3. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Investors: 154
Redditors are dismissing space stocks as today’s hype cycle. What’s actually happening right now is an AI revolution, and every major tech company is in dire need of memory chips. That’s where Micron comes in. Micron Technology (NASDAQ:MU) is experiencing unprecedented demand for DRAM, NAND, and HBM memory as hyperscalers race to build out AI data centers. But here’s the problem: Micron can only fulfill 50 to 66 percent of actual demand in the medium term. Management expects supply and demand to stay tight beyond 2026.
To buffer against cyclical downturns, Micron has signed multi-year Strategic Customer Agreements with major cloud providers. They’re five-year agreements with take-or-pay provisions, meaning Micron Technology (NASDAQ:MU) gets paid regardless of whether customers actually take the product. The company is benefiting from massive price increases across the board. In Q2 2026, DRAM prices jumped 58 to 63 percent quarter over quarter. NAND Flash prices rose 70 to 75 percent. Enterprise SSD prices climbed 80 percent in a single quarter. These are not one-time spikes. TrendForce expects prices to stay elevated through Q4 2026 and beyond.
Burke Wealth Management stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q1 2026 investor letter:
“In an otherwise dismal quarter for growth equities, shares of ASML and Micron Technology, Inc. (NASDAQ:MU) delivered strong returns gaining +24% and +18% respectively during the first quarter. Both of these companies are essential players in delivering the compute power necessary to drive the AI revolution. Had the market displayed any sort of rational behavior during the first quarter, Nvidia would have joined this list of gainers after announcing the strongest results in the history of results and providing the strongest guidance in the history of guidance in late February, but near-term market absurdities prevented this outcome for the time being. The fundamental driver for both ASML and Micron is a seemingly insatiable demand for more compute power. Saying the world is compute constrained without proving it doesn’t get you far these days. We live in a world where many analysts are focused on calling out a peak in CAPEX spending and making the claim that the spending to date on AI has created a bubble that will take years to digest. This may still be the case, but if it is, executives from Amazon, Alphabet, Microsoft, and Meta are going to have a lot of explaining to do because collectively, these four companies committed to spend over $600 billion on AI related CAPEX this year. ..” (Click here to read the full text)
2. Meta Platforms (NASDAQ:META)
Number of Hedge Fund Investors: 262
Meta Platforms (NASDAQ:META) is down about 10% so far this year amid fears that Mark Zuckerberg’s AI spending spree might not result in returns. But many believe AI is already showing a positive impact on the social media giant’s finances and Zuck knows what he’s doing.
An AI-driven advertising revolution drives META bull thesis. Meta’s Advantage+ suite, which is Meta Platforms’ (NASDAQ:META) proprietary platform for automating ad targeting and placement, has become the dominant automation tool in the industry. Eighty-two percent of Meta advertisers are now using some component of it. Management noted that Advantage+ increases ad impressions by 19 percent year over year while driving a 12 percent increase in cost per ad, indicating that advertisers are willing to pay more because their returns are improving. Advantage+ is essentially Meta using artificial intelligence to boost and optimize the performance of ads for advertisers across its platforms.
Meta GEM is Meta Platforms’ (NASDAQ:META) back-end learning model designed for ad-ranking that analyzes image, text, and video assets to predict who wants to see what content and when. It builds user profiles of shopping behavior and purchase intent, then furnishes the most relevant ads to each customer based on those inferred preferences. According to Meta’s internal assessment, GEM is four times more efficient at translating compute power into direct advertising performance compared to traditional ad-ranking systems.
Meta Platforms (NASDAQ:META) is starting to eat into Google’s advertising market share at a meaningful pace. eMarketer data shows that Google’s share of the global digital advertising market has fallen from 34 percent in 2021 to 26.4 percent in 2026. Meta’s share, on the other hand, has jumped from 22 percent in 2021 to 26.8 percent in 2026, meaning Meta Platforms (NASDAQ:META) is projected to unseat Google as the leading digital advertising platform for the first time this year.
Madison Large Cap Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q1 2026 investor letter:
“During the quarter, we initiated positions in Meta Platforms, Inc. (NASDAQ:META) and Salesforce.com. The second new investment was in Meta Platforms, which owns three dominant, global social network and communications apps in Facebook, Instagram, and WhatsApp. We believe revenue growth will remain strong as its user count grows and monetization of its apps improves. Meta is investing heavily in AI and seeing real benefits in the personalization and efficacy of ads in its social network. Additionally, WhatsApp is finally starting to commercialize its business after many years of focusing on acquiring users. Investors are concerned about increasing capital expenditures, but we believe much of it will garner strong returns, and management will remain prudent in managing spending over the long term.”
