In this article, we will list the 5 Best Stocks to Buy for the AI Boom in the Second Half of 2026. Please visit 12 Best Stocks to Buy for the AI Boom in the Second Half of 2026 if you would like to see the extended list and the methodology behind it.
5. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Fund Holders: 282
Stock Upside Potential: 47.13%
Microsoft Corp (NASDAQ:MSFT) is one of the best stocks to buy for the AI boom in the second half of 2026. Analysts see more than 47% upside potential in Microsoft stock from the current price. Microsoft is a huge favorite of elite investors, as it’s backed by 282 hedge funds.
On July 7, Bloomberg reported that Microsoft has started replacing OpenAI and Anthropic models from some of its software products, including Outlook and Excel, in a bid to reduce its AI costs. The report stated that Microsoft is replacing the third-party models with its in-house model called MAI. Microsoft’s internal models are getting better at their job, and the company now feels it can reduce its reliance on outside providers and lower its AI usage costs.
In a June 4 report, Bloomberg quoted Microsoft’s AI executive, Mustafa Suleyman, as saying that the company was looking for alternatives as Anthropic has become extremely expensive.
Microsoft Corp (NASDAQ:MSFT) provides AI infrastructure through its Azure AI cloud platform. With this, it offers the computing power and resources required to train and run AI models. Microsoft also develops its own AI models for various applications.
4. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Holders: 101
Stock Upside Potential: 48.13%
Salesforce Inc (NYSE:CRM) is one of the best stocks to buy for the AI boom in the second half of 2026. Analysts project a 48% upside potential for Salesforce shares from the current price, and some 101 hedge funds have Salesforce stock in their portfolios.
The US Air Force has picked Salesforce Inc (NYSE:CRM) to help modernize and streamline its logistics. On July 8, Salesforce announced that the Air Force will use its Missionforce national security platform to manage its global vehicle fleet.
The Missionforce platform includes AI capabilities. The Air Force will use this platform to manage its fleet of more than 84,000 vehicles across roughly 400 locations. By using Missionforce, the Air Force looks to reap benefits such as streamlined asset logistics, accelerated mission planning, and increased system reliability.
Salesforce has picked up several contracts with the Pentagon as it deepens its presence in the defense sector. In January, it signed a broad $5.6 billion, multiyear contract with the US Army to help accelerate the Pentagon’s digital transformation and mission readiness.
Salesforce Inc (NYSE:CRM) provides AI-powered CRM solutions to businesses. Its flagship autonomous AI platform, Agentforce, can plan and execute tasks without human intervention. Salesforce’s AI exposure also extends to Anthropic, where it has a large investment stake.
3. Nvidia Corp (NASDAQ:NVDA)
Number of Hedge Fund Holders: 275
Stock Upside Potential: 56.92%
Nvidia Corp (NASDAQ:NVDA) is one of the best stocks to buy for the AI boom in the second half of 2026. Nvidia stock is a favorite of elite investors, as some 275 hedge funds have positions in this AI chip stock.
On July 7, Reuters reported that Chinese tech startup DeepSeek is developing its own AI chips to reduce its reliance on Nvidia chips. That report shook Nvidia stock, with shares slipping about 1.6% in premarket trading.
However, according to Richard Windsor, analyst at Radio Free Mobile, DeepSeek’s effort is unlikely to materially affect Nvidia’s AI chip business. First, Windsor noted that Nvidia is “at zero in China and staying there,” referring to Nvidia’s already shrinking business in China due to US restrictions on chip exports.
Second, Windsor commented that DeepSeek has almost zero chance of challenging Nvidia outside China. Not only is China shut out of the world’s most advanced chip manufacturing capabilities, but designing perfect AI chips takes years and requires massive capital.
Nvidia Corp (NASDAQ:NVDA) is an American global semiconductor company. It builds powerful computer chips with a broad variety of applications. Nvidia chips are widely used to train and run large AI models. Nvidia also provides various software solutions to the AI industry.
2. Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Holders: 154
Stock Upside Potential: 66.38%
Micron Technology Inc (NASDAQ:MU) is one of the best stocks to buy for the AI boom in the second half of 2026. Micron shares are up more than 200% year-to-date and have returned more than 676% over the past year. Some 154 hedge funds have confidence in Micron as analysts continue to see upside potential in the stock.
On July 6, Citi reiterated a Buy rating on Micron Technology Inc (NASDAQ:MU) stock with a price target of $1,400, which implies roughly 48% upside potential to the current price. According to the brokerage, Micron should continue to enjoy favorable pricing in the DRAM memory market due to the surging AI processor demand. AI processors require vastly expanded memory compared to conventional processors.
Micron is expanding its production capacity to capitalize on the booming memory demand. On July 4, Bloomberg reported that Micron is building a new chip facility in Japan to produce high-bandwidth memory used alongside AI processors. Micron aims to begin fitting this facility with manufacturing equipment in the second half of 2028. The company is also expanding its manufacturing capacity in the US with additional production facilities in Boise and New York.
Micron Technology Inc (NASDAQ:MU) makes computer memory and data storage products. Its portfolio includes dynamic random-access memory, flash memory, high bandwidth memory, and solid-state drives. Micron’s high-bandwidth memory plays a crucial role in AI inference servers.
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.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email below.
