AI News: Artificial Intelligence Trends And Top AI Stocks To Watch

AI stocks to watch surge 34% as enterprise spending hits new record

Sarah Mills | GlobalBeat

Nvidia closed up 4% at $125.12 on Monday after fresh data showed companies poured $15 billion into artificial intelligence in the first quarter of 2026.

The chipmaker led a broad rally across AI hardware and software names as research firm PitchBook tallied a 34% jump in corporate AI budgets from the same period last year.

The splurge signals that last year’s hype cycle has hardened into line-item spending, with one survey of 1,200 chief information officers ranking machine-learning ahead of cloud computing as the top capex priority for the first time.

“Boards stopped asking ‘Why AI?’ and started asking ‘How fast?’” Jefferies analyst Brent Thill wrote in a client note that upgraded 12 software stocks before the bell. Shares of Palantir, Snowflake and C3.ai all gained more than 6%. Datadog leapt 8%. Even legacy names joined the chase: Oracle added 3% after it revealed 430 new generative-AI trials underway inside Fortune 500 accounts, a figure the company called “easily triple” the count from six months ago.

The buying started in pre-market trading when Nvidia previewed its forthcoming Blackwell GPU platform at a developer meet-up in San Jose. Chief executive Jensen Huang told the crowd the new silicon delivers “north of 2.5 petaflops” of dense compute, enough to shrink large language-model training times by half. Huang put the release window at “late May” and said production volumes were “already oversubscribed through calendar 2027.” The remarks erased an early dip sparked by reports that the Commerce Department may widen export licence rules for high-end semiconductors shipped to China.

Wall Street’s response was swift. Goldman Sachs lifted its Nvidia price target to $165 from $135, arguing that scarcity pricing “is back” after a brief lull. Morgan Stanley raised the entire semiconductor sector to “overweight,” citing “evidence of an AI capex super-cycle that could last eight to ten years.” By lunchtime the Philadelphia Semiconductor Index had gained 3.7%, its best session since January.

Software vendors benefited from a spill-over trade. Investors reason that more chips equal more applications, more data, more code. “Hardware first, software second — that’s the playbook,” Kathleen Brooks, research director at XTB, told GlobalBeat. She pointed to Monday’s volume spikes in ServiceNow and Monday.com, both of which sell workflow automation layered on top of cloud GPUs. ServiceNow ended the day up 5%. The company, which reports earnings next week, declined to comment on the move.

Smaller AI specialists rode the coat-tails. SoundHound AI, whose voice-ordering tech is used by White Castle and Jersey Mike’s, jumped 18% after it pre-announced quarterly revenue “well above” prior guidance of $17 million. The company credited “drive-thru deployments at two national burger chains,” a win analysts read as proof that generative-AI is trickling into mundane corners of the economy. BigBear.ai, another micro-cap, rallied 14% on zero news; short-covering was the suspected catalyst.

Enterprise software giants signalled they feel no need to cut prices despite cheaper open-source models flooding GitHub weekly. Adobe rose 4% after it rolled out an “AI credits” system that requires subscribers to pay extra once they exhaust monthly generative-image allowances. Salesforce gained 2% on reports it will attach a $20 monthly surcharge for autonomous sales-email features launching in June. “Pricing power is intact,” Piper Sandler analysts concluded after channel checks showed customer churn “negligible” following similar hikes last quarter.

Defence contractors with AI exposure caught late bids. Anduril, private but tradable on the LTSE, climbed 7% after the Pentagon confirmed a $280 million contract for autonomous surveillance towers along the southern US border. Palantir added 6% amid renewed chatter that the UK Ministry of Defence will widen use of its data-fusion platform. “National security budgets are the stickiest of all,” Louie DiPalma, aerospace analyst at William Blair, told clients in a note that raised both fair-value estimates.

Venture investors watching the public action took it as validation of record private valuations. Three AI start-ups raised rounds above $1 billion last month alone, led by Anthology’s $4 billion Series C at a $64 billion valuation. Tiger Global, an early backer of OpenAI, told limited partners it will double AI allocation “as fast as term sheets get signed.” The firm’s latest fund has already deployed $2.3 billion into 41 generative-AI companies, filings show.

Background

AI stocks first outperformed the S&P 500 in 2023 when ChatGPT’s viral launch sparked a wave of experimentation. Nvidia shares tripled that year as supply of its H100 processor sold out through 2025. Enterprise adoption was still tentative: a Gartner survey from summer 2023 found 68% of CIOs stuck in proof-of-concept mode, citing governance worries and hallucination risks.

The mood shifted after Microsoft embedded GPT-4 into Office and saw average revenue per user climb 9%. Competitors followed, and by late 2025 quarterly cloud earnings calls were dominated by “AI attach rates.” Chip shortages eased, yet customers kept ordering ahead of need, fearful of being left without compute capacity when the next model breakthrough hit.

What’s Next

All eyes now turn to Nvidia’s full earnings report due 22 May and to Fed chair Jerome Powell’s semi-annual testimony this week, where rate-cut signals could extend the rally. Traders are pricing a 70% chance of at least two reductions by December, according to CME’s FedWatch tool. Lower yields historically favour high-multiple tech names by lowering the discount rate applied to distant cash flows.

Whether the sector can sustain its 2026 multiple expansion will hinge on whether revenue from AI features actually drops to operating income. Microsoft and Google report the week after Nvidia; investors will parse Azure and Cloud growth for evidence that the $15 billion quarterly spend is generating payback. “If customers refuse to renew at higher prices, the whole trade unwinds,” Thill warned. Until then, the chip bulls are in charge.