In this article, we will discuss Avoid SpaceX and Buy These 5 Stocks Instead. Please visit Avoid SpaceX and Buy These 11 Stocks Instead, if you would like to see the extended list and the methodology behind it.
5. Nokia (NYSE:NOK)
Number of Hedge Fund Investors: 66
Redditors are saying Nokia (NYSE:NOK) should not be seen as an old-school telecom equipment company hanging on for dear life. It has transformed. Nokia is emerging as a serious player in AI infrastructure. That’s the real story that Wall Street is still catching up on.
In Q1 2026, Nokia’s AI and cloud sales jumped 49% year-over-year. This segment now accounts for about 8% of Nokia’s (NYSE:NOK) total revenue. In just the first quarter, Nokia pulled in €1 billion in AI and cloud orders. Those are firm purchase orders with real delivery dates from real customers. The order backlog is so big that lead times are running 12 to 18 months. Demand is crushing what the company can supply right now.
But what exactly is Nokia (NYSE:NOK) making for AI? Here’s what matters. Nokia makes optical networking equipment. When hyperscalers build massive data centers, they need to connect all those servers together with super-fast fiber optic cables. Nokia makes the equipment that puts data onto those cables and pulls it off. It’s called coherent optical technology. This equipment lets data move really fast and really efficiently between data centers and inside data centers.
Nokia also makes IP networking equipment, which is the switching and routing gear that directs all that data traffic through the data center.
Nokia (NYSE:NOK) is developing AI-RAN technology with Nvidia. AI-RAN uses artificial intelligence to dynamically optimize wireless networks. Instead of humans manually tuning radio networks, AI does it automatically. This is the move from 5G to 6G wireless technology. It’s a completely new revenue stream outside of just replacing old equipment.
Bulls say Nokia (NYSE:NOK) went from a declining telecom vendor to a growth company in AI infrastructure. Margins are expanding right now. The Infinera synergies are flowing early. Fab 2 comes online later in 2026 to solve supply constraints. New products launch in the second half of 2027 with volume shipments. As AI and cloud revenues grow from 8% toward 15-20% of the total company, Nokia gets reclassified from telecom to infrastructure. That’s when the real rerating happens.
4. ServiceNow (NYSE:NOW)
Number of Hedge Fund Investors: 108
ServiceNow (NYSE:NOW) is another stock that Reddit communities and contrarian analysts believe should be considered instead of falling into the SaaSpocalypse bandwagon. The stock is down a whopping 35 percent so far in 2026 amid widespread fears that artificial intelligence will render enterprise software obsolete. The sell-off was triggered largely by Claude Cowork, the artificial intelligence assistant released by Anthropic, which punished the stock because of concerns about its plugins and labor replacement capabilities. However, bulls say the market reaction was a knee-jerk panic that misunderstands the company’s fundamental value.
Bulls reject the notion that ServiceNow (NYSE:NOW) is just simple software that can be easily replicated. ServiceNow is a giant serving 85 percent of the Fortune 500, companies that require far more than just code. It offers the deep product expertise, round-the-clock customer service, constant patching and security upgrades, and enterprise integration infrastructure that cannot be thrown together quickly. The argument that a developer in a garage could simply use artificial intelligence to spin up a ServiceNow (NYSE:NOW) replacement ignores the complexity and production-readiness required by the world’s largest enterprises.
Some recent reports suggest that companies, including Microsoft, have concluded that using artificial intelligence tokens at scale is not actually cheaper than employing humans. Microsoft disclosed that for certain types of work, it would have been cheaper to simply hire a human developer than to rack up the massive bills from artificial intelligence token consumption. This contradicts the pessimistic thesis and suggests that artificial intelligence may enhance rather than replace the value of enterprise software companies.
Burke Wealth Management stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2026 investor letter:
“ServiceNow, Inc. (NYSE:NOW): As a sector, enterprise software stocks peaked at the end of 2024, had a terrible 2025 and an even worse start to 2026. There has been very little distinction between single solution product companies and platform companies that orchestrate workflows across an entire enterprise. Valuations are at 10-year lows, and the prevailing viewpoint is that AI is going to obviate the need for legacy enterprise software subscriptions either by replacing existing software with vibe-coded solutions or by destroying the per seat business model that these companies were built on by eliminating the seats (human employees). Every time Anthropic releases a new set of tools, it seems like enterprise software stocks fall 5%. We have tried to manage through this environment by consolidating around what we view to be best of breed platform companies across different segments of the enterprise software stack (the raw data layer (SNOW), cyber security (CRWD), and multi-cloud platform solutions (NOW, CRM). Unfortunately, our efforts to discriminate between business models and high grade our holdings have not worked as the broader market is doing no such thing at the present time. The fact that each of the enterprise software companies in our portfolio have beaten earnings estimates consistently over the past year and are forecasting revenue acceleration in 2026 has not mattered either. In fact, this has only served to increase our level of frustration with the stock action. Service Now and Crowdstrike grew operating profit over 25% in 20025 while Snowflake more than doubled its operating profit from a somewhat depressed base….” (Click here to read the full text)
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.”
1. Microsoft (NASDAQ:MSFT)
Number of Hedge Fund Investors: 282
Microsoft (NASDAQ:MSFT) is down 22 percent year-to-date, and Redditors believe now is the time to buy the stock instead of chasing hype like SpaceX.
Bulls point to Microsoft’s latest agreement revisions with OpenAI announced in April 2026, after which Microsoft will no longer be obligated to pay 20 percent of Azure OpenAI Service and Bing revenue to OpenAI. This change will improve Microsoft’s gross margins from 76.11 percent in 2026 to 82.35 percent. But the investment case is not just about OpenAI. Microsoft (NASDAQ:MSFT) is a strong cloud and AI play independent of that relationship. In fiscal Q3 2026, Azure revenue rose 40 percent year-over-year, marking the fourth consecutive quarter of 40 percent plus growth. Azure OpenAI enterprise customers rose 63 percent year-over-year from 49,000 in FY2024 to 80,000 in FY2025.
The market share gap between Azure and AWS has been declining from 23 percentage points in 2021 to just 9 percentage points in fiscal Q3 2026 year-to-date. Enterprise customer concentration remains a key advantage for Microsoft. Enterprise customers spending over 1.2 million dollars annually represent 5 percent of Azure’s customer base compared to just 2.3 percent for AWS. Microsoft (NASDAQ:MSFT) plans to increase its data center supply capacity by 80 percent in fiscal 2026 and double the number of data centers over the next two years. Copilot paid seats rose 250 percent year-over-year to 20 million paid seats in Q3 FY2026, representing the fastest growth rate for any Microsoft software suite since launch. At an annual price of $360 per user, Copilot generates approximately 7.2 billion dollars in annualized revenue.
Aoris Investment Management stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2026 investor letter:
“The startling pace of advancement in AI tools over the last year is extremely impressive but has also unnerved many investors. The key concerns are what these tools will be capable of a few months, a year, or five years from now, and what that means for incumbent software, data and services businesses. Will AI displace white-collar workers, shrinking their client base? Will it make software free? Will data become a commodity?
Such reservations contributed to sharp share price declines over the quarter for five businesses in our portfolio – Microsoft Corporation (NASDAQ:MSFT) and SAP (enterprise software), Experian and RELX (data), and Accenture (professional services). These declines collectively had a negative impact on performance of 9.4%. I should note that these businesses were also major contributors to the Fund’s underperformance last year due to the same underlying investor concerns.
Microsoft recognised that as the world becomes more digital, and data moves to the cloud, cybersecurity risks rise dramatically. It has adapted to this growing need and is now the world’s leading provider of cybersecurity software. We are confident that our five portfolio holdings will continue to adapt, using AI to meet the evolving needs of their customers, as well as making their own operations more efficient. …” (Click here to read the full text)
While we acknowledge the potential of MSFT 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 MSFT and that has 100x upside potential, check out our report about the cheapest AI stock.
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