Several companies have offered high yields only to cut or eliminate the dividend later. That’s been the case in the telecom space in the past. More recently, we’ve seen it with banks and oil companies. Shell’s dividend cut in 2020 was a real shock to dividend investors, as it had so long been regarded as one of the bedrock companies of the dividend universe. Conagra Brands also cut its dividend by 50% in July 2026 as its business was under pressure. The move was driven by shrinking margins and the need to free up cash for debt reduction and a turnaround. It wasn’t so much a case of being unable to pay the dividend at that point in time as it was a decision to strengthen he company’s balance sheet over the longer term. Even companies with long records of dividend growth have faced such setbacks. Explore 10 Dividend Aristocrats That Slashed Their Dividends to see examples of established dividend payers that have cut their payouts in the past.

Still, not every high yield is a trap. At times, markets can become excessively bearish on companies with solid fundamentals and sustainable cash flows. This can present opportunities to buy the shares at a discount to their intrinsic value. The issue is to work out which are the genuinely undervalued businesses and which are simply companies whose high yields are a reflection of underlying weakness.

Also read: Dividend Aristocrats Ranked By Yield: Top 10 Stocks

We saw this opportunity in British American Tobacco in June 2024. The stock had lost about 40% over the period as a result of the non-cash impairment charges. However, we thought that the underlying business was sound. The impairment charges that BTI had reported were charges against the acquired brands rather than equivalent cash outflows. The market treated the company as a melting ice cube and pushed its forward P/E multiple to 7.

So, we decided to add the stock to our Premium Readership Newsletter’s portfolio. At the time BTI had a dividend yield of around 10%. Over the next 16 months, the share price nearly doubled, and our subscribers also received a 10% dividend income. Read BTI’s full analysis here: British American Tobacco Pays a 6% Dividend. Can its Business Sustain it?

Our own experience is that high-yield dividend stocks are worth looking at. An investor who can pick out the genuinely undervalued business from the ones with unsustainable payouts can achieve both good dividend income and good capital gains. Of course, that’s not assured in any way, and careful analysis of cash flow, debt, and dividend sustainability remains essential.

So, what are the best dividend stocks with the highest yields? We provided the list of 10 dividend stocks with the highest yields here. You can see the top 5 stocks below.

Our Methodology:

For this list, we screened dividend-paying companies with market capitalizations of at least $500 million and ranked their appeal based on dividend yields. From an initial group of 30 stocks, we selected the 10 companies held by the largest number of hedge funds, according to Insider Monkey’s Q2 2026 database. These stocks offer dividend yields ranging from over 15% to as high as 33%. The stocks are ranked according to the number of their hedge fund investors.

5. Arbor Realty Trust, Inc. (NYSE:ABR)

Number of Hedge Fund Holders: 25

Dividend Yield as of October 23: 32.19%

Arbor Realty Trust, Inc. (NYSE:ABR) is a mortgage REIT that lends to owners of apartment buildings and other real estate properties. It also earns fees by servicing mortgages, including loans backed by Fannie Mae and Freddie Mac.

ABR has a dividend yield of over 32%, and its high dividend yield reflects serious concerns about its earnings and loan portfolio, not simply generous shareholder returns. In the second quarter of 2026, the company reported distributable earnings of just $0.10 per share, or $0.15 excluding certain realized losses, against a quarterly dividend of $0.17. It also recorded a $37.3 million GAAP net loss and $38.2 million in loan-loss provisions. These figures raise questions about how comfortably earnings can support the payout.

Arbor has also reduced its quarterly dividend from $0.30 in late 2025 to $0.17 in 2026. At the latest declared rate, annualized dividends equal $0.68 per share. The yield looks unusually high partly because the share price has fallen sharply.

Hedge funds still see potential in the stock. Insider Monkey lists Coatue Management, Marshall Wace, Omega Advisors, Scoggin and Citadel among its holders. In the latest data, Omega increased its position by 7% and Citadel by 11%. Investors may be betting on a recovery in real estate lending, improved financing costs, or a rebound in the depressed share price. These positions do not necessarily signal confidence in the dividend, though, and some funds may use hedging strategies. For ordinary investors, the key question is whether Arbor can recover enough earnings to cover its dividend. Its large mortgage-servicing business offers recurring fee income, but rising loan losses and weak distributable earnings make the payout risky.

See what other mortgage finance stocks billionaires are investing in: 10 Best Mortgage Finance Stocks To Buy According to Billionaires

4. Annaly Capital Management, Inc. (NYSE:NLY)

Number of Hedge Fund Holders: 26

Dividend Yield as of October 23: 15.80%

Annaly Capital Management, Inc. (NYSE:NLY) is a well-established mortgage REIT with a clear focus on mortgage-backed securities, residential loans, and mortgage servicing rights. The company’s strategy involves borrowing funds at relatively low rates and investing in higher-yielding mortgage assets, aiming to earn income from the spread between these rates. While the approach is straightforward, investors must understand the underlying risks.

The stock has a dividend yield of nearly 16%, driven by its leveraged business model, which relies on the spread between borrowing costs and investment returns. In the third quarter of 2026, Annaly reported an economic net interest spread of 1.42%, excluding premium amortization. This relatively narrow margin means that even modest changes in interest rates or borrowing costs can significantly impact profitability. Leverage can enhance returns, but it also increases exposure to market volatility. Read the analysis here.

Institutional interest in Annaly remains consistent. Insider Monkey data from the second quarter of 2026 indicates that 26 hedge funds held positions in the company, amounting to approximately $320 million. This ongoing support from professional investors reflects confidence in Annaly’s diversified mortgage portfolio and its ability to deliver income, particularly if market conditions become more favorable.

Annaly declared a dividend of $0.75 per share for the third quarter of 2026, which would total $3 per share annually if maintained. This payout was supported by earnings available for distribution of $0.80 per share, resulting in a coverage ratio of approximately 1.07 times. While this coverage is a positive indicator for shareholders, it does not guarantee that future dividends will remain at this level if market conditions change.

3. International Seaways, Inc. (NYSE:INSW)

Number of Hedge Fund Holders: 27

Dividend Yield as of October 23: 18.23%

International Seaways, Inc. (NYSE:INSW) owns and operates oil tankers that transport crude oil and refined petroleum products worldwide. Its high dividend yield reflects the strong cash flows generated during favorable tanker-market conditions, rather than a fixed income stream.

In the second quarter of 2026, the company’s time charter equivalent revenue rose 130% year over year to $434.2 million as average daily tanker rates increased sharply. The company follows a variable dividend policy, generally distributing at least 85% of adjusted net income to shareholders in strong periods. It paid $6.70 per share in dividends declared or paid during 2026 through its August announcement, including a $5.05-per-share payout. The supplemental portion can shrink when tanker earnings weaken, so investors should not treat the current yield as guaranteed.

Hedge fund activity also signals interest in the company’s cash-generation potential. Insider Monkey’s visible holdings data shows CastleKnight Management increased its position by 103% and AQR Capital Management by 16%, while Hosking Partners reduced its stake by 12%. These contrasting moves suggest selective interest, not universal confidence. The investment case rests on strong tanker rates, cash returns, and fleet value, but earnings remain sensitive to shipping demand and geopolitical disruptions.

Find what other shipping stocks analysts are bullish on: 10 Best Shipping Stocks to Buy According to Analysts

2. AGNC Investment Corp. (NASDAQ:AGNC)

Number of Hedge Fund Holders: 28

Dividend Yield as of October 23: 16.29%

AGNC Investment Corp. (NASDAQ:AGNC) invests mainly in mortgage-backed securities guaranteed by US government agencies. It borrows money to buy these securities and profits from the difference between the interest earned on its portfolio and its funding costs.

AGNC’s high dividend yield reflects its monthly payout and the risks attached to its leveraged portfolio. In Q2 2026, it used 7.4 times leverage relative to tangible net book value at risk. Its net spread and dollar roll income fell from $0.42 per share in Q1 to $0.40 in Q2, against a quarterly dividend of $0.36. That left only $0.04 per share of coverage. AGNC declared monthly dividends of $0.12 per share during Q2. Its payout was covered by this income measure, but the narrowing margin leaves less room for further declines in earnings. Read the full analysis here. 

Insider Monkey reported that 28 hedge funds held AGNC at the end of Q2 2026, down from 33 in the previous quarter, while their combined holdings fell from about $190 million to $120 million. Its latest accessible holdings data showed Millennium Management increasing its put-option position by 151%, while Citadel increased its put position by 65%. These are bearish or hedging trades, not straightforward evidence that the funds expect the stock to rise.

1. Dynex Capital, Inc. (NYSE:DX)

Number of Hedge Fund Holders: 29

Dividend Yield as of October 23: 18.68%

Dynex Capital, Inc. (NYSE:DX) is a mortgage REIT that invests primarily in agency mortgage-backed securities, backed by U.S. government-sponsored entities. It finances its purchases of these securities through borrowing and uses interest rate derivatives to hedge some of the risk. The high dividend yield is a reflection of the income nature of its leveraged portfolio and also of the risks of the borrowings, interest rate movements, and the market value of its assets. Read the company’s valuation analysis here.

Dynex currently has a dividend yield of nearly 19% because its common dividend is so large in relation to its share price. Mortgage REIT earnings are very sensitive to interest rates and financing costs. Q2 2026 saw Dynex generate $94.3 million in economic net interest income, up from $81.0m in Q1 as the portfolio grew, but its net interest spread was only 1.17%, which again highlights the fragility of its returns and the fact that they are so dependent on a very narrow spread between asset yields and the cost of funds.

Insider Monkey’s Q2 2026 data shows that 29 hedge funds held stakes in DX. Millennium Management upped its Dynex Capital position by 155% to 7.02 million shares, and Marshall Wace LLP increased its position by a massive 2919% to 6.41 million shares. Both are significant increases and suggest they saw an opportunity in the mortgage REIT, either in terms of income or the interest rate outlook. The filings themselves don’t state why they’ve made these purchases.

Click to read the list of the 10 Dividend Stocks with the Highest Yields here.

While we acknowledge the risk and potential of DX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DX and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy

Disclosure: None. Follow Insider Monkey on Google News.

Several companies have offered high yields only to cut or eliminate the dividend later. That’s been the case in the telecom space in the past. More recently, we’ve seen it with banks and oil companies. Shell’s dividend cut in 2020 was a real shock to dividend investors, as it had so long been regarded as one of the bedrock companies of the dividend universe. Conagra Brands also cut its dividend by 50% in July 2026 as its business was under pressure. The move was driven by shrinking margins and the need to free up cash for debt reduction and a turnaround. It wasn’t so much a case of being unable to pay the dividend at that point in time as it was a decision to strengthen he company’s balance sheet over the longer term. Even companies with long records of dividend growth have faced such setbacks. Explore 10 Dividend Aristocrats That Slashed Their Dividends to see examples of established dividend payers that have cut their payouts in the past.

Still, not every high yield is a trap. At times, markets can become excessively bearish on companies with solid fundamentals and sustainable cash flows. This can present opportunities to buy the shares at a discount to their intrinsic value. The issue is to work out which are the genuinely undervalued businesses and which are simply companies whose high yields are a reflection of underlying weakness.

Also read: Dividend Aristocrats Ranked By Yield: Top 10 Stocks

We saw this opportunity in British American Tobacco in June 2024. The stock had lost about 40% over the period as a result of the non-cash impairment charges. However, we thought that the underlying business was sound. The impairment charges that BTI had reported were charges against the acquired brands rather than equivalent cash outflows. The market treated the company as a melting ice cube and pushed its forward P/E multiple to 7.

So, we decided to add the stock to our Premium Readership Newsletter’s portfolio. At the time BTI had a dividend yield of around 10%. Over the next 16 months, the share price nearly doubled, and our subscribers also received a 10% dividend income. Read BTI’s full analysis here: British American Tobacco Pays a 6% Dividend. Can its Business Sustain it?

Our own experience is that high-yield dividend stocks are worth looking at. An investor who can pick out the genuinely undervalued business from the ones with unsustainable payouts can achieve both good dividend income and good capital gains. Of course, that’s not assured in any way, and careful analysis of cash flow, debt, and dividend sustainability remains essential.

Our Methodology:

For this list, we screened dividend-paying companies with market capitalizations of at least $500 million and ranked their appeal based on dividend yields. From an initial group of 30 stocks, we selected the 10 companies held by the largest number of hedge funds, according to Insider Monkey’s Q2 2026 database. These stocks offer dividend yields ranging from over 15% to as high as 33%. The stocks are ranked according to the number of their hedge fund investors.

10. Prospect Capital Corporation (NASDAQ:PSEC)

Number of Hedge Fund Holders: 13

Dividend Yield as of October 23: 28.38%

Prospect Capital Corporation (NASDAQ:PSEC) is a business development company (BDC) that makes loans to privately held mid-sized U.S. businesses. The majority of its income is derived from interest on the loans it makes and from returns on its other investments.

PSEC is offering a fantastic dividend yield of 28.3%, mainly because the share price has dropped dramatically in relation to the monthly dividend payments. The company declared monthly dividends of $0.035 per share for both September and October 2026. That’s $0.42 per share annually if that continues. At the current share price, that works out as a very high yield. The market is clearly pricing in a lot of concern about the company’s earnings, its investment portfolio, and its ability to continue paying the dividend.

At the end of Q2 2026, 13 hedge funds held PSEC, which suggests that some of the institutional investors see some potential in the stock. They may be looking for a rebound in the share price, drawn in by the income potential or expecting some improvement in the portfolio. Prospect has also increased its focus on first-lien secured loans, which give the lender a first charge on the borrower’s assets in the event of default. First lien secured loans made up 72.5% of their middle market portfolio by cost as at June 2026.

There are still real risks. PSEC reported net investment income of $0.15 per share in the June quarter, covering the $0.115 distribution. Net income attributable to common shareholders was negative $0.08 per share. Hedge fund ownership doesn’t necessarily equate to future returns either, as the funds in question may have very different strategies and time horizons.

Take a look at this analysis: Prospect Capital’s (PSEC) Payout Shrinks Even As Its Deals Pay Off

The selloff has punished AI capacity builders and hardware suppliers particularly hard. Between September 23 and October 23, Cerebras lost 46.0%, CoreWeave fell 37.6% and Nebius dropped 30.0%. Seagate and Coherent each lost more than 30%. These businesses face different pressures: neoclouds must finance construction, optical suppliers depend on customer deployments, and storage manufacturers face the possibility that new competing capacity will weaken pricing. Rising demand alone cannot protect their shares.

On October 14, Gartner warned that more than $3.5 trillion of AI infrastructure spending could face impairment by 2030 if providers maintain their investment pace. A data center can fill up and still earn too little to justify its construction cost. Interest accrues before rent arrives, and delays extend that gap. CoreWeave has floating-rate debt that exposes it to higher interest expense; IREN faces financing risk on future expansion even where existing borrowing is fixed or hedged. See how those differences affect the cash left for shareholders here.

Financing can also change what shareholders own. Raising equity may keep a project on schedule while spreading its eventual profits across more shares. Borrowing preserves ownership initially but gives lenders a prior claim on cash. A company can therefore deliver its promised revenue growth without delivering the return implied by an old price target.

Semiconductor investors face another problem: AI spending can keep growing while customers shift orders between competing chip designs. That makes an industry growth forecast a poor substitute for a company-specific earnings forecast. A chip designer must defend its share and pricing; a foundry may retain the manufacturing work when customers switch designs, but still suffers if overall orders slow. See how Nvidia and TSMC divide those risks here.

Investors should not assume analysts have identified the bottom. A target set 20% above a stock’s former price can suddenly imply 100% upside after the shares fall 40%, even without any improvement in the business. Analysts can update late, and further cuts over the coming weeks could erase much of the apparent opportunity. Some cuts have already arrived: UBS lowered its CoreWeave target from $120 to $105 on October 23.

That is why we pair targets with short interest and hedge fund ownership. Heavy short interest can expose disagreement, although convertible-debt and transaction hedges can inflate it. Quarterly holdings cannot identify who bought this month’s dip. Coatue’s Intel and Cerebras positions show why institutional backing also needs context. Neither measure guarantees a recovery. Here, oversold means sharply sold down, not necessarily below a technical RSI threshold.

So, which oversold AI stocks offer the most upside according to Wall Street analysts? We listed the 10 oversold AI stocks with highest upside here. You can find the top 5 below.

Copyright: ralwel / 123RF Stock Photo

Methodology

We revisited a 50-stock selloff shortlist drawn from a review of 124 U.S.-listed companies across the AI ecosystem. The shortlist used split-adjusted closing-price changes from September 23 through October 23, 2026, and required sufficient price history and at least three identifiable analyst targets in the consensus dataset. Its stocks had declined at least 12.41% over that window.

For this large-company list, we required a market capitalization of at least $20 billion and direct commercial exposure to AI computing infrastructure: chips, cloud capacity, networking, data-center equipment, memory or storage. Consumer internet and advertising platforms were excluded. These restrictions left 27 companies from the original selloff shortlist. The group includes focused infrastructure suppliers and diversified companies with substantial infrastructure businesses; it is not a pure-play-only screen.

We ranked those 27 companies by upside to their average 12-month S&P Global analyst price target displayed by Stock Analysis. Upside equals the target divided by the October 23 closing price, minus one. Missing, insufficient or unreconciled target coverage was excluded. The five highest-upside stocks from the ten-stock ranking appear below, counting down to number one; alphabetical ticker order breaks ties. Market capitalizations and targets use the October 23 snapshot.

Short interest uses the September 30 settlement-date snapshot and is expressed as a percentage of estimated float, except for Cerebras, where conflicting float estimates make the number of shares sold short more reliable. Hedge fund counts come from Insider Monkey’s Q2 2026 database and are compared with Q1 where meaningful. These positioning measures provide context and do not determine the ranking. Float estimates vary by provider and can lag share issuance. All prices and targets are in dollars.

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 returned 599.2% from May 2014 through June 2, 2026, beating its benchmark by 372 percentage points (see more details here).

#5. Credo Technology Group Holding Ltd (NASDAQ:CRDO)

Analyst Upside: 89.48%

30-Day Decline: 24.03%

Short Interest: 6.60% of Float

Number of Hedge Fund Holders: 86

Credo makes the connections that move data between expensive AI processors. Its active electrical cables and optical connectivity products address a practical problem — adding computing power isn’t quite as useful when network links cannot keep up. Fiscal first-quarter revenue grew 114.7% to $479 million, and management forecast $525 million to $535 million for the following quarter. Bulls expect faster, more power-efficient links to gain importance as clusters expand.

The shares lost 24.0% over the month as AI hardware valuations came under pressure. Credo had already sold off after its September 1 results, before this screening window. GAAP operating income fell 22.6% sequentially to $120.7 million as GAAP gross margin slipped from 68.2% to 64.5% and operating expenses increased. Midpoint guidance implied a recovery to roughly $137 million of GAAP operating income, up 13.6%, with adjusted gross margin holding around 68%. Bulls therefore need the forecast recovery to materialize after the reported earnings deterioration.

Q2 hedge fund holders rose to 86 from 59, although Point72 reduced its share count by 17.7% to 6.15 million. It still held $1.67 billion at June-end, so the reduction was substantial. Shares sold short then jumped 31.0% between September settlement dates, reaching 6.60% of float. Neither the major-holder trim nor the growing short position fits an uncomplicated bullish reading of the higher fund count.

Credo sells connectivity into networks whose designs are still evolving. Delos’s bid to connect different vendors’ AI accelerators explains why customers may look beyond Nvidia’s integrated systems; whether those designs use Credo products remains a separate question.

#4. Western Digital Corporation (NASDAQ:WDC)

Analyst Upside: 94.52%

30-Day Decline: 27.45%

Short Interest: 4.90% of Float

Number of Hedge Fund Holders: 98

Western Digital’s October 22 results make its 27.4% monthly decline especially striking. Revenue rose 55% to $4.38 billion, and management guided to $5.1 billion next quarter with a 60.5% adjusted gross margin at the midpoint. Bulls are betting that AI-generated data keeps expanding demand for bulk storage, allowing higher shipments and improved pricing to reinforce each other.

The concern, however, is how long those conditions can last. Reports of Toshiba’s planned hard-drive expansion hit the sector in early October. New competing supply could give cloud customers more bargaining power just as suppliers enjoy incredibly strong margins. Financing pressures on the AI buildout add another risk to customer orders. That makes the price paid for current profits important: our Western Digital–Micron comparison tests how weaker cash generation changes the valuation of each stock.

The latest quarter generated $1.38 billion of free cash flow, giving Western Digital cash to fund investment and shareholder returns. Hedge fund holders increased to 98 from 83 in Q2 in Insider Monkey database, although AQR reduced its stake by 518,617 shares, or 15.0%, to 2.94 million. Its remaining position was worth $1.88 billion at June-end, that’s pretty significant despite the reduction. September 30 short interest was 4.90% of float. However, both snapshots are from before the Toshiba reports. Analyst caution is more recent, with TD Cowen cutting its target from $540 to $430 on October 23, despite the strong results. Its revised target sits far below the $668.50 consensus.

#3. Coherent Corp. (NYSE:COHR)

Analyst Upside: 96.11%

30-Day Decline: 30.38%

Short Interest: 5.66% of Float

Number of Hedge Fund Holders: 105

Coherent lost 7.9% on October 12 alone as optical stocks sold off following concerns about funding the AI buildout. Its full-month decline reached 30.4%. That financing issue reaches Coherent through its customers. Optical components generate revenue when networks are built, so deferred data-center projects can delay orders even when computing demand remains strong.

Whale Rock increased its Coherent stake by 25.3% to 1.22 million shares in Q2, even as the overall hedge fund count fell to 105 from 114. Its $482.1 million position represented 3.87% of its reported 13F portfolio at June-end. The falling count therefore masks substantial buying by an existing holder. September 30 short interest was 5.66% of float. Susquehanna then lowered its target from $425 to $350 on October 21. That puts its revised target well below the $410.43 consensus.

Bulls see a product transition that can outlast the spending scare. Moving more data between AI processors increases demand for optical links, and Coherent supplies the photonic components and systems behind those connections. Fiscal fourth-quarter revenue rose 34% to $2.05 billion, while GAAP gross margin improved 2.77 percentage points to 38.5%. Expanding production while preserving that margin gain would turn rising demand into stronger earnings.

The same shift toward faster optical links is also creating opportunities for component suppliers such as MACOM. Our comparison explains how MACOM’s 3.2-terabit chipset and Coherent’s production scale offer different exposure to that upgrade.

#2. CoreWeave, Inc. (NASDAQ:CRWV)

Analyst Upside: 159.18%

30-Day Decline: 37.58%

Short Interest: 17.24% of Float

Number of Hedge Fund Holders: 71

CoreWeave’s 37.6% slide points to the market’s growing worries over the cost of financing AI capacity. Second-quarter net interest expense reached $640 million, against $2.575 billion of revenue. Floating-rate borrowing leaves earnings exposed when rates rise, even if demand for computing remains strong. The distinction is existing debt versus future funding: our CoreWeave–IREN comparison traces how higher rates reach today’s interest bill and tomorrow’s expansion costs.

On the other hand, hedge fund ownership rose to 71 holders from 63 in Q2. September 30 short interest reached 17.24% of float. Shares sold short increased 9.1% from mid-September. So there’s both interest and skepticism among hedge funds, although gross short positions can include hedges. The $140.58 consensus target implies 159.18% upside from $54.24; UBS nevertheless cut its target from $120 to $105 on October 23.

Bulls have operating growth to point to, as quarterly revenue more than doubled, and June-end revenue backlog reached about $104 billion. That backlog excludes over $25 billion of commitments added early in Q3, but remains subject to delivery and service-availability requirements. CoreWeave must turn contracted demand into operating cash while funding new capacity and servicing debt.

#1. Cerebras Systems Inc. (NASDAQ:CBRS)

Analyst Upside: 163.17%

30-Day Decline: 46.00%

Short Interest: 14.12 Million Shares

Number of Hedge Fund Holders: 78

Cerebras lost 46.0% over the 30-day window as investors questioned how much OpenAI’s inference demand would flow through its hardware. Reports that a newer OpenAI ultrafast offering was running on Nvidia GPUs challenged expectations for Cerebras’ role. However, competition and the need to fund capacity ahead of revenue remain the more durable risks.

Stock Analysis displayed a $291.64 average price target, implying 163.2% upside from $110.82, but dated the consensus update October 5. TD Cowen subsequently cut its target from $275 to $175 on October 19 while maintaining Buy. That lower target implies 57.9% upside. The revisions narrowed the apparent opportunity. Insider Monkey counted 78 hedge fund holders in Q2 for the stock. September 30 short interest totaled 14.12 million shares, up 10.3% from September 15. Coatue reported 7.01 million Cerebras shares worth $1.55 billion at June-end, or 3.19% of its reported 13F portfolio, alongside a new Intel holding. Its Cerebras beneficial ownership included 6.67 million Class B shares convertible into Class A. Our review of those positions examines the case for alternatives to Nvidia and the operating hurdles each company still faces.

Bulls can point to a growing cloud business because in the second-quarter, CBRS’s cloud and services revenue reached $126 million, up 281%, while remaining performance obligations totaled $25.4 billion. Consolidated GAAP gross margin was 14%, versus 41% on the company’s adjusted core basis, which excludes warrant amortization, stock compensation and other items. Even on that basis, operating margin remained negative 16%, so rapid growth has yet to produce operating profitability.

To read the full version, visit 10 Oversold AI Stocks: Where Wall Street Analysts Are Spotting 50%+ Upside.

While we acknowledge the risk and potential of CBRS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CBRS and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: Nvidia vs. TSMC: Which Business Depends Less on Picking the Winning AI Chip? and Can Nebius Earn Better Returns by Letting Partners Own the Hardware?

Disclosure: None. Follow Insider Monkey on Google News.

The selloff has punished AI capacity builders and hardware suppliers particularly hard. Between September 23 and October 23, Cerebras lost 46.0%, CoreWeave fell 37.6% and Nebius dropped 30.0%. Seagate and Coherent each lost more than 30%. These businesses face different pressures: neoclouds must finance construction, optical suppliers depend on customer deployments, and storage manufacturers face the possibility that new competing capacity will weaken pricing. Rising demand alone cannot protect their shares.

On October 14, Gartner warned that more than $3.5 trillion of AI infrastructure spending could face impairment by 2030 if providers maintain their investment pace. A data center can fill up and still earn too little to justify its construction cost. Interest accrues before rent arrives, and delays extend that gap. CoreWeave has floating-rate debt that exposes it to higher interest expense; IREN faces financing risk on future expansion even where existing borrowing is fixed or hedged. See how those differences affect the cash left for shareholders here.

Financing can also change what shareholders own. Raising equity may keep a project on schedule while spreading its eventual profits across more shares. Borrowing preserves ownership initially but gives lenders a prior claim on cash. A company can therefore deliver its promised revenue growth without delivering the return implied by an old price target. Customer prepayments offer another source of funding, but cash collected today still has to pay for future services. Oracle’s cash-flow breakdown shows how much that distinction matters after the construction bill.

Semiconductor investors face another problem: AI spending can keep growing while customers shift orders between competing chip designs. That makes an industry growth forecast a poor substitute for a company-specific earnings forecast. A chip designer must defend its share and pricing; a foundry may retain the manufacturing work when customers switch designs, but still suffers if overall orders slow. See how Nvidia and TSMC divide those risks here.

Investors should not assume analysts have identified the bottom. A target set 20% above a stock’s former price can suddenly imply 100% upside after the shares fall 40%, even without any improvement in the business. Analysts can update late, and further cuts over the coming weeks could erase much of the apparent opportunity. Some cuts have already arrived: UBS lowered its CoreWeave target from $120 to $105 on October 23.

That is why we pair targets with short interest and hedge fund ownership. Heavy short interest can expose disagreement, although convertible-debt and transaction hedges can inflate it. Quarterly holdings cannot identify who bought this month’s dip. Coatue’s Intel and Cerebras positions show why institutional backing also needs context. Neither measure guarantees a recovery. Here, oversold means sharply sold down, not necessarily below a technical RSI threshold.

For illustration purposes only. Photo by Brett Sayles on Pexels

Methodology

We revisited a 50-stock selloff shortlist drawn from a review of 124 U.S.-listed companies across the AI ecosystem. The shortlist used split-adjusted closing-price changes from September 23 through October 23, 2026, and required sufficient price history and at least three identifiable analyst targets in the consensus dataset. Its stocks had declined at least 12.41% over that window.

For this large-company list, we required a market capitalization of at least $20 billion and direct commercial exposure to AI computing infrastructure: chips, cloud capacity, networking, data-center equipment, memory or storage. These restrictions left 27 companies from the original selloff shortlist. The group includes focused infrastructure suppliers and diversified companies with substantial infrastructure businesses; it is not a pure-play-only screen.

We ranked those 27 companies by upside to their average 12-month S&P Global analyst price target displayed by Stock Analysis. Upside equals the target divided by the October 23 closing price, minus one. Missing, insufficient or unreconciled target coverage was excluded. The ten highest-upside stocks appear below, counting down to number one; alphabetical ticker order breaks ties. Market capitalizations and targets use the October 23 snapshot.

Short interest uses the September 30 settlement-date snapshot and is expressed as a percentage of estimated float, except for Cerebras, where conflicting float estimates make the number of shares sold short more reliable. Hedge fund counts come from Insider Monkey’s Q2 2026 database and are compared with Q1 where meaningful. These positioning measures provide context and do not determine the ranking. Float estimates vary by provider and can lag share issuance. All prices and targets are in dollars.

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 returned 599.2% from May 2014 through June 2, 2026, beating its benchmark by 372 percentage points (see more details here).

#10. Micron Technology, Inc. (NASDAQ:MU)

Analyst Upside: 77.88%

30-Day Decline: 18.13%

Short Interest: 2.31% of Float

Number of Hedge Fund Holders: 184

Micron’s selloff has exposed the main risk in owning a memory producer in that earnings can peak before demand does. The shares fell 18.1% during a semiconductor retreat fueled by rate worries and competition. Its September 30 outlook also offered little further margin expansion as next-quarter adjusted gross margin was projected at 86.25%, down from 87% in the quarter just reported.

Bulls have more than an AI label to work with because Micron’s Cloud Memory and Core Data Center businesses generated a combined $34.29 billion of fiscal fourth-quarter revenue, 63% of the total. High-bandwidth memory feeds AI accelerators, while servers also need conventional memory. Management’s $61.5 billion next-quarter revenue forecast implies another 13.4% increase from $54.23 billion. The question is how much of that growth survives in earnings if memory supply catches up and pricing softens.

Q2 hedge fund holders rose to 184 from 154 in Q1. Coatue increased its Micron stake from 165,000+ shares to 3.14 million, worth $3.63 billion at June-end and 7.46% of its reported 13F portfolio. That was a substantial commitment before the selloff. September 30 short interest was just 2.31% of float, so bearish positioning was relatively limited. Even so, the $1,561 analyst target depends on future earnings assumptions. If memory pricing weakens, the apparent bargain changes with it; our Micron earnings stress test shows how a lower profit base changes the stock’s valuation.

]]> https://www.insidermonkey.com/news/alphabet-googl-investing-behind-ai-demand-and-tpu-growth-1858551/ Sat, 24 Oct 2026 00:31:49 +0000 https://www.insidermonkey.com/blog/?p=1858551 Broyhill Asset Management, a Charlotte-based firm, issued its third-quarter 2026 investor letter. The letter can be downloaded here. The Broyhill Equity Composite decreased by 0.3% in Q3, underperforming the MSCI All Country World Index, which gained 1.7%. For the first nine months of the year, the Composite returned 1.9%, compared to 13.4% for the Index. The quarter was characterized by a strong July, when the Composite rose by 3.3%, despite a significant fall in the semiconductor index. However, technology stocks led in August and September, while other sectors, including consumer staples and industrials, declined, leading to the decline. Broyhill cites rising oil prices, higher interest rates, and competition for capital as reasons to be cautious. The recent performance of Broyhill has been analyzed due to its divergence from the overall market trend. Despite this, the firm is confident in its portfolio’s ability to adapt to varying economic conditions.  Broyhill is committed to focusing on fundamental drivers and valuations while exploring new opportunities, valuing the trust of its investors and its long-term partners. Also, check the Fund’s top five holdings to see its best picks for 2026.

In its Q3 2026 investor letter, Broyhill Asset Management highlighted Alphabet Inc. (NASDAQ:GOOGL) as a new portfolio holding. Alphabet Inc. (NASDAQ:GOOGL), the parent company of Google, offers various platforms and services, including online search and advertising, cloud solutions, and artificial intelligence. On October 22, 2026, Alphabet Inc. (NASDAQ:GOOGL) closed at $324.22, with a $3.95 trillion market capitalization. Alphabet Inc. (NASDAQ:GOOGL) is up 3.23% YTD, trading within a 52-week range of $255.32 to $408.61.

Broyhill Asset Management stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2026 investor letter:

“We initiated a starter position in Alphabet Inc. (NASDAQ:GOOGL) following a post-earnings sell-off in the shares. Alphabet’s second quarter put higher capital spending and negative free cash flow, a first for the company, in the spotlight: capital expenditures were $45 billion against operating cash flow of $39 billion. Against that, demand continues to exceed supply, and direct sales of its TPU chips to customers offer a back door to chip exposure without owning a semiconductor company. We are comfortable layering in small positions of this kind and will look to size it up if valuations compress further.”

Alphabet Inc. (NASDAQ:GOOGL) ranks third on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 275 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOGL) at the end of the second quarter, which was 265 in the previous quarter. While we acknowledge the risk and potential of Alphabet Inc. (NASDAQ:GOOGL) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Alphabet Inc. (NASDAQ:GOOGL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we discussed Alphabet Inc. (NASDAQ:GOOGL) and shared a list of undervalued AI stocks according to the media. Diamond Hill Large Cap Strategy also initiated a position in Alphabet Inc. (NASDAQ:GOOGL) in Q3 2026, citing artificial intelligence as a key catalyst strengthening the company’s core search, advertising, and broader product ecosystem. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management highlighted Microsoft Corporation (NASDAQ:MSFT) as a top contributor. Microsoft Corporation (NASDAQ:MSFT) is a multinational software company that develops and supports software, services, devices, and solutions, holding dominant positions in software, cloud infrastructure, generative AI, and gaming. On October 23, 2026, Microsoft Corporation (NASDAQ:MSFT) closed at $521.08 per share, reflecting a market capitalization of $3.87 trillion. Microsoft Corporation (NASDAQ:MSFT) posted a one‑month return of 0.95%, while its shares declined 0.48% over the past 52 weeks.

Broyhill Asset Management stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2026 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) added about 110 basis points, most of it in July, the month we added to the position. Results for its fiscal fourth quarter were ahead of expectations, led by faster growth in Azure, its cloud platform, with guidance for further acceleration. Demand continues to exceed capacity, and adoption of its Copilot AI assistant keeps widening. What mattered most for this quarter’s theme was cash: capital spending came in below expectations, free cash flow was strong, and management expects to be free cash flow positive next year at a time when the market worried about hyperscalers competing for capital. The shares rose 16% the next day.”

Microsoft Corporation (NASDAQ:MSFT) ranks second on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 273 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the second quarter, compared to 282 in the previous quarter. While we acknowledge the risk and potential of Microsoft Corporation (NASDAQ:MSFT) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Microsoft Corporation (NASDAQ:MSFT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we discussed Microsoft Corporation (NASDAQ:MSFT) and shared a list of best big name stocks to buy according to financial media. In its Q3 2026 investor letter, Wood Partners noted that despite market skepticism over a temporary FCF dip, Microsoft Corporation’s (NASDAQ:MSFT) reinvestment of strong cash flows into high-return AI capex positions the stock for continued upside. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

10. NWL: Newell Brands (NWL) falls 6.46% as UBS reiterates neutral stance on concerns about sustainability of improvements.

9. INFY: Infosys Ltd. (INFY) sheds 6.58% after cutting revenue growth forecast by 1-2%.

8. TMUS: T-Mobile US (TMUS) falls 7.71% on competition concerns with SpaceX, as the latter eyes installing 80K cell sites across the US.

7. T: AT&T (T) drops 7.96% on Starlink competition fears, as SpaceX eyes 80K cell sites across the US.

6. FLG: Flagstar Bank (FLG) sheds 9.27% on revenue miss.

Hedge Fund Investor Letters and Updates for 2026 Q3

A copy of Ariel Fund’s Q3 2026 investor letter can be downloaded here.

In its Q3 2026 investor letter, Broyhill Asset Management noted that it sold its position in Midera Food Processing, Inc. (NASDAQ:MFP) during the quarter. Midera Food Processing, Inc. (NASDAQ:MFP) is leading food processing platform that manufactures equipment for food preparation, cooking, packaging, handling and safety across the food processing industry. On October 22, 2026, Midera Food Processing, Inc. (NASDAQ:MFP) closed at $41.19, with a $1.86 billion market capitalization. Over the past three months, Midera Food Processing, Inc. (NASDAQ:MFP) declined 12.36%, trading within a 52-week range of $33.00 to $52.58.

Broyhill Asset Management stated the following regarding Midera Food Processing, Inc. (NASDAQ:MFP) in its Q3 2026 investor letter:

We sold Midera Food Processing, Inc. (NASDAQ:MFP) following its spin out from Middleby. We never underwrote Midera as a stand alone investment. It arrived as a distribution, and our thesis is on the Middleby we kept, a pure-play commercial foodservice company. The shares had re-rated roughly 19% in their first weeks of trading, while second-quarter organic growth was just 1.3%, so we took the gain and put the capital behind higher conviction holdings.

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Midera Food Processing, Inc. (NASDAQ:MFP) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. While we acknowledge the potential of Midera Food Processing, Inc. (NASDAQ:MFP) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Diranko Capital highlighted Lifecore Biomedical, Inc. (NASDAQ:LFCR). Lifecore Biomedical, Inc. (NASDAQ:LFCR) is an integrated contract development and manufacturing organization that engages in the aseptic fill and finish of formulations and highly viscous sterile injectable pharmaceutical drug and medical device products. On October 22, 2026, Lifecore Biomedical, Inc. (NASDAQ:LFCR) closed at $6.37, with a $241.69 million market capitalization. Lifecore Biomedical, Inc. (NASDAQ:LFCR) posted a 22.13% YTD decline, trading within a 52-week range of $3.63 to $8.98.

Diranko Capital stated the following regarding Lifecore Biomedical, Inc. (NASDAQ:LFCR) in its Q3 2026 investor letter:

Lifecore Biomedical, Inc. (NASDAQ:LFCR) is a US-based contract development and manufacturing organization (CDMO). What is quite a mouthful to spell out is basically a contract manufacturer for the pharmaceutical industry. If a company like Pfizer develops a new drug, they oftentimes outsource the manufacturing to third-party manufacturers not unlike an industrial business does. Although we are in no way experts in the biotech space, we actually have a good understanding of contract manufacturing businesses in the industrial space and we thought that knowledge may transfer to the biotech space in that particular instance. We were able to acquire LFCR stock at around $6.00 per share on average, slightly below our estimate of what it would cost to replicate its facilities (~$6.30 per share), which we thought would provide downside protection. Since CDMOs in general generate excellent returns on capital, they tend to trade at large premiums to replacement value(~1.5-2.0x), which satisfied our hurdle of a potential double within three years.

Obviously, LFCR had its fair share of problems, most notably a levered balance sheet and, in one of its segments, high customer concentration in a single customer. Both aspects on their own wouldn’t have been a problem but the company had recently built a new manufacturing facility that was highly underutilized and the company was barely breaking even from a cash flow perspective, which in general doesn’t fit well with a debt-heavy balance sheet…” (Click here to read the full text)

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Lifecore Biomedical, Inc. (NASDAQ:LFCR) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 14 hedge fund portfolios held Lifecore Biomedical, Inc. (NASDAQ:LFCR) at the end of the second quarter, down from 17 in the previous quarter. While we acknowledge the potential of Lifecore Biomedical, Inc. (NASDAQ:LFCR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In another article, we discussed Lifecore Biomedical, Inc. (NASDAQ:LFCR) and shared Greenhaven Road Capital’s views on the company. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

A copy of Diranko Capital’s Q3 2026 investor letter can be downloaded here.

In its Q3 2026 investor letter, Broyhill Asset Management highlighted Intuit Inc. (NASDAQ:INTU). Intuit Inc. (NASDAQ:INTU) is a financial software company offering products and services for financial management, payments, capital, compliance, and marketing. On October 22, 2026, Intuit Inc. (NASDAQ:INTU) closed at $354.90, with a $94.84 billion market capitalization. Intuit Inc. (NASDAQ:INTU) posted a 46.42% YTD pullback, trading within a 52-week range of $252.84 to $689.17.

Broyhill Asset Management stated the following regarding Intuit Inc. (NASDAQ:INTU) in its Q3 2026 investor letter:

“Intuit Inc. (NASDAQ:INTU) was a small position established as part of a software basket, which we have since rotated into higher quality holdings, namely Microsoft, which also sold off in the first half of the year. We believe the shares of both were caught in the market’s concern that AI will pressure software economics. This is true for some, but for many companies, we believe this concern is overblown or entirely unfounded. We have not given up on software as a theme but have shifted how we are expressing it in the portfolio.”

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Intuit Inc. (NASDAQ:INTU) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 98 hedge fund portfolios held Intuit Inc. (NASDAQ:INTU) at the end of the second quarter, which was 92 in the previous quarter. While we acknowledge the potential of Intuit Inc. (NASDAQ:INTU) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In another article, we discussed Intuit Inc. (NASDAQ:INTU) and shared Jenga Investment Partners’ views on the company. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management noted that it exited its position in CACI International Inc (NYSE:CACI) during the quarter. CACI International Inc (NYSE:CACI) provides expertise and technology to enterprise and mission customers in support of national security in the intelligence, defense, and federal civilian sectors. On October 22, 2026, CACI International Inc (NYSE:CACI) closed at $619.22 per share. Over the past month, CACI International Inc (NYSE:CACI) gained 0.15%, but its shares are up 5.75% over the past year. CACI International Inc (NYSE:CACI) has a market capitalization of $13.68 billion, trading within a 52-week range of $434.70 to $683.50

Broyhill Asset Management stated the following regarding CACI International Inc (NYSE:CACI) in its Q3 2026 investor letter:

“Finally, we sold CACI International Inc (NYSE:CACI) in September after the shares rallied on its fiscal fourth-quarter report. Headline results for the full fiscal year were strong, with revenue up 10.9% and a book-to-bill of 1.1x, but the pillars of our thesis that we could verify had broken: the buyback driver is gone as cash goes to paying down debt after the ARKA acquisition, the technology-mix metric has gone undisclosed for three quarters, and management is downplaying book-to-bill as a measure. The shares had also returned to a valuation above their multi-year average, with no insider buying.”

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CACI International Inc (NYSE:CACI) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 35 hedge fund portfolios held CACI International Inc (NYSE:CACI) at the end of the second quarter, down from 44 in the previous quarter. While we acknowledge the potential of CACI International Inc (NYSE:CACI) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In another article, we discussed CACI International Inc (NYSE:CACI) and shared Meridian Contrarian Fund’s views on the company from the previous quarter. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management noted Rentokil Initial plc (NYSE:RTO) as its largest detractor. Rentokil Initial plc (NYSE:RTO) is a route-based service provider that offers a range of pest control services. On October 22, 2026, Rentokil Initial plc (NYSE:RTO) closed at $22.88 per share. Over the past month, Rentokil Initial plc (NYSE:RTO) returned 10.85%, but its shares are down 23.25% over the past year. Rentokil Initial plc (NYSE:RTO) has a market capitalization of $10.59 billion, and its stock has traded within a 52-week range of $19.50 to $34.67.

Broyhill Asset Management stated the following regarding Rentokil Initial plc (NYSE:RTO) in its Q3 2026 investor letter:

“Rentokil Initial plc (NYSE:RTO) was our largest detractor, costing about 270 basis points, most of it in July and again in September. The first-half report on July 30 was a case of fine financials and a broken story. Growth and margins improved, and leverage fell into the target range for the first time since the Terminix acquisition. But North American growth slowed, lead flow weakened into July, door-to-door, a pillar of our thesis, went undisclosed, and management retired its 2027 North American margin target. The shares fell about 21% on the report. We trimmed the position in September and exited the position after quarter-end. Rentokil has historically lagged its closest peer Rollins on operational metrics. We expected this gap to close over time and, with that, valuation to re-rate higher. This could still happen, but in the meantime, we have decided to exit to focus on higher conviction ideas and revisit the story at a later date.”

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Rentokil Initial plc (NYSE:RTO) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 15 hedge fund portfolios held Rentokil Initial plc (NYSE:RTO) at the end of the second quarter, compared to 19 in the previous quarter. While we acknowledge the potential of Rentokil Initial plc (NYSE:RTO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In another article, we discussed Rentokil Initial plc (NYSE:RTO) and shared White Falcon Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management highlighted Honeywell Aerospace Inc. (NASDAQ:HONA) as a new holding. Honeywell Aerospace Inc. (NASDAQ:HONA), spun off from Honeywell International in June 2026, manufactures and supplies aircraft components, avionics, engines, and systems. On October 22, 2026, Honeywell Aerospace Inc. (NASDAQ:HONA) closed at $163.02 per share, reflecting a market capitalization of $51.67 billion. Honeywell Aerospace Inc. (NASDAQ:HONA) recorded a 25.87% decline over the past three months driven by quarterly earnings miss and supply chain bottlenecks.

Broyhill Asset Management stated the following regarding Honeywell Aerospace Inc. (NASDAQ:HONA) in its Q3 2026 investor letter:

“We sized up Honeywell Aerospace Inc. (NASDAQ:HONA) and at the same time sold the automation business left behind in the parent company. Once the two companies traded separately, the market paid up for the latter and discounted the former. Part of our thesis on the conglomerate was a sum-of-the-parts discount. We exited the parent, now a pure-play automation company, when that discount to its peers closed. Aerospace has long been considered the crown jewel of Honeywell, and we think the case for owning more of it is straightforward. HONA’s parts are designed into aircraft platforms for 30 to 50 years, allowing it an entrenched position in the supply chain, a high return on invested capital, and over $2 billion of free cash flow expected next year. The sell-off in shares followed analyst reports arguing its content on newer aircraft is lower, indicating lower growth ahead. This selling pressure was exacerbated by spin-off dynamics, but going forward the spin will allow the company to invest where it sees fit. For HONA that means making sure it has the supply chain it needs in place. Further, if shares continue to languish, we think a potential acquirer would put a floor under the price.”

The letter can be downloaded here.

Honeywell Aerospace Inc. (NASDAQ:HONA) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 74 hedge fund portfolios held Honeywell Aerospace Inc. (NASDAQ:HONA) at the end of the second quarter. While we acknowledge the risk and potential of Honeywell Aerospace Inc. (NASDAQ:HONA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Honeywell Aerospace Inc. (NASDAQ:HONA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article on Honeywell Aerospace Inc. (NASDAQ:HONA), we noted that ClearBridge Value Strategy initiated a position in the stock following its spin-off from Honeywell. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management noted that Valvoline Inc. (NYSE:VVV) detracted from performance during the quarter. Valvoline Inc. (NYSE:VVV) is a US-based automotive preventive maintenance company that offers oil changes, battery, bulb, and wiper replacements; tire rotations; and other maintenance services. On October 22, 2026, Valvoline Inc. (NYSE:VVV) closed at $32.44 per share. Over the past month, Valvoline Inc. (NYSE:VVV) returned 12.17%, and its shares lost 3.77% over the past 52 weeks. Valvoline Inc. (NYSE:VVV) has a market capitalization of $4.14 billion.

Broyhill Asset Management stated the following regarding Valvoline Inc. (NYSE:VVV) in its Q3 2026 investor letter:

“Valvoline Inc. (NYSE:VVV) cost the equity portfolio about 120 basis points, spread across all three months, even as the business kept executing. Fiscal third-quarter same-store sales and earnings beat expectations, and management raised its full-year sales outlook. The pressure is on margin. Gross margin declined for a second straight quarter, and management’s outlook implies meaningful compression again in the fourth quarter on higher base oil costs. To offset the pressure from oil costs stemming from the Iran war, management announced an increase to its prices. This not only reflects its pricing power, but we believe is likely to stay in place if base oil reverts to a lower level. We added to the position in September.”

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Valvoline Inc. (NYSE:VVV) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 44 hedge fund portfolios held Valvoline Inc. (NYSE:VVV) at the end of the second quarter, up from 39 in the previous quarter. While we acknowledge the potential of Valvoline Inc. (NYSE:VVV) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Valvoline Inc. (NYSE:VVV) was a positive contributor to Broyhill Asset Management’s portfolio performance last quarter. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management highlighted Masco Corporation (NYSE:MAS). Masco Corporation (NYSE:MAS) is a home improvement and building products company that designs, manufactures, and distributes branded products, including paints, architectural coatings, plumbing fixtures, and decorative hardware. On October 22, 2026, Masco Corporation (NYSE:MAS) closed at $78.45, with a $15.39 billion market capitalization. Masco Corporation (NYSE:MAS) posted a 22.99% YTD gain, trading within a 52-week range of $58.16 to $83.64.

Broyhill Asset Management stated the following regarding Masco Corporation (NYSE:MAS) in its Q3 2026 investor letter:

“Masco Corporation (NYSE:MAS) cost just over 100 basis points, most of it in July. Second-quarter sales fell and missed expectations. Earnings beat, but the beat came from a one-time tariff refund, and the increase in full-year guidance was essentially all refund. Management raised the buyback, but demand remains choppy and commodity inflation guidance worsened. Moreover, Masco is exposed to the housing cycle, and rising rates serve to pressure shares for that reason. Part of our thesis is that, as homebuyers become accustomed to higher rates, activity will improve. The recent rise has delayed this timing.”

Masco Corporation (NYSE:MAS) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held Masco Corporation (NYSE:MAS) at the end of the second quarter, which was 42 in the previous quarter. While we acknowledge the risk and potential of Masco Corporation (NYSE:MAS) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Masco Corporation (NYSE:MAS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we discussed Masco Corporation (NYSE:MAS) and shared Broyhill Asset Management’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management highlighted Thermo Fisher Scientific Inc. (NYSE:TMO) as a notable contributor. Thermo Fisher Scientific Inc. (NYSE:TMO) is a life science company that focuses on providing life sciences solutions, analytical instruments, specialty diagnostics, laboratory products, and biopharma services. On October 22, 2026, Thermo Fisher Scientific Inc. closed at $676.54 per share. Over the past month, Thermo Fisher Scientific Inc. (NYSE:TMO) returned 0.23%, and its shares are up 18.17% over the past year. Thermo Fisher Scientific Inc. (NYSE:TMO) has a market capitalization of $250.14 billion, and its stock has traded within a 52-week range of $435.27 to $705.79.

Broyhill Asset Management stated the following regarding Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q3 2026 investor letter:

“Thermo Fisher Scientific Inc. (NYSE:TMO) added about 210 basis points, more than half of it in July. Second-quarter results beat expectations, and management raised full-year guidance. Management said the improvement was broad-based across end markets, that biopharma demand is now showing up in the numbers and not only in the pipeline, and that academic and government spending, previously the largest drag, has returned to growth. We view the broad based growth in Thermo as a barometer that the sector is returning to normal demand after the disruption from over-ordering following COVID and political uncertainty. Healthcare remains our largest sector exposure.”

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Thermo Fisher Scientific Inc. (NYSE:TMO) ranks 34 on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 118 hedge fund portfolios held Thermo Fisher Scientific Inc. (NYSE:TMO) at the end of the second quarter, which was 115 in the previous quarter. While we acknowledge the potential of Thermo Fisher Scientific Inc. (NYSE:TMO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In another article, we discussed Thermo Fisher Scientific Inc. (NYSE:TMO) and noted that Diamond Hill Capital attributed the stock’s surge to the same reason. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.

In its Q3 2026 investor letter, Broyhill Asset Management highlighted IQVIA Holdings Inc. (NYSE:IQV) as a leading contributor. IQVIA Holdings Inc. (NYSE:IQV) is a US-based provider of clinical research services, commercial insights, and healthcare intelligence to the life sciences and healthcare industries. On October 22, 2026, IQVIA Holdings Inc. (NYSE:IQV) closed at $278.32 per share. Over the past month, IQVIA Holdings Inc. (NYSE:IQV) returned 2.94%, and its shares are up 26.21% over the past year.IQVIA Holdings Inc. (NYSE:IQV) has a market capitalization of $45.81 billion, and its stock has traded within a 52-week range of $154.50 to $282.98.

Broyhill Asset Management stated the following regarding IQVIA Holdings Inc. (NYSE:IQV) in its Q3 2026 investor letter:

“IQVIA Holdings Inc. (NYSE:IQV) was our largest contributor, adding about 320 basis points, most of it in July. Second-quarter results beat expectations on revenue, earnings and bookings, and management raised its full-year earnings guidance. The shares jumped 12% on the report to a new 52-week high. We trimmed the position in August as part of our portfolio construction discipline.”

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IQVIA Holdings Inc. (NYSE:IQV) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. According to our database, 58 hedge fund portfolios held IQVIA Holdings Inc. (NYSE:IQV) at the end of the second quarter, down from 64 in the previous quarter. While we acknowledge the potential of IQVIA Holdings Inc. (NYSE:IQV) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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In another article, we discussed IQVIA Holdings Inc. (NYSE:IQV) and shared Oakmark Global Fund’s views on the company. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.