5 Best Stocks to Buy for the AI Boom in the Second Half of 2026

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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.

While we acknowledge the potential of PANW 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 PANW and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: Billionaire David Abrams’ Top 9 Stock Picks with Seth Klarman Stock Portfolio: 10 Best Stocks to Buy.

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