The latest earnings season has eased concerns about a potential artificial intelligence bubble. Increased spending by hyperscalers and other companies has reinforced confidence in the demand for AI infrastructure and software solutions.
Investors keen on capitalizing on the AI boom can track recommendations from top Wall Street analysts, who give key insights into a company’s ability to capture AI-driven demand despite macro uncertainties and rising competition.
Here are three stocks favored by some of Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.
Datadog
AI-powered observability and security platform Datadog (DDOG) is this week’s first pick. In early May, the company impressed investors with its market-beating first-quarter results and robust outlook.
Following an investor webinar with Vikram Thaker, the senior director of North American business at global consulting firm Cognizant, Bank of America analyst Koji Ikeda reiterated a buy rating on Datadog stock and raised his price target to $260 from $225. The analyst said that following the webinar, he is more positive on the demand backdrop for “best-of-breed infrastructure software vendors” such as Datadog and JFrog. He believes that these two companies have the ability to surpass Bank of America and the Street’s estimates.
Ikeda added that the demand for high-quality observability and security platforms like Datadog will increase as enterprises transition to the cloud and AI, making everything more complex. Consequently, he expects the momentum in Datadog’s performance to continue.
The five-star analyst highlighted that Datadog delivered first-quarter results that were way above estimates. Also, the second-quarter revenue growth outlook of more than 30% reinforced Ikeda’s confidence in DDOG’s potential to generate further acceleration in its growth. He emphasized that new large AI-related deals prove Datadog’s mission-critical positioning and robust AI-led tailwinds.
“Execution remains top notch, with improving demand trends supporting further beat-and-raise potential,” said Ikeda.
Ikeda ranks No. 867 among more than 12,200 analysts tracked by TipRanks. His ratings have been profitable 55% of the time, delivering an average return of 10.4%. See Datadog Hedge Funds Activity on TipRanks.
Micron Technology
Micron Technology (MU) stock is having a solid run this year, thanks to unprecedented demand for memory fueled by the ongoing AI boom and elevated pricing stemming from supply challenges. Despite the impressive rally in MU stock, UBS analyst Timothy Arcuri significantly raised his price target to $1,625 from $535, while reaffirming a buy rating.
“We believe the market will start to put a more ‘normal’ multiple on the stock and MU will continue to re-rate higher as more details emerge about the structural changes AI has driven to the entire memory complex,” said Arcuri.
Notably, the five-star analyst again raised his calendar years 2027 to 2029 earnings per share estimates, citing traction in long-term agreements across the memory industry. Arcuri highlighted that these new LTAs are of longer durations, involve fixed-volume commitments, and have a partially fixed pricing structure. They are in contrast to offtake agreements in prior periods, which were simply volume-based.
Furthermore, Arcuri’s supply chain checks on LTAs across the industry indicate that up to 30% of double data rate memory volumes could soon be locked in at pricing only slightly below current levels. The analyst explained that such agreements will allow Micron to trade some near-term revenue for strong demand visibility and a more stable earnings trajectory.
Based on these LTAs, Arcuri expects Micron’s EPS to remain easily above $100 over 2027-2029 and expects the company to deliver $400 billion in free cash flow over this period. Specifically, the analyst raised his 2027, 2028, and 2029 EPS estimates to $155, $167, and $117, respectively, from $133, $122, and $77.
Remarkably, Arcuri ranks No. 2 among more than 12,200 analysts tracked by TipRanks. His ratings have been profitable 81% of the time, delivering an average return of 56.6%. See Micron Ownership Structure on TipRanks.
Lam Research
Lam Research (LRCX), a provider of wafer fabrication equipment and services to the semiconductor industry, is this week’s third stock pick. The AI-led surge in semiconductor manufacturing has boosted demand for Lam Research and triggered a strong rally in its shares.
Top Mizuho analyst Vijay Rakesh increased his price target for LRCX stock to $380 from $330 and reiterated a buy rating. His higher price target reflects strength in demand amid elevated WFE spending.
Rakesh now expects WFE spending to rise 23% to $153 billion in 2026, with 2027 spending to see a 24% surge to $190 billion. In fact, he sees additional upside to these estimates, based on increased capex by Taiwan Semiconductor Manufacturing, or TSMC; Samsung; and Micron. Specifically, the total memory WFE investment is projected to be about $112 billion this year.
“With higher revised 2026E/2027E WFE spend, we now see significant upside to consensus estimates for LRCX, MKSI, and AMAT, with LRCX potentially offering the most compelling estimate upside as the steady outperformer vs. WFE and peers,” said Rakesh.
Also, the five-star analyst expects the WFE market to continue to benefit from accelerating NAND node transitions, with Lam Research highlighting $40 billion in node transition spending. The majority of this investment is expected before the end of 2027.
Rakesh ranks highly as well. He is #4 among more than 12,200 analysts tracked by TipRanks. His ratings have been successful 74% of the time, delivering an average return of 79.2%. See Lam Research Statistics on TipRanks.
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