In this article, we will list the 5 Best Young Stocks to Invest In According to Hedge Funds. Please visit 11 Best Young Stocks to Invest In According to Hedge Funds to see the extended list and the methodology behind it.
5. Core & Main Inc. (NYSE:CNM)
Number of Hedge Fund Holders: 55
Core & Main Inc. (NYSE:CNM) is one of the best young stocks to invest in according to hedge funds. On June 10, Core & Main reported solid Q1 2026 results, with net income rising 7.6% to $113 million and diluted EPS increasing 9.6% to $0.57. Net sales remained steady at $1.91 billion as steady municipal demand and growth in treatment plant and smart utility categories helped offset volume declines in other areas. The company also expanded its gross margin by 50 basis points to 27.2% through disciplined pricing and cost management.
The company continued to execute its growth strategy by opening five new greenfield locations during the quarter. Core & Main demonstrated a balanced approach to capital allocation, deploying $88 million to repurchase 1.8 million shares during the quarter, with an additional $37 million used for further repurchases after the period closed.
Looking ahead, Core & Main Inc. (NYSE:CNM) has reaffirmed its full-year fiscal 2026 outlook. With healthy demand for water infrastructure repair and replacement, the company remains focused on its strategic initiatives, including margin expansion and supporting complex utility projects.
Core & Main Inc. (NYSE:CNM) distributes water, wastewater, storm drainage, and fire protection products and related services in the US.
4. Clearwater Analytics Holdings Inc. (NYSE:CWAN)
Number of Hedge Fund Holders: 57
Clearwater Analytics Holdings Inc. (NYSE:CWAN) is one of the best young stocks to invest in according to hedge funds. On June 3, Clearwater Analytics introduced three AI-enabled products designed to integrate directly into institutional investment workflows. By using its trusted investment data foundation, which supports over $10 trillion in global assets, the company aims to help investors automate operations, improve risk management, and gain deeper insights into private markets without sacrificing transparency or auditability.
The new offerings include Clearwater Compass, which automates exception management and reconciliation for accounting teams; Total Portfolio Oversight, developed with Blackstone to provide a unified view of public and private asset risk; and Fund Analytics, which uses AI to structure fragmented private markets data. These tools are designed to replace manual, spreadsheet-driven processes with centralized, intelligence-backed workflows.
CEO Sandeep Sahai emphasized that the effectiveness of these AI solutions is rooted in the platform’s high-quality investment record. By embedding intelligence directly into operational and oversight functions, Clearwater Analytics Holdings Inc. (NYSE:CWAN) aims to help firms accelerate their decision-making processes while maintaining the rigorous controls required by institutional investors.
Clearwater Analytics Holdings Inc. (NYSE:CWAN) provides a cloud-native investment management platform for institutional investors across public and private markets, using a single-instance, multi-tenant architecture to deliver real-time data and AI-driven insights across the investment lifecycle.
3. GE HealthCare Technologies Inc. (NASDAQ:GEHC)
Number of Hedge Fund Holders: 60
GE HealthCare Technologies Inc. (NASDAQ:GEHC) is one of the best young stocks to invest in according to hedge funds. On June 4, GE HealthCare received FDA 510(k) clearance for MIM Contour ProtégéAI+ 2.0, an AI-powered software designed to streamline radiation therapy planning. This update introduces new capabilities, including an MR Brain model and an improved CT Male Pelvis model, to assist oncology teams in delivering more personalized patient care.
The clearance includes a Predetermined Change Control Plan/PCCP, which creates a framework for GE HealthCare to introduce future enhancements and new anatomical models more efficiently. By automating the time-intensive process of manual contouring, the software helps clinicians increase efficiency while maintaining high accuracy in their treatment planning.
Designed to operate with minimal user interaction, the tool automatically initiates contouring and integrates directly with existing treatment planning systems. This automation aims to reduce manual workload, allowing radiation oncology care teams to focus on refining and personalizing treatment plans for their patients.
GE HealthCare Technologies Inc. (NASDAQ:GEHC) is a healthcare company with a focus on various products, services, and digital solutions made for diagnoses and treatments. The company operates through Imaging, Advanced Visualization Solutions, Patient Care Solutions, and Pharmaceutical Diagnostics segments.
2. Astera Labs Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 69
Astera Labs Inc. (NASDAQ:ALAB) is one of the best young stocks to invest in according to hedge funds. On May 5, Astera Labs introduced its Scorpio X-Series 320-lane smart fabric switch, designed to address the inefficiency of fragmented AI workloads. As AI training and inference tasks increasingly branch and pause, traditional infrastructure often leaves expensive GPUs idle. Astera’s memory-semantic architecture aims to resolve this by reducing data-movement overhead, allowing accelerators to access shared resources more efficiently and improving overall GPU utilization.
To further boost performance, the switch incorporates the Hypercast engine, which offloads collective operations directly into the fabric. By handling tasks like all-reduce and all-gather within the network, the system reduces the synchronization tax that typically limits scaling. Astera claims this approach can yield up to a 2x improvement in collective operations, helping large GPU clusters remain synchronized as they handle increasingly complex, non-linear model architectures.
As the AI switching market expands, Astera is positioning itself within the growing open ecosystem, supporting initiatives like UALink, to offer an alternative to proprietary vendor lock-in. By simplifying cluster topology and reducing hop counts, the company is betting that hyperscalers will prioritize flexible, high-radix fabrics to keep their compute resources fed and synchronized in diverse, multi-tenant environments.
Astera Labs Inc. (NASDAQ:ALAB) is a global semiconductor company that provides hardware and software solutions for AI and cloud infrastructure applications to solve memory, data, and networking bottlenecks. The company’s operations are divided into the following geographical segments: Taiwan, China, the United States, and Other.
1. Forgent Power Solutions Inc. (NYSE:FPS)
Number of Hedge Fund Holders: 76
Forgent Power Solutions Inc. (NYSE:FPS) is one of the best young stocks to invest in according to hedge funds. On May 14, Forgent Power Solutions reported FQ3 2026 earnings, with revenues reaching $379 million, a 103% year-over-year increase. The company achieved record performance in order volume, securing $867 million in bookings and reaching a total backlog of $1.98 billion. Driven by demand across data center and power grid markets, the company saw its net income rise to $24 million, while Adjusted EBITDA reached $85 million, reflecting a 200-basis-point sequential margin expansion.
Management attributed the company’s success to its agile manufacturing model and the ability to deliver customized solutions with industry-leading lead times. Although margins were slightly impacted by startup costs at new facilities and aggressive headcount growth, revenue expansion is allowing Forgent to improve its absorption of labor and overhead costs. Operational cash flow improved significantly to $29 million, even as the company continues to invest in its multi-year capacity expansion plan.
Forgent Power Solutions Inc. (NYSE:FPS) has now raised its full-year fiscal 2026 guidance, now projecting revenue between $1.35 billion and $1.39 billion, along with Adjusted EBITDA of $310 million to $320 million. With its capacity expansion on track to support up to $5 billion in annual revenue by the end of the year, the company expects further margin improvement in the fourth quarter and enters the final period of its fiscal year with substantial growth visibility.
Forgent Power Solutions Inc. (NYSE:FPS) is a leading US designer and manufacturer of custom electrical distribution equipment, specializing in critical power infrastructure for data centers, the power grid, and energy-intensive industrial facilities.
While we acknowledge the potential of FPS 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 FPS and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 8 Oversold Stocks to Buy Right Now and 10 Best Low Risk Stocks to Buy in 2026.
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