Artificial intelligence (AI) promises to be the most transformative technology of the decade, if not all of human history. Analysts have compared the AI revolution to other major inflection points, including the advent of the internet, the introduction of the smartphone, and the invention of the microprocessor.
However, AI is being adopted much more quickly than all of those technologies. Indeed, Stephanie Aliaga at JPMorgan Chase writes, "In the first half of 2025, AI-related capital expenditures contributed 1.1% to GDP growth, outpacing the U.S. consumer as an engine of expansion."
Here's why Nvidia (NVDA +1.26%), Meta Platforms (META 1.47%), and Pure Storage (PSTG +2.98%) are my picks for the three best AI stocks to buy in January 2026.
Image source: Getty Images.
Nvidia: 32% upside implied by the median target price
Nvidia is best known for its graphics processing units (GPUs), chips that speed up compute-intensive data center workloads like analytics and artificial intelligence (AI). But the company is truly formidable because it complements its GPUs with CPUs, networking platforms, and an unparalleled ecosystem of software tools that assist developers with building applications.
Consequently, while custom AI accelerators developed by competitors like Broadcom are generally cheaper, Nvidia systems frequently have a lower total cost of ownership because the company can optimize performance across most facets of the data center computing stack. Additionally, custom chips lack pre-built software tools, which means they must be built from scratch.
Morningstar analyst Brian Colello says Nvidia's vertically integrated business model that spans data center hardware and software affords the company a wide economic moat. "In the long run, we expect tech titans to strive to find second sources or in-house solutions to diversify away from Nvidia in AI, but these efforts will, at best, only chip away at Nvidia's AI dominance."
Nvidia's adjusted earnings increased 60% in the third quarter, and Wall Street estimates earnings will increase at 67% annually through the fiscal year ending in January 2027. That makes the current valuation of 46 times earnings look cheap. Indeed, among 69 analysts, Nvidia has a median target price of $250 per share, implying 32% upside from its current share price of $189.
NASDAQ: NVDA
Key Data Points
Meta Platforms: 29% upside implied by the median target price
Meta Platforms is the second-largest ad tech company in the world. The company has an almost unparalleled ability to source consumer data because it owns four of the six most popular social media properties as measured by monthly active users. That data continuously informs content ranking and ad targeting systems to improve the user experience.
Meta has developed several artificial intelligence products, from custom AI chips that reduce dependence on Nvidia GPUs to proprietary machine learning models that optimize the performance of ad impressions. CEO Mark Zuckerberg says "higher quality and more relevant content" has led to deeper engagement across Facebook and Instagram.
Meta's earnings increased 20% in the third quarter (excluding a one-time tax charge) and Wall Street estimates adjusted earnings will increase 21% in 2026. That makes the current valuation of 29 times earnings a fair price for patient investors. Among 71 analysts, Meta has a median target price of $840 per share, implying 29% upside from its current share price of $650.
Pure Storage: 45% upside implied by the median target price
Pure Storage builds all-flash storage systems and adjacent software that lets enterprises manage file, block, and object storage across private and public clouds. The company has distinguished itself with DirectFlash technology, which eliminates many inefficiencies and bottlenecks associated with traditional solid-state drives by managing raw flash memory at the array level rather than the device level.
"Our DirectFlash modules deliver two to three times the storage density and consume from 39% to 54% fewer watts per terabyte than our closest competitors today," according to the company. Consultancy Gartner recently recognized Pure Storage as the technology leader in enterprise storage platforms, listing automation features, data management capabilities, and strong customer satisfaction as key strengths.
The all-flash array market is forecast to grow at 16% annually through 2033 as the AI boom continues. Pure Storage's adjusted earnings increased 16% during the third quarter, but Wall Street anticipates an acceleration to 23% annually through the fiscal year ending in February 2027. That makes the current valuation of 39 times earnings look reasonable.
Indeed, among 23 Wall Street analysts, Pure Storage has a median target price of $100 per share. That implies 45% upside from its current share price of $69.
