In this article, we take a look at the 8 Best Generative AI Software Stocks to Buy in June 2026.
On June 12, McKinsey & Company noted that, despite many organizations adopting AI coding tools, only a few are able to capture the full value of these technologies because they layer AI onto existing processes rather than redesigning workflows around it.
“AI is rapidly changing software development, but research consistently shows that organizations still struggle to translate experimentation into meaningful, sustained impact. The promised land of tenfold to 20-fold productivity from AI still seems far away for most companies,” McKinsey said, noting that most companies are only experiencing productivity gains of about 1.2x.
The global management consulting firm said that the challenge goes beyond tool adoption, emphasizing that it requires redesigning the product development life cycle (PDLC), including the fundamental ways software teams work.
McKinsey partnered with the code quality and governance platform Sonar for a case study in which Sonar redesigned its PDLC to be AI-native and piloted the new approach with selected teams. By the end of the pilot, McKinsey noted that the teams saw improvements across velocity and quality, emphasizing that redesigning workflows around AI reduced friction across handoffs and enabled more parallel work across product, engineering, and design, while agents supported execution.
“While approaches to measuring velocity vary across organizations and teams, at Sonar, teams focused on pull request throughput and cycle time. Front-runner teams improved pull request throughput by up to 2.2 times and reduced pull request cycle times by up to 3.4 times, with self-reported productivity gains in build ranging from 50 to 80 percent across teams,” McKinsey said.
Moreover, the consulting firm highlighted that the shift to AI-native development is not a question of if, but how quickly organizations can adapt. It added:
“Organizations that move beyond experimentation to redesign their PDLC around AI will unlock disproportionate gains not only in productivity, but in how quickly they learn, iterate, and deliver value to users. Those that fail to do so risk optimizing the past, while others redefine the future.”
As we take into consideration the results of the case study, let’s take a look at the 8 Best Generative AI Software Stocks to Buy in June 2026.
Our Methodology
To compile our list of the 8 Best Generative AI Software Stocks to Buy in June 2026, we relied on financial media, ETFs, and screeners to identify AI software stocks with significant upside potential. From this pool, we selected the 8 stocks most widely owned by hedge funds, based on Q1 2026 filings from Insider Monkey’s database. These names were then ranked by the number of hedge funds holding positions in them.
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. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
Note: All pricing data is as of market close on June 15, 2026.
8. GitLab Inc (NASDAQ:GTLB)
Potential Upside: 13.03%
Number of Hedge Fund Holders: 43
GitLab Inc (NASDAQ:GTLB) is one of the 8 Best Generative AI Software Stocks to Buy in June 2026. On June 15, Investing.com reported that Cantor Fitzgerald maintained its Neutral rating on GitLab with a price target of $35 as the company introduced four new capabilities.
At its Transcend event last week, GitLab announced new capabilities, particularly the Next Generation Source Code Management in private beta, GitLab Orbit context graph in public beta, Governance for Agents in private beta, and GitLab Flex.
The Source Code Management and Orbit capabilities address limitations that users in Git-based workflows encounter due to larger codebases managed by software teams and the growing volume of automated activity.
Meanwhile, the Governance for Agents extends that foundation with new AI auditing and control capabilities to meet compliance requirements, while GitLab Flex allows monthly reallocation across seats and credits without contract amendments.
Cantor Fitzgerald said the feature has the ability to accelerate enterprise adoption as organizations remain uncertain about agent consumption patterns.
Earlier on June 10, BTIG analyst Nick Altmann reiterated a Buy rating on Gitlab, according to a report by TipRanks. Based on 30 analyst ratings compiled by CNN, 63% assigned a Hold rating to GitLab, while 30% assigned a Buy rating. The stock has a median price target of $32, a 13.03% upside from the current price of $28.31.
GitLab Inc. (NASDAQ:GTLB) provides an intelligent development, security, and operations (DevSecOps) platform for software innovation.
7. Datadog, Inc. (NASDAQ:DDOG)
Potential Upside: 0.96%
Number of Hedge Fund Holders: 80
Datadog, Inc. (NASDAQ:DDOG) is one of the 8 Best Generative AI Software Stocks to Buy in June 2026. On June 15, Truist analyst Miller Jump upgraded Datadog’s rating to Buy from Hold while raising its price target to $300 from $190, according to a report by Investing.com.
The analyst attributed the upgraded rating and price target to the company’s potential for durable AI-driven growth as well as improved stability of the firm’s relationships with frontier lab customers.
“Despite increased awareness around AI consumption, we believe urgency of AI adoption in the enterprise is significantly outweighing the urgency to optimize AI, and customers remain early in their agentic journeys,” Jump was quoted saying in the report.
Several analysts recently raised their price targets on Datadog, such as BMO Capital, which increased its price target on Datadog on June 12 to $260 from $220 while maintaining an outperform rating on the shares.
Earlier on June 11, Benchmark increased the firm’s price target on Datadog to $260 from $230 and maintained a Buy rating on the shares after following the company’s DASH 2026 conference in New York City. The analyst cited the company’s efforts to conduct on-the-ground checks and solicit feedback from customers and partners as a positive development.
At its DASH conference on June 9, DataDog launched 100 plus capabilities to support customers in driving autonomy and managing growing AI and security complexities. These include the new Bits AI, log management, and security capabilities.
Datadog, Inc. (NASDAQ:DDOG) is an observability and security platform for the AI era. It brings applications, infrastructure, data, models, and security into one place, using AI to detect and resolve issues before they impact customers.
6. Snowflake Inc. (NYSE:SNOW)
Upside Potential: 24.60%
Number of Hedge Fund Holders: 80
Snowflake Inc. (NYSE:SNOW) is one of the 8 Best Generative AI Software Stocks to Buy in June 2026. On June 12, Snowflake Ventures, the company’s corporate venture arm, announced that it is investing in Jedify, an autonomous context graph for data-intensive agentic applications and workflows.
The venture company said the investment in Jedify aims to advance the semantic foundation for enterprise AI. It added that the investment reflects Snowflake’s view that governed semantic context is transforming into foundational infrastructure for enterprise AI.
As part of the investment, Snowflake noted that Jedify can support customers in accelerating the adoption of Snowflake’s AI capabilities while reinforcing the broader Open Semantic Interchange (OSI) ecosystem.
Earlier on June 5, Truist increased its price target on Snowflake to $300 from $275 while maintaining a Buy rating on the shares, highlighting its Cortex Code (CoCo), which is accelerating workload creation, migrations, and platform expansion.
Out of 52 analyst ratings compiled by CNN, 87% placed a Buy rating on Snowflake, while 11% rated the stock Hold. The stock has a median price target of $300, a 24.60% upside from the current price of $240.78.
Snowflake Inc. (NYSE:SNOW) provides cloud data warehousing software to enterprise clients. The company’s AI Data Cloud platform allows clients to build, use, and share data, applications, and AI.
While we acknowledge the potential of SNOW 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 SNOW and that has 100x upside potential, check out our report about the cheapest AI stock.
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