In this article, we take a look at the 10 Best AI Stocks to Watch in May.
On Monday, Bridgewater Associates emphasized the threat that legacy software companies are facing amid the rapid rise of artificial intelligence (AI), according to a report by Reuters. The global macro investment firm likened the current scenario to that in the 1990s, when fear loomed for the fate of traditional bookstores when Amazon began selling books online.
“With the latest release of Claude Code, an upstart competitor has created existential risk for major businesses, much as Amazon posed to Barnes & Noble,” Bridgewater Associates said in a client note.
In the past year, the S&P 500 Software and Services Index has fallen 16.6% amid concerns that newly released AI models could upend traditional software companies.
“Markets have started pricing in the risk to application software companies, and companies will either co-evolve with AI or face disruption,” the Bridgewater co-chief investment officers said.
In contrast to legacy software firms, the rise of AI has resulted in growth for other industries, such as the semiconductor sector. According to the latest base-case estimates by McKinsey & Company, the semiconductor industry could reach $1.6 trillion in revenue by 2030, a significant jump from $775 billion in 2024, driven by the emergence of new computing models, domain-specific architectures, advanced chipsets, and other next-generation technologies.
While the future looks bright for the industry, McKinsey emphasized the need for semiconductor companies to make bold strategic moves to capture the next wave of value brought by the AI boom.
“To compete in an industry where advantage is increasingly concentrated among a few highly successful companies, semiconductor leaders must act now. The leaders that will shape the next era will be those that translate insight into commitment, making the required portfolio and performance moves at full scale and then adhering to a strategic core to accelerate innovation and resilience. The path is demanding, but the payoff is equally significant. By making deliberate choices now—about where to lead, how to build, and with whom to align—companies can define the industry’s next wave of value creation,” McKinsey said in a report in March.
With this backdrop, let’s take a look at the 10 Best AI Stocks to Watch in May.
Our Methodology
To compile our list of best AI stocks to watch in December, we relied on financial media, ETFs, and screeners to identify AI stocks with significant upside potential. We considered not only pure-play AI stocks but also companies that leverage AI to enhance their businesses. From this pool, we selected the 10 stocks most widely owned by hedge funds, based on Q4 2025 filings from Insider Monkey’s database. These names were then ranked by the number of hedge funds holding positions in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows 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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Note: All pricing data is as of market close on April 30, 2026.
10. Baidu Inc. (NASDAQ:BIDU)
Potential upside: 41.90%
Number of Hedge Fund Holders: 57
Baidu Inc. (NASDAQ:BIDU) is one of the best stocks to watch in May. On April 28, the company announced the launch of GenFlow 4.0, an upgraded version of its general AI agent. Jointly released by Baidu Wenku and Baidu Drive, GenFlow 4.0 comes with a fully revamped Office Agent at its core, which allows users to invoke PowerPoint, Excel, and Word Agents in parallel from a single prompt.
Additionally, the company said the AI agent is also deeply integrated with OpenClaw, which can be deployed in one click from the Baidu Drive PC or mobile app, turning Baidu Drive into a personal AI workspace.
In the past year, Baidu’s stock surged 44.08%, while it posted a 15.82% year-to-date decline. Based on 37 analyst ratings compiled by CNN, the Baidu stock has an average price target of $179.55, a 41.90% upside from the current price of $125.76.
On April 1, Baidu announced that, in partnership with the Roads and Transport Authority (RTA), it has launched a fully driverless commercial ride-hailing service in Dubai via the Apollo Go app, marking the platform’s first international app deployment and a major milestone in the region. The company said the launch was done through Apollo Go’s strategic collaboration with Dubai Taxi Company (DTC), the emirate’s leading mobility service provider, bringing strong local operational expertise to support the service.
Baidu said Dubai marks a key strategic hub in Apollo Go’s growing global network, as it continues to expand its footprint worldwide. As of February 2026, Apollo Go has completed over 20 million rides worldwide, with weekly rides peaking at more than 300,000 during Q4 2025.
Baidu is a leading AI company with a strong internet foundation. It offers a full AI stack of four layers, including cloud infrastructure, an in-house developed deep learning framework, PaddlePaddle, self-developed ERNIE foundation models, and applications.
9. Snowflake Inc. (NYSE:SNOW)
Potential Upside: 68.54%
Number of Hedge Fund Holders: 90
Snowflake Inc. (NYSE:SNOW) is one of the best AI Stocks to watch in May. On April 28, Snowflake and enterprise software company Appian launched a technology partnership to enhance the latter’s data fabric tool. Under the partnership, Appian serves as the AI orchestration layer while Snowflake’s AI Data Cloud combines data aggregation, model training, and process orchestration to enable immediate business value. This aims to equip agents with deep enterprise context and allows them to interact directly with Snowflake Cortex AI to drive intelligent, data-backed decisions.
Earlier this month, Snowflake announced updates in its Snowflake Intelligence and Cortex Code products, noting that these enhancements enable organizations to connect even more data sources, enterprise systems, and AI models. It added that the enhancements also allow enterprises to align their data, tools, and workflows with AI agents built on Snowflake, which will enable more seamless action on data.
Based on 51 analyst ratings compiled by CNN, Snowflake has a median price target of $230, a 68.54% upside from the current price of $136.47. On April 21, UBS Analyst Karl Keirstead lowered his price target on Snowflake shares to $210 from $235 while maintaining a Buy rating on the stock. The analyst pointed out the year-to-date decline in the company’s shares despite the company projecting a stable revenue growth of 20% to 30%. He attributed the stock’s weakness to investor concerns about the potential disruption of AI models from Anthropic and OpenAI in the data software market over time.
In the fourth quarter of its fiscal year ending January 31, Snowflake registered product revenue of $1.23 billion, a 30% rise from the previous year. This resulted in a 29% growth in full-year product revenues to $4.47 billion.
Snowflake CFO Brian Robins emphasized that the company’s strategy for durable growth is focused on landing new customers and expanding them into strategic, long-term relationships. He added:
“We delivered strong new logo momentum, adding 740 net new customers, up 40% year-over-year, while continuing to deepen engagement across our base. We now have 733 customers spending more than $1 million on a trailing 12-month basis, and a record number exceeding $10 million. As we look ahead, our focus remains on driving stability and operational rigor to support sustained, long-term growth.”
Snowflake Inc. provides cloud data warehousing software to enterprise clients. The company’s AI Data Cloud platform allows clients to build, use, and share data, applications, and AI.
8. ASML Holding N.V. (NASDAQ:ASML)
Potential Upside: 23.35%
Number of Hedge Fund Holders: 101
ASML Holding N.V. (NASDAQ:ASML) is one of the best AI stocks to watch in May. In the past year, the stock grew 115.39% and an equally impressive 23.65% year-to-date. According to CNN ratings compiled from 45 analysts, 82 percent placed a Buy rating on ASML, while 13 percent marked it with a Hold rating. The stock has a median price target of $1,775, a 23.35% upside from the current price of $1,438.99.
On April 15, RBC Capital raised its price target on ASML to €1,700 from €1,625 while maintaining an overperform rating, driven by strong demand for Extreme Ultraviolet (EUV) lithography.
For the first quarter of the year, the company reported total net sales of €8.8 billion and a gross margin of 53.0%, both of which fall within the company’s guidance. Net income came in at €2.8 billion.
ASML President and Chief Executive Officer Christophe Fouquet emphasized the rise in the demand for chips, which is outpacing supply, driven by ongoing AI-related infrastructure investments. He added:
“In response, our customers are accelerating their capacity expansion plans for 2026 and beyond, supported by long-term agreements with their customers. In the past months, our customers have increased their expected short- and medium-term demand for our products. ASML’s order intake continues to be very strong as a result, and we are closely aligned with our customers to support their demand in a combination of delivery of new systems and performance upgrades of their installed base. These business dynamics underpin our expectation that 2026 will be another growth year for all our businesses.”
Foquet said the company expects total net sales for the second quarter of 2026 to be between €8.4 billion and €9.0 billion, with a gross margin between 51% and 52%. He added:
“We expect R&D costs of around €1.2 billion and SG&A costs of around €0.3 billion. Given the demand dynamics discussed above, we now expect total net sales for 2026 to be between €36 billion and €40 billion, with a gross margin between 51% and 53%. We expect that the bandwidth in our 2026 guidance accommodates potential outcomes of ongoing discussions around export controls.”
ASML is a leading supplier to the semiconductor industry. The company provides chipmakers with hardware, software, and services to mass-produce integrated circuit patterns. It is a multinational company headquartered in Veldhoven, the Netherlands, with offices across EMEA, the US, and Asia.
7. Intuit Inc. (NASDAQ:INTU)
Potential Upside: 51.87%
Number of Hedge Fund Holders: 109
Intuit Inc. (NASDAQ:INTU) is one of the best AI stocks to watch in May. In the past week, Intuit shares posted a 1.36% gain as the company announced leadership changes in its Small Business Group on April 28.
In a Securities and Exchange Commission (SEC) filing, the company announced that Marianna Tessel will step down as Executive Vice President and General Manager of its Small Business Group, effective May 31, 2026. Following this development, the company’s current Executive Vice President and General Manager of the Mid-Market Group, Ashley Still, will expand her role to lead both the Mid-Market Group and the Small Business Groups. Additionally, Tessel will remain employed by the Company in an advisory role until July 2, 2026.
On April 9, Intuit announced the completion of the Federal Reserve’s certification and readiness program for the FedNow Service, which will enable the company to partner with financial institutions to send instant payments on behalf of its customers. It explained that the flexible participation model enables INTU to accelerate the adoption of a more modern U.S. payment infrastructure, providing businesses with the ability to manage their cash flow more quickly and the financial confidence that comes with instant settlement.
In the second quarter of fiscal 2026, which ended January 31, Intuit reported a 17% rise in total revenues to $4.7 billion. For the full fiscal year, the company expects revenues of $20.997 billion to $21.186 billion, growth of approximately 12% to 13%. Based on 35 analyst ratings compiled by CNN, Intuit has a median price target of $590, a 51.87% upside from the current price of $388.50.
Intuit Inc. is a global financial technology platform. It has approximately 100 million customers worldwide using products such as TurboTax, Credit Karma, QuickBooks, Mailchimp, and Intuit Enterprise Suite.
6. Oracle Corp. (NYSE:ORCL)
Potential upside: 37.86%
Number of Hedge Fund Holders:111
Oracle Corp. (NYSE:ORCL) is one of the best stocks to watch in May. In the past year, Oracle stock jumped 14.69% while declining 17.54% year-to-date. According to a report by the Australian Financial Review on April 27, Oracle signed a six-year supply agreement with Australian modular data center manufacturer Datapod worth approximately $1.65 billion to supply, deploy, and maintain AI infrastructure in the United States and Europe.
Based on ratings compiled by CNN from 45 analysts, 80% placed a Buy rating on Oracle, while 18% assigned a Hold rating. The stock has a median price target of $222.50, a 37.86% upside from the current price of $161.39.
According to a report by TheFly on April 28, Wedbush analyst Daniel Ives said the sell-off in Oracle shares is a “way overreaction” following a Wall Street Journal report that OpenAI recently missed its own targets for new users and revenue. The firm expressed a high level of confidence in Oracle’s ability to complete its $50B capital raise. It also believes the company has enough capital to fulfill its compute capacity needs over at least the next three years, noting that recent concerns around OpenAI are overblown. Currently, Wedbush has an Outperform rating on Oracle with a $225 price target.
Oracle Corp. is a global provider of enterprise information technology solutions. It offers integrated application suites and secure, autonomous infrastructure in the Oracle Cloud.
5. ServiceNow Inc. (NYSE:NOW)
Potential Upside: 58.53%
Number of Hedge Fund Holders: 118
ServiceNow Inc. (NYSE:NOW) is one of the best AI stocks to watch in May. Based on 49 analyst ratings compiled by CNN, 90 percent of analysts rated ServiceNow a Buy, with an average price target of $140, representing a 58.53% upside from the current price of $88.31. On April 28, TipRanks reported that Evercore ISI analyst Kirk Materne maintained a Buy rating on ServiceNow and set a price target of $140.00. Earlier on April 24, Citi Analyst Tyler Radke also issued a Buy rating on ServiceNow.
For the first quarter of the year, ServiceNow reported a 22% rise in total revenues to $3.77 billion, driven by higher subscription revenues. ServiceNow President and CFO Gina Mastantuono said the company exceeded the high end of its topline guidance. She added:
“In Q1, we exceeded the high end of our topline and profitability guidance metrics, grew free cash flow, and returned capital to shareholders. The early close of our Armis acquisition meaningfully expands our TAM and accelerates our subscription revenue growth trajectory. With agentic AI, workflow orchestration, security, and data fabric converging on a single platform, we believe the most compelling chapter in ServiceNow’s growth story is just beginning.”
In December, ServiceNow announced the acquisition of cyber exposure management & security company Armis for $7.75 billion in cash. ServiceNow said the acquisition will expand its security workflow offerings and advance AI-native, proactive cybersecurity and vulnerability response across all connected devices.
ServiceNow provides an end-to-end workflow automation platform for digital businesses. The ServiceNow AI Platform integrates with any cloud, any model, and any data source to orchestrate how work flows across the enterprise.
4. Meta Platforms, Inc. (NASDAQ:META)
Potential Upside: 37.44%
Number of Hedge Fund Holders: 256
Meta Platforms, Inc. (NASDAQ:META) is one of the best AI stocks to watch in May. On April 30, Evercore ISI increased its price target on Meta to $930 from $900 and kept an Outperform rating on the shares as it highlighted the company’s AI deployment strength, according to a report by Investing.com.
While acknowledging Meta’s proven ability to deploy AI to improve customer experience for both consumers and advertisers, Evercore noted that the company now faces the question of whether it can become one of the leading superintelligence companies. It cited this as a generational opportunity, noting that Meta currently trails AI market leaders.
On April 29, Meta announced a 61% jump in net income in the first quarter of the year to $26.8 billion, while revenue posted a 33% gain to $56.3 billion.
“We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs. We’re on track to deliver personal superintelligence to billions of people,” Meta Founder and CEO Mark Zuckerberg said.
Meta CFO Susan Li said the company expects second-quarter total revenue to be in the range of $58-$61 billion. She added:
“We anticipate 2026 capital expenditures, including principal payments on finance leases, to be in the range of $125-145 billion, increased from our prior range of $115-135 billion. This reflects our expectations for higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity.”
According to 73 analyst ratings compiled by CNN, 90% rated Meta Buy, while 10% rated it Hold. As of April 30, Meta has a median price target of $841, a 37.44% upside from the current price of $611.91.
Meta Platforms, Inc. is engaged in developing social media applications. It operates several popular social media platforms, including Facebook, WhatsApp, Instagram, and Threads.
3. NVIDIA Corp. (NASDAQ:NVDA)
Potential Upside: 34.04%
Number of Hedge Fund Holders: 264
NVIDIA Corp. (NASDAQ:NVDA) is one of the best AI stocks to watch in May. NVIDIA Corp. The stock posted an 83.23% gain for the past year, while it registered a 5.68% year-to-date growth. On April 28, Bank of America Securities analyst Vivek Arya maintained a Buy rating on Nvidia, according to a report by TipRanks.
According to 70 analyst ratings compiled by CNN, 91% gave Nvidia a Buy rating, while 7% gave it a Hold rating. NVIDIA has an average price target of $267.50, a 34.04% upside from the current price of $199.57.
On April 14, NVIDIA announced the world’s first family of open-source quantum AI models, NVIDIA Ising, designed to help researchers and enterprises build quantum processors capable of running useful applications. NVIDIA said Ising models run the world’s best quantum processor calibration and enable researchers to tackle much larger, more complex problems with quantum computers by delivering up to 2.5x faster performance and 3x higher accuracy for the decoding process needed for quantum error correction.
NVIDIA earlier reported that fourth-quarter data center revenue grew to $62.3 billion, a 75 percent increase from a year ago, driven by major platform shifts toward accelerated computing and AI. Full-year data revenue rose 68 percent to a record $193.7 billion.
“Computing demand is growing exponentially — the agentic AI inflection point has arrived. Grace Blackwell with NVLink is the king of inference today — delivering an order-of-magnitude lower cost per token — and Vera Rubin will extend that leadership even further,” said Jensen Huang, founder and CEO of NVIDIA.
“Enterprise adoption of agents is skyrocketing. Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth,” Huang added.
NVIDIA Corp. designs and manufactures graphics processing units (GPUs), system-on-a-chip units (SoCs), and AI hardware and software. Its GPUs are used in gaming, high-performance computing, AI training, and inference and serve as the backbone of data center infrastructure worldwide.
2. Alphabet Inc. (NASDAQ:GOOGL)
Potential upside: 2.65%
Number of Hedge Fund Holders: 288
Alphabet Inc. (NASDAQ:GOOGL) is one of the best AI stocks to watch in May. On April 30, Raymond James raised its price target on Alphabet to $425 from $400 and maintained a strong buy rating for the stock, according to a report by TheFly. This developed as the company reported strong financial results for the first quarter of the year, mainly due to the continued acceleration in Search and Google Cloud.
On Wednesday, Alphabet reported that consolidated revenues surged 22% to $109.9 billion, marking the company’s 11th consecutive quarter of double-digit growth. The company shared that revenues from Google Services increased 16% to $89.6 billion, driven by a 19% growth in Google Search & other, 19% in Google subscriptions, platforms, and devices, and 11% in YouTube ads.
Additionally, Google Cloud posted significant revenue growth of 63% to $20.0 billion, led by increases in Google Cloud Platform (GCP) across enterprise AI Solutions and enterprise AI Infrastructure, as well as core GCP services.
Alphabet and Google CEO Sundar Pichai said the company’s year is off to a terrific start. He added:
“Our AI investments and full stack approach are lighting up every part of the business. Search had a strong quarter with AI experiences driving usage, queries at an all time high, and 19% revenue growth. Google Cloud revenues grew 63% with backlog nearly doubling quarter on quarter to over $460 billion. This was our strongest quarter ever for our consumer AI plans, driven by the Gemini App. Overall the number of paid subscriptions has now reached 350 million, with YouTube and Google One being the key drivers. Gemini Enterprise has great momentum with 40% quarter on quarter growth in paid monthly active users. And, finally, I’m pleased to see Waymo surpass 500,000 fully autonomous rides a week.”
Based on 73 analyst ratings compiled by CNN, 88% rated Alphabet’s shares Buy, while 12% rated them Hold. The stock has an average price target of $395, a 2.65% upside from the current price of $384.80.
On April 24, Google announced plans to invest up to $40 billion in Anthropic to strengthen its partnership in the race to build artificial intelligence, according to a Bloomberg report. Under the pact, Anthropic said Google is committing to invest $10 billion in cash at a $350 billion valuation, while the remaining $30 billion will be invested once Anthropic hits certain performance targets.
Alphabet Inc. is a holding company that engages in software, health care, transportation, and other technologies. It owns several notable platforms, including Google Search, Google Maps, Gmail, and YouTube. The company is also known for pioneering work and research in cloud computing, quantum computing, and artificial intelligence.
1. Microsoft Corporation (NASDAQ:MSFT)
Upside Potential: 41.01%
Number of Hedge Fund Holders: 312
Microsoft Corporation (NASDAQ:MSFT) is one of the best AI stocks to watch in May. On April 30, TheFly reported that Benchmark analyst Yi Fu Lee raised the company’s price target on Microsoft to $525 from $450 while maintaining a Buy rating on the shares, following Microsoft’s announcement of its fiscal year 2026 third-quarter financial performance.
On April 29, Microsoft reported an 18% rise in revenue to $82.9 billion for the quarter ended March 31, 2026. Additionally, the company registered a 23% jump in its net income for the period to $31.8 billion.
“We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era. Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year,” Microsoft Chairman and Chief Executive Officer Satya Nadella said.
Microsoft reported 17% revenue growth in its Productivity and Business Processes segment to $35.0 billion, while Intelligent Cloud posted an impressive 30% revenue growth to $34.7 billion. In contrast, revenue from More Personal Computing declined 1% to $13.2 billion.
According to a report by Investing.com on April 30, Goldman Sachs analyst reiterated a Buy rating on Microsoft with a price target of $610. The company highlighted Microsoft’s Azure guidance as a positive, as the technology company is projecting a 39% to 40% constant-currency growth in the fiscal fourth quarter.
On April 27, Microsoft announced that it has amended its agreement with OpenAI to simplify our partnership and anchor it in flexibility. Under the amended agreement, Microsoft will continue to have a license to OpenAI IP for models and products through 2032; however, the company’s license will now be non-exclusive.
Microsoft emphasized that it remains OpenAI’s primary cloud partner and that OpenAI products will ship first on Azure, unless Microsoft cannot and chooses not to support the necessary capabilities. Additionally, OpenAI will be allowed to serve all its products to customers across any cloud provider.
“While this amendment simplifies the partnership, the work we’re doing together remains ambitious. From scaling gigawatts of new datacenter capacity, to collaborating on next-generation silicon, to applying AI to advance cybersecurity, and more, we’re excited to keep partnering to advance and scale AI for people and organizations around the world,” Microsoft said.
In the past year, Microsoft’s stock grew 3.17%, while it posted a 13.78% year-to-date decline. Based on 59 analyst ratings compiled by CNN, 93% rated the stock Buy, while 7% rated it Hold. The average price target on Microsoft is at $575, a 41.01% upside from the current price of $407.78.
Microsoft Corporation is a technology company that creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of customers.
