In this article, we will take a look at the most promising education stocks according to hedge funds.
With positive digital learning dynamics and accelerated enrollment rates, education platforms are scaling globally. The trend first started when COVID-19 hit, prompting institutions to rush to adopt digital platforms. Since then, the global higher education market has been experiencing strong growth.
On February 3, Maximize Market Research published an article titled “Higher Education Market: Global Industry Analysis and Forecast (2025-2032),” according to which the global higher education market size is expected to surge at a CAGR of 12.66% during the forecast period 2025-2032. By 2032, the market is expected to reach approximately USD 2,117.61 billion, driven by growing demand for digital learning, rising EdTech adoption, strategic investments by leading institutions, program expansion, and higher enrollments.
The report advances by supporting the tech-powered higher education delivery. According to the publication, the institutions that are effectively employing educational technology are achieving increased student retention, enhanced academic outcomes, and greater reach.
Keeping this outlook in mind for the education space, we have compiled a list of the most promising education stocks according to hedge funds.
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Our Methodology
For this article, we began by filtering for stocks in the education sector having a market capitalization of over $300 million. Next, we shortlisted stocks with an upside potential of more than 5% and the highest number of hedge fund holdings. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are then ranked by the number of hedge fund holdings, based on Insider Monkey’s database, as of Q4 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
7. Afya Limited (NASDAQ:AFYA)
Number of Hedge Fund Holders: 9
On February 24, BofA reduced the price target on Afya Limited (NASDAQ:AFYA) to $17 from $22, while downgrading it from Buy to Neutral. According to the firm, increased investments in non-core businesses will put pressure on shareholder returns in the short-term. The analyst now expects the company’s medical practice solutions to scale up more gradually than previously thought.
The firm projects a free cash flow-to-equity yield of about 10% for this year, down from the earlier forecast of 13%. While undergraduate programs continue to keep generating strong cash flow, thanks to solid profit margins and revenue, the medical practice solutions segment is witnessing a lagged ramp-up. This division represents 5% of Afya Limited (NASDAQ:AFYA)’s revenue.
Earlier, on February 13, Morgan Stanley said that investments required to grow other businesses will possibly weigh on margins. Afya Limited (NASDAQ:AFYA) also faces additional structural pressures, including established medical undergraduate seats, which the firm believes will result in slower volume growth. That said, the firm downgraded the company to Underweight from Equalweight and cut the price target to $16, down from $17.50.
Afya Limited (NASDAQ:AFYA) is a Brazilian medical education group operating in three segments: Undergrad, Continuing Education, and Digital Services. Incorporated in 1999, the company offers educational products and services, digital health services, printed and digital content, an online medical education platform, and practical medical training services.
6. McGraw Hill, Inc. (NYSE:MH)
Number of Hedge Fund Holders: 15
On February 12, TheFly reported that Baird trimmed the price target on McGraw Hill, Inc. (NYSE:MH) to $19 from $21 and maintained an Outperform rating. This follows the firm’s model adjustment driven by solid results and improved guidance.
On the same day, BMO Capital also lowered the price target on McGraw Hill, Inc. (NYSE:MH) to $19 from $21 and reiterated an Outperform rating. The downward revision comes even after the company’s “strong beat” in the third-quarter, thanks to the Higher Education segment. According to BMO, the division’s outperformance was driven by market share gains, market skew growth, and a strengthened product mix, among other factors.
On the other hand, UBS slightly lifted the price target on McGraw Hill, Inc. (NYSE:MH) to $17, up from $16, as it believes shares will appreciate because of robust Q3 results. Although execution has been strong and the stock offers an appealing normalized free cash flow yield, concerns about AI’s impact in the long haul could constrain multiple expansion, the firm noted, adding that it remains neutral.
McGraw Hill, Inc. (NYSE:MH) is an Ohio-based provider of information solutions for K-12, higher education, and professional markets. Incorporated in 1888, the company operates through three segments: K-12, Higher Education, Global Professional, and International.
5. Udemy, Inc. (NASDAQ:UDMY)
Number of Hedge Fund Holders: 30
On February 9, Jason Tilchen from Canaccord Genuity reduced the price target on Udemy, Inc. (NASDAQ:UDMY) to $5 from $7 and reiterated a Hold rating, according to TheFly. With revenue and profitability modestly surpassing estimates, the company delivered a strong Q4, the firm noted.
As AI-driven content and new products help develop personalized learning experiences, the company continues to demonstrate progress in enterprise business strategy. These products include custom role-play simulations and MCP servers. Udemy, Inc. (NASDAQ:UDMY) didn’t provide any guidance due to the pending deal with Coursera, which is expected to close in the latter half of 2026.
Canaccord Genuity believes that the combined business will achieve an adjusted EBITDA margin of nearly 20%, driven by cost synergies and investments in product and go-to-market projects.
Overall, Udemy, Inc. (NASDAQ:UDMY) has a buy rating from 40% of the analysts covering the stock, with the remaining 60% neutral, as of February 25. With a 1-year median price target of $8.40, the stock boasts an upside potential of 66.93%.
Udemy, Inc. (NASDAQ:UDMY) is a California-based learning company that offers courses, professional services, learning architecture development, AI transformation packages, and seat-based subscription plans.
4. Universal Technical Institute, Inc. (NYSE:UTI)
Number of Hedge Fund Holders: 33
As of February 25, Universal Technical Institute, Inc. (NYSE:UTI) is a consensus buy among all the analysts covering the stock. One such firm is Truist Securities, which maintained a Buy rating and a price target of $40 on Universal Technical Institute, Inc. (NYSE:UTI) on February 5. With the highest 1-year price target among analysts, the firm’s estimate reflects an upside potential of 16.70%.
What positions Universal Technical Institute, Inc. (NYSE:UTI) well for sustained growth momentum is student enrollment, which is expected to increase in the times ahead, Truist Securities noted. While being optimistic about the possible employer interest in applying the Heartland model to new programs at UTI and Concorde, the firm said that capex could be reduced as campus buildout accelerates.
The firm highlighted that a strong demand pattern is projected across the trade school sector, as private competitors report solid dynamics in HVAC and welding programs, adding that Universal Technical Institute, Inc. (NYSE:UTI) is its top pick in the Education space.
Universal Technical Institute, Inc. (NYSE:UTI) is an Arizona-based provider of transportation, skilled trades, and healthcare education programs. With two main segments: UTI and Concorde, the company serves students, partners, and communities.
3. Coursera, Inc. (NYSE:COUR)
Number of Hedge Fund Holders: 33
On February 7, TheFly reported that Eric Sheridan from Goldman Sachs trimmed the price target on Coursera, Inc. (NYSE:COUR) to $6 from $9 and maintained a Sell rating. According to the analyst, the company delivered a strong FY25 operating performance in the consumer segment despite a muted enterprise environment. The analyst advised investors to focus on topline progression and how initiatives advance into 2026.
KeyBanc also cut the price target on Coursera, Inc. (NYSE:COUR) to $10, down from $12, and reiterated an Overweight rating on February 6. The downward price target revision came after the company’s Q4 results, which demonstrated a 2.9% jump in total revenue, thanks to the Consumer and Enterprise segments.
Perhaps even more interesting is the initial 2026 revenue growth guidance of 6-8%, which is higher than the street’s projection of 5.8%. The firm’s price trim is driven by a recent pullback in valuation, with KeyBanc supporting Coursera, Inc. (NYSE:COUR)’s long-term potential in the Enterprise segment.
Coursera, Inc. (NYSE:COUR) is a California-based global provider of online educational services. Founded in 2011, the online learning platform operates through two segments: Consumer and Enterprise.
2. Laureate Education, Inc. (NASDAQ:LAUR)
Number of Hedge Fund Holders: 35
On February 24, UBS cut the price target on Laureate Education, Inc. (NASDAQ:LAUR) to $37.50 from $39 and reiterated a Buy rating. Although there is seasonality noise, fundamentals remain strong, the analyst noted.
According to UBS, weak investor sentiment seems to be associated with margin pressures expected for Q1, which is driven by seasonal fluctuations in enrollment and new campus ramp-up. On the other hand, strong operational trends anticipated for the company’s Peruvian operations in 2026 are a growth driver for Laureate Education, Inc. (NASDAQ:LAUR), alongside growth acceleration in Mexico in the next two years, the firm highlighted.
That said, UBS lowered its earnings forecasts by 9% and 5% for 2026 and 2027, respectively. The firm now projects an earnings compound annual growth rate of nearly 16% from 2025 to 2030.
A day earlier, BMO Capital lifted the price target on Laureate Education, Inc. (NASDAQ:LAUR) to $40 from $36, while maintaining an Outperform rating, according to TheFly. This suggests an upside potential of approximately 19%.
Laureate Education, Inc. (NASDAQ:LAUR) is a Florida-based company providing higher education programs and services through higher education institutions. Founded in 1989, the company operates in Mexico, Peru, and the United States.
1. Stride, Inc. (NYSE:LRN)
Number of Hedge Fund Holders: 43
As of February 25, Stride, Inc. (NYSE:LRN) has mixed market sentiment, with 67% of analysts recommending buying the stock and the remaining 33% advising holding it. With a 1-year median price target of $100, the stock has an upside potential of 19.08%.
On January 29, BMO Capital lifted the price target on Stride, Inc. (NYSE:LRN) to $94, up from $75, and reiterated a Market Perform rating. In a research note, the analyst says the company’s Q2 2026 results surpassed street forecasts, despite the result being supported by a one-time gain. The deteriorating dynamics of General Education were more than offset by Career Learning, the firm added.
BMO Capital highlighted that management views last quarter’s key platform implementation issues as no longer a problem. Stride, Inc. (NYSE:LRN) maintained its FY26 revenue guidance and increased its adjusted operating income (AOI) projection.
On the same day, Canaccord Genuity reaffirmed a Buy rating on Stride, Inc. (NYSE:LRN), with a price target of $125. This came after the company’s fiscal Q2 results, in which it met expectations for total enrollment and revenue, while outperforming on profitability. The company’s virtual education programs’ demand appears steady, with application volumes remaining solid and technical pressure exposure at zero, the firm asserted.
Stride, Inc. (NYSE:LRN), headquartered in Reston, Virginia, offers proprietary and third-party online curriculum, software systems, and educational services. Founded in 1999, the company serves a wide clientele, including public and private schools, school districts, consumers, and government agencies.
While we acknowledge the potential of LRN 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 LRN and that has 100x upside potential, check out our report about this cheapest AI stock.
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