In this article, we will discuss Billionaire Dan Loeb’s Top 5 AI Stock Picks. Please visit Billionaire Dan Loeb Sells Old Economy Stocks, Buys 7 AI Stocks, if you would like to see the extended list and the methodology behind it.
Dan Loeb of Third Point
5. KLA Corp. (NASDAQ:KLAC)
Billionaire Dan Loeb’s Stake: 110,000 Shares Valued at Approximately $16.20 Million (NEW position)
KLA Corp. (NASDAQ:KLAC) plays a key role in the AI revolution because it makes the machines used to inspect and measure semiconductor chips during manufacturing — essentially the quality control layer of every major fab on the planet. It holds a 58% global market share in process control, meaning most of the world’s chip manufacturers rely on KLA equipment to ensure their chips come out correctly.
KLA Corp. (NASDAQ:KLAC) sits at the center of every major semiconductor tailwind right now. As chip geometries shrink down to 2nm, the inspection and metrology requirements become exponentially more demanding — older machines simply can’t detect flaws at that level of precision, which forces chipmakers to upgrade their KLA equipment with every new node generation. Hyperscalers are projected to spend over $725 billion on AI infrastructure in 2026 alone, which flows directly into chip manufacturing demand, which flows directly into KLA.
KLA Corp. (NASDAQ:KLAC) targets $26 billion in revenue by 2030, representing a 13–17% revenue CAGR, alongside gross margin expansion to 63.5%. EPS is expected to grow around 34% in FY2027, outpacing peers like Applied Materials and Entegris on both volume and growth rate.
Aristotle Growth Equity Fund stated the following regarding KLA Corporation (NASDAQ:KLAC) in its fourth quarter 2025 investor letter:
“KLA Corporation (NASDAQ:KLAC) contributed to performance in the fourth quarter as leading-edge logic and memory customers accelerated capital spending to support advanced-node transitions. The company is benefiting from increased adoption of advanced packaging and extreme ultraviolet-related (EUV) inspection, where KLA maintains a technology leadership position, and investors continued to increase estimates for semiconductor capital equipment spending growth in 2026 and 2027 from prior consensus.”
4. Hut 8 (NASDAQ:HUT)
Billionaire Dan Loeb’s Stake: 869,563 Shares Valued at Approximately $40.79 Million (NEW position)
Hut 8 (NASDAQ:HUT) is transitioning from Bitcoin mining into AI data center infrastructure. It doesn’t just host GPUs or sell cloud compute, it owns the underlying power and land assets outright — then leases that infrastructure to hyperscalers on long-term contracts.
The bull case centers on two campuses. Hut 8’s (NASDAQ:HUT) Beacon Point facility in Texas (352 MW) is leased to a high-credit tenant — widely understood to be Google — for 15 years, with a base contract value of $9.8 billion. River Bend in Louisiana (245 MW) is leased to Fluidstack as part of a broader agreement tied to Anthropic’s AI infrastructure buildout, locking in another $7 billion over the base term.
The nature of its contracts makes Hut interesting. Hut 8 (NASDAQ:HUT) bears minimal operating costs once the facilities are built. The cash flows are essentially fixed, long-duration, and backed by investment-grade counterparties — much closer to bond-like income than typical tech revenue.
Billionaire Dan Loeb bought a stake worth about $40.8 million in Hut 8 (NASDAQ:HUT) during the March quarter.
3. Alphabet (NASDAQ:GOOGL)
Billionaire Dan Loeb’s Stake: 175,000 Shares Valued at Approximately $50.32 Million (NEW position)
Billionaire Dan Loeb piled into Alphabet (NASDAQ:GOOGL) in the first quarter and that bet proved to be profitable. The stock is up 17% so far this year.
Loeb isn’t alone in turning bullish on Google. For the past two years, Alphabet (NASDAQ:GOOGL) was widely considered the biggest loser of the AI revolution, because AI directly threatened its bread and butter — search. Why would anyone use Google Search when ChatGPT or Claude could just answer your question directly? But Alphabet turned the tables, embraced AI aggressively, and is now one of the clearest beneficiaries of the very trend that was supposed to destroy it. Its AI products and Google Cloud have become its biggest growth catalysts.
The cloud numbers tell the story. In Q1 2026, Google Cloud’s contracted backlog surged 93% on a sequential basis to $462.3 billion. These are not forecasts or wishful projections — these are signed contracts from enterprise customers who have already committed to paying Alphabet (NASDAQ:GOOGL). The company says roughly 50% of this backlog, or over $230 billion, is expected to convert into recognized revenue within the next 24 months. On top of that, Google Cloud grew 63% year-over-year in Q1 — significantly ahead of Microsoft Azure at 40% and Amazon Web Services at 28%. Google Cloud is simultaneously the third-largest cloud provider and the fastest-growing one, and management has explicitly said revenue would have been even higher if the company could physically build infrastructure fast enough to meet demand.
Another powerful growth catalyst that the market has largely missed is Alphabet’s (NASDAQ:GOOGL) chip business. Alphabet has begun selling its proprietary TPU chips — originally built exclusively for internal use — to outside customers. The early deals are with some of the most credible AI buyers in the world. Anthropic signed a deal worth up to $40 billion for TPU capacity, and Meta has signed a multi-billion-dollar deal to rent Alphabet’s TPUs, with talks reportedly underway for Meta to purchase them outright for its own data centers starting in 2027. Demand for these chips is so intense that Alphabet’s (NASDAQ:GOOGL) own DeepMind researchers have been placed in a queue, with chips being rationed away from internal teams to fulfill external orders — a signal that the product’s value is very real and the market for it is only getting bigger.
L1 Capital International Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q1 2026 investor letter:
Portfolio adjustments during the March 2026 quarter were relatively modest, but deliberate. We trimmed investments in AerCap, Alphabet Inc. (NASDAQ:GOOGL), HCA Healthcare and Weir Group at prices around the top end of our assessed fair value range, with all of these businesses benefitting from positive sentiment intra-quarter. Alphabet’s share price has more than doubled over the past 12 months. This reflects strong performance in core Search, continued momentum in Google Cloud Platform, and better-than-expected progress in AI (Gemini). Today Alphabet has a market capitalisation approaching US$4 trillion. Share prices and fair value are not always aligned, even for the world’s largest companies.
2. Meta Platforms (NASDAQ:META)
Billionaire Dan Loeb’s Stake: 90,000 Shares Valued at Approximately $51.49 Million (NEW position)
Billionaire Dan Loeb opened a new position in Meta Platforms (NASDAQ:META) in the first quarter, buying 90,000 shares of the social media giant. The stock is down about 15% over the past year as the market awaits ROI on Zuckerberg’s eye-popping AI spending spree.
Meta Platforms (NASDAQ:META) plans to spend at least $600 billion on AI infrastructure through 2028, which is spooking investors who fear the returns won’t justify the cost. But bulls believe this investment will pay off because Meta is deploying AI directly into its core business rather than into speculative new ventures.
Meta Platforms (NASDAQ:META) is using AI to improve its algorithm to increase engagement, which is showing impact in its ads business. The average price per ad grew 12% year-over-year in Q1 2026, nearly double the 6% growth seen just one quarter earlier.
Meta Platforms (NASDAQ:META) recently launched Meta One, its first consumer-facing paid subscription service for its AI chatbot. Users can pay $7.99/month for features like image generation, reasoning, and other AI capabilities.
Family of Apps other revenue, which captures subscriptions and business messaging, grew 74% year-over-year to $885 million in Q1, driven primarily by WhatsApp paid messaging and subscriptions revenue.
Impax US Sustainable Economy Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q1 2026 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) (Communication Services, Interactive Media & Services) is not held in the portfolio due to its unfavorable Corporate Resilience profile, including below-average scores on social risk management and governance. The stock declined materially during the quarter, reflecting broader de-rating of large-cap technology names and concerns around slowing digital advertising growth in a weaker consumer environment. The portfolio’s zero weight, given Meta’s meaningful benchmark position, made this the second-largest positive active contributor.”
1. Taiwan Semiconductor (NYSE:TSM)
Billionaire Dan Loeb’s Stake: 275,000 Shares Valued at Approximately $92.93 Million
Taiwan Semiconductor (NYSE:TSM) manufactures the physical chips designed by virtually every major semiconductor company in the world — Nvidia, Apple, AMD, Google, and Broadcom all rely on its fabs. TSMC benefits regardless of which chip architecture wins the AI race. Whether hyperscalers shift toward custom ASICs to reduce their Nvidia dependence, or stick with Nvidia GPUs, every one of those chips is fabricated on a TSMC wafer — meaning it captures volume from both sides of the competition simultaneously.
The 2nm node is where the next leg of growth comes from. It carries a wafer price reportedly above $30,000 — over 50% more expensive than the 3nm node it replaces — and is already seeing more customer tape-outs at this stage than any previous node in Taiwan Semiconductor’s (NYSE:TSM) history. Apple has already booked nearly half of initial 2nm capacity for the iPhone 18, with AMD, Intel, Qualcomm, and Broadcom all expected to follow. Q1 2026 gross margins hit a record 66.2%, prompting management to raise its long-term gross margin floor from 53% to 56%.
However, bears point to two risks. First, valuation — the stock trades at around 30x trailing earnings, near its 10-year peak. Second, and more importantly, over 90% of TSMC’s advanced node capacity sits in Taiwan, making any escalation in China-Taiwan tensions a permanent and unhedgeable overhang on the stock.
Green Alpha Investment stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2026 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has commenced mass production of 2nm chips using nanosheet Gate-All-Around transistors—the most significant architectural leap in a decade—with initial yields already reaching 70-80%, well ahead of any competitor. The N2 node delivers a 15% performance boost at the same power or a 25-30% reduction in power consumption versus 3nm, and TSMC expects to reach 100,000 wafers per month of 2nm capacity by year-end 2026. Apple, NVIDIA, AMD, and Google have all secured capacity, and 2nm revenue is projected to surpass 3nm and 5nm combined by Q3 2026.
TSMC is effectively the world’s sole manufacturer of bleeding-edge silicon at scale, with 38% of the $320 billion global foundry market and a technology lead that Samsung and Intel cannot close in the near term. With $56 billion in planned 2026 capex and pricing power to raise wafer prices 5-10% across all sub-5nm nodes, TSMC’s competitive moat is widening, not narrowing. As AI workloads demand ever more advanced process nodes and advanced packaging (CoWoS capacity expanding 70%+ annually), TSMC sits at the absolute center of the AI compute supply chain.”
While we acknowledge the potential of TSM 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 TSM and that has 100x upside potential, check out our report about the cheapest AI stock.
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