In this article, we will list the 5 Best AI Stocks to Buy for 2026 According to Billionaire David Tepper. Please visit 10 Best AI Stocks to Buy for 2026 According to Billionaire David Tepper if you would like to see the extended list and the methodology behind it.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 224
Appaloosa Management Equity Stake: $343.39 Million
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the best AI stocks to buy for 2026, according to billionaire David Tepper. On May 8, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) delivered April revenue figures that affirmed strong demand for artificial intelligence chips.
The company’s April revenue was up 17.5% year over year to $13.08 billion. Revenue for the first four months of the year was up by 29.9%. The robust revenue growth underscores the company’s increasingly prominent role in the global semiconductor supply chain as demand for AI infrastructure and advanced AI chips grows.
On the other hand, Taiwan Semiconductor Manufacturing has entered into a strategic collaboration with Sony Semiconductor Solutions Corporation. The companies are joining forces to enhance the development and manufacturing of next-generation image sensors. The companies are to establish a joint venture with Sony as the majority and controlling shareholder.
The joint venture is to leverage Sony’s expertise in sensor design alongside TSMC’s strengths in process technology and manufacturing to enhance image sensor performance.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) dominates advanced AI chip manufacturing for clients such as Nvidia, AMD, and Apple, leveraging AI to optimize production. It controls over 90% of high-end chip production and supports scalable AI hardware with advanced packaging.
4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 256
Appaloosa Management Equity Stake: $396.05 Million
Meta Platforms Inc. (NASDAQ:META) is one of the best AI stocks to buy for 2026, according to billionaire David Tepper. On May 8, the New York Times reported that Meta Platforms Inc. (NASDAQ:META) is increasingly pushing its 78,000 workers to use artificial intelligence as it also prepares to lay off some of them.
The company has reportedly told its US employees it plans to make changes that would affect tens of thousands of them. As part of the initiative, Meta Platforms has already started tracking what employees type on their computers, how they move their mice, what they click, and what they see on their screens. The idea is to track employees’ data so that AI models can learn how people complete everyday tasks.
Meta’s Chief Executive Officer, Mark Zuckerberg, has reiterated that Meta’s future lies in artificial intelligence. The company has already begun cutting jobs to offset its AI spending, with plans to slash 10% of its workforce. Amid the proposed layoffs, some staff no longer view Meta Platforms as a place for a longer career.
Meta Platforms, Inc. (NASDAQ:META) has transitioned into a major AI-driven company, integrating artificial intelligence across its social media apps, advertising systems, and hardware devices while developing open-source AI models. The company is focused on building agentic AI, improving content recommendations, and advancing its open-source Llama model.
3. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 137
Appaloosa Management Equity Stake: $428.12 Million
Micron Technology Inc. (NASDAQ: MU) is one of the best AI stocks to buy for 2026, according to billionaire David Tepper. On May 10, Micron Technology Inc. (NASDAQ: MU) emerged as one of the forces behind the global semiconductor industry entering a melt-up phase. The industry has exploded to $3.8 trillion in market capitalization over the past six weeks, driven by significant gains in traditional CPU and memory chip players.
The gains are also supported by significant earnings growth amid strong demand for CPU and memory chips. Micron Technology is projected to generate $77 billion in operating profit this year, a significant improvement from its 2023 losses. The bounce back to profitability comes amid demand for memory chips outstripping supply.
While Micron has rallied by over 100% year to date, some analysts believe its valuation remains grounded by the unprecedented growth. Micron stock trades at 8.9 times projected earnings, well below the 21 times the S&P 500 trades at.
Micron Technology, Inc. (NASDAQ:MU) accelerates AI by providing the critical high-bandwidth memory (HBM), DRAM, and NAND storage required for data-intensive AI training and inference in data centers and edge devices. They supply crucial hardware to Nvidia for GPU systems and use AI to optimize their own semiconductor manufacturing processes.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 288
Appaloosa Management Equity Stake: $560.74 Million
Alphabet Inc. (NASDAQ:GOOGL) is one of the best AI stocks to buy for 2026, according to billionaire David Tepper. On May 5, Reuters reported that Alphabet Inc. (NASDAQ:GOOGL) is on the cusp of replacing Nvidia as the world’s most valuable company by market capitalization.
The company has seen its market cap increase significantly on the back of increased investor interest impressed by its artificial intelligence efforts and booming cloud business. It has also emerged as one of the major AI service providers with its cloud platform. It is also taking Nvidia head-on with its custom processor that is winning big customers, including Anthropic.
Alphabet’s cloud computing growth has outpaced expectations and rivals, including Microsoft and Amazon, owing to greater AI integration across its offerings. Revenue in the Google Cloud segment was up by 63% in the first quarter. Investors have become increasingly confident that the company’s hundreds of billions of dollars in AI spending will pay off in the long run.
“High demand for cloud and AI offerings drove a ‘meaningful acceleration’ in growth, indicating to investors that significant ?AI investments are paying off,” Jeff Buchbinder, chief equity strategist at LPL Financial, said.
Separately, on May 9, Bloomberg reported that Isomorphic Labs, the AI‑powered drug discovery firm spun out of Alphabet’s Google DeepMind, is in advanced talks to raise over $2 billion in new funding. The round is expected to be led by Thrive Capital, which backed Isomorphic’s first raise last year, with Alphabet also participating, underscoring strong investor confidence in the company’s biotech‑AI strategy.
Alphabet Inc. (NASDAQ:GOOGL) is a leader in AI, investing heavily in research, infrastructure, and applications via Google. It plans up to $190 billion in capital expenditures by 2026 to support its AI initiatives.
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 381
Appaloosa Management Equity Stake: $753.12 Million
Alibaba Group Holding Limited (NYSE:BABA) is one of the best AI stocks to buy for 2026, according to billionaire David Tepper. On May 8, Alibaba Group Holding Limited (NYSE:BABA) was on the defensive, refuting claims that it was one of the beneficiaries of billions of dollars’ worth of Super Micro computer servers containing Nvidia chips smuggled into China.
Bloomberg reported that a key company behind Thailand’s national AI effort had smuggled the servers containing Nvidia chips and sold them to Alibaba, among other end customers. The allegations follow US prosecutors reiterating early in the year that Super Micro’s co-founder had worked to divert AI semiconductors in violation of US trade rules.
Alibaba insists it has no business relationship with Super Micro, OBON, or any third-party brokers that deal in servers with Nvidia chips under US control. It has also refuted claims that it is involved in the alleged smuggling activities. The Chinese AI powerhouse insists it maintains a compliance-first approach with its data center operations.
Alibaba Group Holding Limited (NYSE:BABA) is a leading AI player, developing its own large language models, integrating AI into its e-commerce and logistics, and offering cloud-based AI services. Its strategy centers on open-source approaches and cloud computing to boost adoption.
While we acknowledge the potential of BABA to grow, 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 BABA and that has 100x upside potential, check out our report about the cheapest AI stock.
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