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10 Best AI Stocks to Buy After Wells Fargo’s Outlook Upgrade

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Wells Fargo is no longer telling investors to stay away from the AI infrastructure trade. In a new note, analysts led by Ohsung Kwon raised the firm’s view on US AI infrastructure to neutral from negative.

The change follows a deep selloff. Semiconductor shares trade about 38% below their June highs, and the multiples investors pay for them have compressed. At current prices, the analysts said, valuations imply earnings growth of only about 8% a year.

A compressed multiple means investors now pay less for each dollar of expected profit. That can happen even while earnings keep rising, which is why a stock can fall while its business improves.

Politics Adds a New Worry to the AI Spending Debate

Democratic wins in the midterm elections, including in states that oppose new data centers, fueled concerns about regulation. A stricter permitting climate could slow construction and raise its cost, which would cut into the spending that has fed AI company revenue.

The selloff has erased about $3 trillion from the S&P 500. Readers following the pullback can find the names analysts like most in our list of oversold AI stocks with 50%-plus upside. Kwon and his team said the risk-reward is now reasonable after the drop.

Why 2028 Worries Analysts More Than 2027

AI spending added about 8 percentage points to S&P 500 earnings growth over the past year. The Wells Fargo analysts wrote that “The tailwind is expected to continue in 2027,” and that it largely disappears in 2028 as spending growth slows and depreciation costs rise.

Depreciation explains much of the concern. Companies spread the cost of data centers and chips over several years, so those charges keep landing on income statements even after the buying slows. Those charges are real expenses even though the cash left the company earlier. Profit growth then shrinks, just as the spending that lifted it fades. Analysts build their forecasts from spending levels, so a plateau in budgets changes the math quickly.

The bigger risk, the analysts said, is a downturn in earnings per share once capital spending peaks. They also pointed to extra supply arriving in 2028 that prices do not yet reflect. For investors, the question is how much of that is already in share prices after the drop.

Companies still growing quickly through the selloff are the subject of our roundup of the fastest-growing AI stocks. The Wells Fargo shift is a move from caution to a neutral stance, not a call that the selloff is over.

Photo by Arturo Añez on Unsplash

Our Methodology

For this article, we used Finviz to screen for AI stocks with an average upside potential of at least 30%. We have ranked these stocks in ascending order of their upside potential, as of November 12, 2026. We also list each stock’s number of hedge fund holders as of Q2 2026, from our database of 1,006 hedge funds.

At Insider Monkey, we are obsessed with what hedge funds do. 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 strategy selects 14 small-cap and large-cap stocks every quarter and has returned 612% since May 2014, beating its benchmark by 375 percentage points (see more details here).

10 Best AI Stocks to Buy After Wells Fargo’s Outlook Upgrade

10. Lam Research (NASDAQ:LRCX)

Average Upside Potential: 55%

Number of Hedge Fund Holders: 139

Bernstein analyst Stacy Rasgon kept a Buy rating and a $350 target on Lam Research on November 2, after the stock lost about 34% in a month.

Lam makes the machines that chipmakers use to etch and deposit the thin layers inside a chip, and memory makers are among its largest customers. As chips stack more layers, each factory needs more of those steps. The selloff came after a record September quarter. Guidance for the December quarter only matched expectations, and worries about AI spending pulled down the whole chip equipment group. China made up 35% of September-quarter revenue and is expected to fall sharply in December, which is the main near-term drag.

Other firms trimmed their targets after the drop, and the Street’s average target slipped from its October peak, though it still sits above Bernstein’s. Part of Lam’s cushion comes from service work on machines already installed, which we examined in our look at its fast-growing support revenue. Memory makers’ spending plans decide how quickly orders come back. The next test comes when the company reports December-quarter results in late January.

9. ServiceNow (NYSE:NOW)

Average Upside Potential: 55%

Number of Hedge Fund Holders: 115

Argus reiterated a Buy rating and a $170 target on ServiceNow on November 3. The stock trades 42% below its high from a year ago.

The drop traces to weak guidance for fourth-quarter contracted backlog. ServiceNow sells subscription software that routes work requests and automates tasks for IT, HR and customer service teams, so backlog is the best early signal of future sales. Management blamed the weak figure on the timing of deals, and Argus’s call rests on that explanation holding up. The target works out to 37 times expected earnings, below the stock’s five-year average of 53 times. The company is also absorbing its purchase of Armis, a security company, which adds costs. Bears point to analysts trimming their 2026 and 2027 earnings estimates over the past month.

Bulls lean on the AI product line, where ServiceNow raised its 2026 annual contract value goal for AI products to $1.7 billion. Investors are watching how fast those new AI sales convert. Whether cash flow can keep up with that spending is the question we raised in our piece on ServiceNow’s AI expansion.

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