In this article, we will look at the 5 Best AI Stocks to Watch in May. Please visit 10 Best AI Stocks to Watch in May if you’d like to see an extended list and methodology behind it.
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 (NYSE:NOW) 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. (NASDAQ:META) 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. (NASDAQ:NVDA) 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. (NASDAQ:GOOGL) 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 (NASDAQ:MSFT) is a technology company that creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of customers.
While we acknowledge the potential of MSFT 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 MSFT and that has 100x upside potential, check out our report about the cheapest AI stock.
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