from UK and EU reforms grows and creates information overload rather than clarity.

MarketAxess Holdings Inc. (NASDAQ:MKTX) is a financial technology company. It operates an electronic trading platform for fixed-income securities, including corporate bonds, municipal bonds, and emerging market debt. The platform connects broker-dealers and institutional investors.

7. Rollins, Inc. (NYSE:ROL)

Stock Upside Potential: 58.47%

Number of Hedge Fund Holders: 47

Two Sigma Advisors’ Stake: $92,509,485

Rollins, Inc. (NYSE:ROL) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 25, Wells Fargo analyst Jason Haas cut his price target on Rollins, Inc. (NYSE:ROL) to $46 from $55, while keeping an Equal Weight rating on the shares.

The analyst said the cut was triggered by his firm’s expectation that Rollins will report weaker-than-consensus organic revenue growth in the second quarter of 2026. Haas noted that the company posted a strong exit rate in March but he believes that momentum has not held up, particularly in Rollins’ one-time pest control jobs, which tend to be more unpredictable and volatile compared to its recurring subscription-based business.

Separately, on May 27, Rollins announced that its Chief Financial Officer, Kenneth D. Krause, had resigned to pursue an opportunity at a company in an unrelated industry. The resignation was effective on June 15.

The company described the CFO’s departure as a managed handoff and that Krause entered into a Separation and Transition Agreement under which he will continue in an advisory capacity through September 30, 2026.

Rollins, Inc. (NYSE:ROL) is a pest control services company. It provides residential and commercial pest management services through its Orkin, HomeTeam Pest Defense, Clark Pest Control, and other regional brands across the United States and international markets.

6. Chewy, Inc. (NYSE:CHWY)

Stock Upside Potential: 59.63%

Number of Hedge Fund Holders: 53

Two Sigma Advisors’ Stake: $167,748,084

Chewy, Inc. (NYSE:CHWY) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 23, TD Cowen analyst William Kerr named Chewy, Inc. (NYSE:CHWY) as the firm’s best small- and mid-cap, or Smid-cap, stock idea for 2026, and at the same time reiterated a Buy rating and a $34 price target on the shares.

Kerr said his firm’s endorsement was built around several growth and margin levers it believes Chewy has not yet fully monetized. These include its veterinary care partnership through CVC and Modern Animal, an expanding advertising business, ongoing automation of its fulfillment operations, the Chewy+ membership program, and the integration of generative AI into its platform.

Kerr added that at the time of the note, Chewy was trading at just 6.3 times its enterprise value-to-EBITDA. He described this valuation as attractive given the company’s expected EBITDA compound annual growth rate of 15% over the next five years. Put simply, the analyst believes the stock is too cheap relative to how fast the business is expected to grow.

The analyst also pointed out that as online shopping for pet products continues to grow as a share of total industry sales, Chewy is well positioned to pull customers away from physical competitors. The competitors include local pet stores, traditional retailers, and grocery chains.

The Smid-cap designation places Chewy in a curated list of TD Cowen’s top investment picks for companies with a market capitalization generally below $10 billion. This is the firm’s annual selection that signals its highest-conviction ideas in that size category.

Chewy, Inc. (NYSE:CHWY) is an online retailer of pet products. It operates an e-commerce platform offering pet food, treats, supplies, and pharmacy services, with a focus on subscription-based auto-ship deliveries.

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