10 Best and Cheap Stocks to Buy Heading into 2027

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Wall Street’s AI trade took a hard hit on October 30. Reuters reported that a selloff in tech shares pushed MSCI’s global index down 1.5%, after results from Intel and Amazon showed how much cash AI spending is burning. Intel fell 28.6%, and the Philadelphia semiconductor index lost more than 7%, its biggest one-day drop since late June. Alphabet’s shares had already slid 12.6% a day earlier, after it reported that its AI spending pushed its cash flow negative.

The nervousness had been building. Reuters reported on October 15 that South Korea’s KOSPI index, home to some of the world’s largest chipmakers, fell roughly 8% in a single session. Saxo Bank chief investment strategist Charu Chanana said the Asian selloff looked less like a sudden deterioration in technology fundamentals and more like a repricing of the cost of capital.

READ ALSO 10 Best Robotics Stocks to Buy That Are More Than 30% On Sale

Rates are a large part of that story. Bloomberg reported on October 4 that benchmark 10-year Treasury yields sat near 5.3%, and Franklin Templeton Institute head market strategist Chris Galipeau said the conversation would change if they reached 6%. Bloomberg Intelligence analyst Robert Schiffman added that hyperscalers such as Meta, Amazon, Alphabet, Microsoft and Oracle now have cash needs far beyond what they generate, which pushes them toward debt markets.

Oracle is one of the companies Schiffman names, and the gap between its share price and the view on Wall Street is the subject of our analysis of why most analysts still like Oracle after its steep fall.

Chip Stocks Face a Different Test

For chipmakers, the worry has been competition as much as cost. Bloomberg reported on October 13 that the Kospi fell 5.5% in one day after China’s CXMT said it had achieved a memory-chip breakthrough, which undercut the bullish case for its global peers. The report added that Broadcom chief executive Hock Tan likened the approach of some AI investors to gambling, and warned that the industry can run into funding limits.

Nvidia sits at the center of the debate, and you might also be interested in reading our piece on whether Nvidia is trading as if growth will stop.

The same Bloomberg report said JPMorgan Chase and Goldman Sachs took the rare step of limiting their exposure to a loan for AI startup Volta Infrastructure Holdings. In Asia, the collapse of Nvidia-backed data center operator Firmus Grid’s initial public offering is making investors far pickier about AI deals that depend on future earnings.

10 Best and Cheap Stocks to Buy Heading into 2027

Our Methodology

For this article, we started by screening stocks in our hedge fund database and selected undervalued stocks with a forward P/E under 15. Then we kept those with a forward expected revenue growth rate of at least 15% to focus on cheap stocks with growing sales. We took the 10 with the largest market caps and ranked them in ascending order of the number of hedge funds that have stakes in them, as of Q2 2026, from our database of 1,006 hedge funds.

Note: All data was sourced on November 2, 2026.

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 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 and Cheap Stocks to Buy Heading into 2027

10. Dell Technologies (NYSE:DELL)

Market Cap: $261.88 billion

Forward P/E: 13.30

Forward Revenue Growth: 34.15%

Number of Hedge Fund Holders: 77

Dell’s chief financial officer, David Kennedy, told analysts the company is raising its expectations across every line of business, and the numbers behind that claim are large. Dell booked a record $60.9 billion of AI server orders in its fiscal second quarter and ended it with a $95 billion backlog of AI servers waiting to ship. It lifted its full-year revenue outlook to $192 billion as a result.

The story is not only about AI machines. Revenue from traditional servers and networking jumped 122%, as customers replace aging data center equipment and need more general computing power to run AI and agentic software. Management said customers are modernizing data centers for performance, efficiency and resilience, and that demand is running ahead of the supply Dell can get, which keeps orders coming even while some components are tight. It sees the opportunity reaching well beyond AI-optimized machines.

Dell also returned a record amount to shareholders in the quarter through buybacks and dividends. That backlog is the subject of our look at whether Dell’s order book justified the end of its discount.

9. AppLovin (NASDAQ:APP)

Market Cap: $79.61 billion

Forward P/E: 12.06

Forward Revenue Growth: 28.88%

Number of Hedge Fund Holders: 88

AppLovin’s revenue grew 53% from a year earlier in the second quarter, and its adjusted EBITDA margin reached 84%, yet the stock fell sharply because revenue landed just below the company’s own guidance. Management said the shortfall came from a slower pace of improvements to the advertising models that match app advertisers with users, not from weaker demand from advertisers.

The next round of model improvements arrived right after the quarter ended and is already live, according to chief executive Adam Foroughi. The company guided to third-quarter revenue growth of 46% to 48%, even after allowing for the higher computing costs of training bigger models. Chief financial officer Matt Stumpf said AppLovin spends on that computing only when it expects extra revenue in return, and that margins should stay near current levels over the long run.

Foroughi also said he believes the business can compound at roughly 30% a year as its consumer and e-commerce advertisers scale. The company kept buying back shares and carries little net debt. Whether the market has marked the stock down too far is the question behind our look at why AppLovin’s discount may be unwarranted ahead of its next report.

8. Charles Schwab (NYSE:SCHW)

Market Cap: $153.97 billion

Forward P/E: 11.33

Forward Revenue Growth: 17.29%

Number of Hedge Fund Holders: 95

Schwab’s clients are handing it more of their money and then using more of what it sells. Core net new assets, the money clients add to their accounts, hit a record $190 billion in the third quarter, up 38% from a year earlier, and chief executive Rick Wurster said that growth is coming from every one of its client-facing businesses and every kind of client. Managed investing flows also set a quarterly record.

That growth is turning into profit faster than costs are rising. Revenue reached a record while expenses grew more slowly, which lifted Schwab’s adjusted pre-tax profit margin to 54.8%. Schwab is also rolling out an AI assistant to handle administrative work so its advisers can spend more time with clients.

Lending adds a second engine. Bank loan balances grew 35% as clients borrowed against their portfolios through margin loans and pledged-asset lines, and chief financial officer Mike Verdeschi expects the interest margin to keep widening into 2027. What protects a franchise like this is the subject of our analysis of whether Schwab’s economic moat is widening or narrowing.

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