In this article, we will take a detailed look at the best innovative stocks to buy according to analysts.
Innovative stocks are the companies that continuously invest in developing new products, services or even entire business models, enabling them to stay ahead of competition and thrive in any stage of the market cycle. The ability to innovate can be considered a form of adaptability, which is required to survive in a tough and hyper-competitive business environment. It also helps businesses build a robust competitive advantage, often called “business moat”, which is a determinant of profitability and ability to gain market share and thus grow above the industry growth pace.
Empirical research links superior profitability (as measured by Return on Equity or Return on Invested Capital) and the ability to gain market share with superior stock price returns. Analysts and researchers find that such companies are often the ones that focus on innovation and constantly reinvent themselves to prevent the competition from catching up. Notable examples of successful innovation in the past are the creation of user-friendly computers, which cemented some of the widest moats that thrive until this day, or completely new production and fulfillment models such as the “just-in-time”. The importance of investing in innovative stocks has been recognized by many legendary investors, such as Peter Lynch. Here’s what he said on this topic:
“The best companies to invest in are those that innovate and are growing within industries you understand.”
READ ALSO: 10 Best Innovative Stocks that Pay Dividends
The best innovative stocks are even more favored now than in the past, as technological advancements are disrupting industries faster than ever. For instance, the proliferation of the AI trend is a game changer in many industries, as this new technology not only allows businesses to slash operating costs and optimize processes but can also create complementary products, services, and even entirely new market opportunities. The companies that are the first to capitalize on AI capabilities will be the ones to gain market share, become more profitable than ever, and thrive for years to come. Likewise, the pandemic, high inflation, high interest rates, and geopolitical tensions have uncovered other areas that require innovation – sustainable supply chains are now more important than ever, while automation, AI, or robotics initiatives are required to preserve profitability amid inflationary pressures.
Investors often inquire how (if at all) innovative stocks can help them build better portfolios, with higher expected returns and better resilience to uncertainty and turmoil, similar to the one experienced by the US economy at the moment. The answer is simple – innovative stocks can be found in a wide range of industries, which means that one could build a completely balanced portfolio by incorporating strictly innovative stocks. Such an approach will likely increase the overall quality of the portfolio and metrics like Return on Equity and revenue growth rate, which are strong determinants of stock price returns.
We believe that innovative stocks are a reliable way to hedge against the worst-case scenario for the US economy—where sharp cuts in public spending as well as the tariff wars will cause a significant economic slowdown and fuel inflation, leading to potential stagflation and a prolonged bear market. Leading researchers, such as Yardeni Research and Goldman Sachs, have already significantly increased their odds that the US will enter a recession in 2025, as well as significantly lowered their target for the US stock market index until the end of 2025. Buying the best innovative stocks now could be the best way to find pockets of outperformance in the US stock market, as these stocks are most likely to find ways to offset inflation, cut costs, create new revenue opportunities, and thrive in any environment.
An entrepreneur presenting the latest technology innovation in electrical components.
Our Methodology
We screened the market and selected companies that actively prioritize and promote the development of new and groundbreaking ideas, products, services, or business processes. From that list, we picked 11 stocks with the highest average analysts’ upside as of March 30, 2025, and ranked them in ascending order. For each stock, we also include the number of hedge funds that own the stock as of Q4 2024, according to our proprietary database.
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. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11. Pfizer Inc. (NYSE:PFE)
Average analysts’ upside: 24.00%
Number of Hedge Fund Holders: 92
Pfizer Inc. (NYSE:PFE) is one of the world’s biggest drug companies, best known for creating life-saving medicines and vaccines that aim to help people live longer and healthier lives. You might recognize the name from the COVID-19 vaccine, but PFE’s work goes far beyond that – they’re constantly innovating and researching new ways to treat serious diseases like cancer and infections. What makes the company stand out is how it blends deep scientific R&D with massive global reach, helping get treatments to people in nearly every corner of the world. PFE, as a reliable dividend payer with a strong financial position, ranked fifth on our recent list of 13 Best Healthcare Dividend Stocks to Invest in.
Pfizer Inc. (NYSE:PFE) delivered strong financial performance in 2024, with revenues of $63.6 billion versus $59.6 billion in the previous year and operational revenue growth of 12%, excluding COVID products, exceeding the expectations range of 9% to 11%. The company demonstrated improved commercial effectiveness with strong contributions across its product portfolio, primarily driven by the VYNDAQEL family, PADCEV, Eliquis, and NURTEC, while also achieving expanded margins through cost management initiatives. The company successfully integrated the Seagen business, creating one of the best oncology companies in the industry, and implemented significant organizational changes, including splitting commercial operations into US and international divisions.
Looking ahead to 2025, Pfizer Inc. (NYSE:PFE) is focusing on improving R&D productivity while maintaining an emphasis on margin expansion, commercial excellence, and shareholder-friendly capital allocation. Notably, PFE has increased its cost savings target to $4.5 billion by the end of 2025 and remains committed to its delevering targets and maintaining and growing its dividend. The company’s pipeline shows promise with multiple potential catalysts ahead, including at least 4 regulatory decisions, up to 9 potential Phase III readouts, and 13 potential pivotal program starts expected in 2025. With a long and promising research pipeline, PFE is one of the best innovative stocks to consider.
10. Tesla, Inc. (NASDAQ:TSLA)
Average analysts’ upside: 25.36%
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) has evolved from being a car company to a tech-driven energy and transportation giant trying to change how the world moves and powers itself. Best known for its sleek electric vehicles, TSLA also builds solar panels, home batteries, and giant energy storage systems that help power entire communities. What makes Tesla stand out is how it combines hardware, software, and AI – from cars to self-driving features that are getting smarter with every mile. The company is in a never-ending innovation loop, with plans for robotaxis and humanoid robots, using the same AI brains developed for driving.
Tesla, Inc. (NASDAQ:TSLA) achieved record deliveries in Q4 2024, operating at an annualized rate of nearly 2 million vehicles, with Model Y becoming the best-selling vehicle of any kind in 2024. The company made significant investments in manufacturing, AI, and robotics during 2024, which management believes will lead to substantial future growth. A major milestone announced is the planned launch of unsupervised full self-driving as a paid service in Austin in June 2025, with plans to expand to other US cities by year-end. TSLA is a clear leader in innovation and also offers an attractive 25.36% upside according to analysts, which makes it one of the best innovative stocks to buy.
Despite some near-term challenges including battery pack production constraints and a major Model Y production transition affecting all factories in early 2025, Tesla, Inc. (NASDAQ:TSLA) remains focused on future growth initiatives, including plans to launch a more affordable model in the first half of 2025 and ambitious plans for Optimus robot production, targeting several thousand units in 2024. Management expressed strong confidence in the company’s future, suggesting that autonomous vehicles and humanoid robots could make the company worth more than the next top 5 companies combined.
9. Workday, Inc. (NASDAQ:WDAY)
Average analysts’ upside: 31.02%
Number of Hedge Fund Holders: 89
Workday Inc. (NASDAQ:WDAY) makes cloud-based software that helps companies manage their people and money in one easy-to-use system. Over 10,000 organizations use WDAY software to handle things like payroll, hiring, budgeting, and planning, and all of this is possible from a single platform that offers real-time updates. The company is constantly innovating its SaaS products, with the most recent features including built-in AI to help businesses make their operations more efficient, make better and faster decisions, and improve the employee experience. WDAY ranked eighth on our recent list of 10 Best SaaS Stocks to Buy According to Billionaires.
Workday Inc. (NASDAQ:WDAY) delivered a solid performance in the recent Q4 2024 with 16% subscription revenue growth. The company now serves more than 11,000 customers across industries and geographies, including more than 60% of the Fortune 500. FY25 subscription revenue reached $7.718 billion, representing 17% growth, while total revenue was $8.45 billion, up 16%. The company demonstrated strong momentum in AI adoption, with 30% of customer expansions involving one or more AI SKUs, including Extend Pro, Recruiting Agent, Evisort, and Talent Mobility Agent.
Looking ahead, Workday Inc. (NASDAQ:WDAY) is strategically positioning itself through significant AI investments and innovations, notably launching the Agent System of Record, a centralized system to manage all organization’s AI agents. The company expects FY26 subscription revenue of approximately $8.8 billion, representing 14% growth. Despite implementing a restructuring that will reduce the workforce by approximately 8%, WDAY plans to have a higher headcount next year than before the restructuring, indicating continued investment in growth areas. The company is particularly focused on expanding internationally, strengthening its AI capabilities, and leveraging its partner ecosystem. WDAY’s success in innovating and monetizing AI capabilities secured its place on our list of best innovative stocks.
8. Oracle Corporation (NYSE:ORCL)
Average analysts’ upside: 32.15%
Number of Hedge Fund Holders: 105
Oracle Corporation (NYSE:ORCL) is a global enterprise IT products and services leader that offers cloud, on-premises, and hybrid solutions that cater to the diverse needs of customers. Oracle Cloud Services is the key segment that includes SaaS and Oracle Cloud Infrastructure, which enables customers to run and manage mission-critical business processes securely and efficiently – think of it as a suite of online tools that help businesses run software, store and manage data, and build applications over the internet without needing to own or maintain physical servers. The company also offers database and middleware software, engineered systems, and professional services to facilitate IT performance and innovation.
Oracle Corporation (NYSE:ORCL) reported exceptional financial performance in the latest Q3 2025, with total cloud revenue growing 25% to $6.2 billion and Infrastructure Cloud services revenue increasing by 51% to an annualized revenue of $10.6 billion. The company’s remaining performance obligations balance surged to $130 billion, representing a whopping 63% YoY growth, indicating strong future revenue potential. ORCL’s strategic back-office SaaS applications showed a robust growth of 18%, reaching an annualized revenue of $8.6 billion. The company’s AI-related business experienced extraordinary growth, with GPU consumption revenue nearly 3.5 times larger than the previous year.
Oracle Corporation (NYSE:ORCL)’s technological advancements and strategic positioning in the AI market are driving its growth. The company’s Gen 2 cloud architecture offers faster and more economical solutions compared to competitors, particularly for AI training and inferencing. ORCL’s unique AI data platform enables customers to leverage their existing databases with leading AI models, providing a significant competitive advantage. The company’s expansion in cloud regions, with 101 regions currently online and plans for further growth, positions ORCL to meet the increasing demand for its cloud services globally. With an estimated average upside of 32.15%, ORCL is also one of the best innovative stocks to buy according to analysts.
7. Meta Platforms, Inc. (NASDAQ:META)
Average analysts’ upside: 32.65%
Number of Hedge Fund Holders: 262
Meta Platforms, Inc. (NASDAQ:META) is a technology company that owns leading platforms such as Facebook, Instagram, Messenger, WhatsApp, and Meta Quest VR. The company is investing heavily in developing the next computing platform with the metaverse and related technologies and also employs AI across its platform to improve content discovery, ad delivery, product development, and user experience. Its innovation strategy is highly centered on long-term investment in AI, immersive experiences, and infrastructure. META ranked third on our recent list of 10 Best Stocks to Buy for the Next 3 Months.
Meta Platforms, Inc. (NASDAQ:META) ended 2024 with a strong performance, reaching over 3.3 billion daily active users across its family of apps. The company’s Q4 revenue reached $48.4 billion, up 21% YoY, while operating income was $23.4 billion with a 48% operating margin. Meta AI has emerged as the most widely used AI assistant, positioning the company for leadership in personalized AI services, reaching potentially over 1 billion users. Coupled with strong investments into infrastructure and breakthrough directions like Metaverse, the AI leadership makes META one of the best innovative stocks for the future.
The significant infrastructure investments made by Meta Platforms, Inc. (NASDAQ:META) consist of bringing online almost a gigawatt of capacity in 2025 and building a massive 2-gigawatt AI data center. META is also focusing on key growth areas, including Threads, which has reached 320 million monthly active users, and WhatsApp, which has surpassed 100 million monthly active users in the US. Management plans to fund these ambitious AI programs through aggressive investment in revenue-growth initiatives while maintaining a focus on operational efficiency.
6. Microsoft Corporation (NASDAQ:MSFT)
Average analysts’ upside: 33.64%
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) is a global technology leader that offers a complete range of software, services, and devices. Its core offerings include the Windows operating system, productivity and collaboration software (Office suite), cloud platforms, enterprise solutions, development tools, and devices like Surface PCs and Xbox consoles. The company also creates value through platforms like Microsoft 365, Azure, LinkedIn, and GitHub, which have become leaders in their niches. MSFT’s innovation is centered on creating AI responsibly, unlocking next-generation tools that make humans more productive, secure, and efficient.
Microsoft Corporation (NASDAQ:MSFT) delivered strong financial results in the most recent Q2 2025, with revenue growing 12% and operating income increasing 17% YoY. The Microsoft Cloud remains the key pillar of growth as it surpassed $40 billion in quarterly revenue for the first time, up 21% on a YoY basis. Notably, the company’s AI business reached an annual revenue run rate of $13 billion, growing 175% compared to the previous year. Commercial bookings increased significantly by 67% YoY, driven largely by Azure commitments from its promising partner OpenAI.
Microsoft Corporation (NASDAQ:MSFT) is seeing accelerated adoption of its AI offerings, particularly Microsoft 365 Copilot, across various customer segments. The company is expanding its data center capacity to meet the growing demand for AI and cloud services, having more than doubled its overall capacity in the last 3 years. MSFT is also focusing on optimizing its AI infrastructure for both training and inference, which is expected to drive down costs and increase the accessibility of AI technologies. Looking ahead, management anticipates continued strong demand for its cloud and AI offerings, with plans to further scale its global infrastructure to support long-term growth. The tremendous growth momentum and constant improvements in its core products solidifies MSFT’s position as one of the best innovative stocks to buy.
5. ASML Holding N.V. (NASDAQ:ASML)
Average analysts’ upside: 38.40%
Number of Hedge Fund Holders: 86
ASML Holding N.V. (NASDAQ:ASML) is a Dutch multinational corporation and one of the most underrated companies. As a leading innovator in the semiconductor industry, ASML provides chipmakers with comprehensive lithography solutions, including hardware, software, and services, enabling the mass production of microchip patterns, which are subsequently used in virtually all electronic products. ASML’s commitment to innovation is evident in its development of advanced lithography technologies, such as extreme ultraviolet (EUV) lithography, which allows for the production of smaller, more powerful, and energy-efficient microchips. The company effectively holds a technological monopoly, which arose from decades of extensive R&D.
ASML Holding N.V. (NASDAQ:ASML) delivered strong Q4 2024 results, with total net sales exceeding guidance primarily due to higher installed base revenue and revenue recognition on 2 High-NA systems. The company concluded the year with a substantial net systems backlog of around EUR 36 billion, which represents 127% of annualized revenue, highlighting substantial demand for its lithography systems. The company demonstrated significant technological achievements, including the successful demonstration of the NXE:3800E with 220 wafers per hour throughput and the completion of customer acceptance on two High-NA systems, with customers reporting positive feedback on major performance benefits in imaging, overlay, and contrast.
Looking ahead to 2025, ASML Holding N.V. (NASDAQ:ASML) projects revenue growth between 6% and 24%, driven primarily by AI becoming a key growth driver in the industry. The company expects Logic segment to be up versus 2024 with the ramp of leading-edge nodes, while Memory is expected to remain strong, similar to 2024 levels. For the longer term, ASML anticipates increased demand for its products and services due to the shift in market dynamics, projecting a 2030 revenue opportunity between EUR 44 billion and EUR 60 billion, which implies a double-digit potential CAGR. ASML holds a technological monopoly on the most advanced EUV machines, which makes it one of the best innovative companies in the world.
4. Alphabet Inc. (NASDAQ:GOOGL)
Average analysts’ upside: 41.78%
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOGL) is a multinational conglomerate that manages a wide range of companies, including the Google search engine. Online advertising, search engine optimization, cloud computing, software development, consumer electronics, and AI are some of its primary activities. The company runs YouTube, Google Cloud Platform, Android OS, and hardware such as Pixel smartphones. The company’s large investments in AI research and development, which have produced innovations like the Gemini AI model and AI-generated code contributions to its software projects, demonstrate its dedication to innovation.
Alphabet Inc. (NASDAQ:GOOGL) is strongly positioned to drive significant success at scale in AI over a long period, with an impressive stack including a robust infrastructure of data centers, TPUs, GPUs, and incredible research teams. The company’s core platforms are showing strong momentum, with Cloud and YouTube combined generating over $110 billion in annual revenue. The company is seeing increased engagement with AI-powered features, particularly in Search, where AI Overviews are being monetized at the same rate as non-AI Overview searches.
Alphabet Inc. (NASDAQ:GOOGL) is also making significant investments in infrastructure, with approximately $75 billion in CapEx planned for 2025, primarily focused on data centers and servers to support AI initiatives and cloud growth. In terms of operational efficiency, the company continues to focus on cost optimization and productivity improvements while maintaining strategic investments in key growth areas like AI and cloud. The cloud business, despite capacity constraints, demonstrated strong growth at 30% in Q4, with demand exceeding supply and showing growth both within the existing customer base and through new customer additions. GOOGL is on one of the strongest Capex sprees in the world, which cements its place on our list of best innovative stocks to consider.
3. Dell Technologies Inc. (NYSE:DELL)
Average analysts’ upside: 46.77%
Number of Hedge Fund Holders: 63
Dell Technologies Inc. (NYSE:DELL) creates, develops, and markets a wide variety of computer hardware and software products. Its product line, which serves both individual customers and businesses, consists of personal computers, servers, storage systems, networking products, and software services. The business places a lot of emphasis on innovation, especially in the field of AI, and provides cutting-edge AI servers and infrastructure solutions that improve the capacity of different industries to process and store data. The company’s goal of becoming a market leader through innovation is backed by more than $2 billion in R&D spending in the last fiscal year.
Dell Technologies Inc. (NYSE:DELL) delivered strong FY2025 results with revenue of $95.6 billion, up 8%, and record EPS of $8.14, up 10%. The company demonstrated operational efficiency by reducing operating expenditures by 4% over the course of the year while growing revenue. In Q4, revenue grew 7% to with EPS increasing 18% to $2.68, both exceeding the street estimates. The strong growth momentum is demonstrated by $1.7 billion in AI orders and $2.1 billion in shipments in Q4 alone, leading to a $4.1 billion backlog, which has since more than doubled to approximately $9 billion. This success is attributed to continued progress in AI technology and partnerships such as with xAI, which makes DELL one of the best innovative stocks to consider now.
Dell Technologies Inc. (NYSE:DELL) has positioned itself strongly in the AI market with $15 billion in expected AI server shipments for FY2026. For FY2026, DELL expects revenue between $101 billion and $105 billion, representing 8% growth at the midpoint, with the ISG segment projected to grow in the high teens and the CSG segment expected to grow in low to mid-single digits. The company continues to demonstrate confidence in its business model through an 18% increase in its annual dividend and a $10 billion increase in share repurchase authorization.
2. Broadcom Inc. (NASDAQ:AVGO)
Average analysts’ upside: 48.07%
Number of Hedge Fund Holders: 161
Broadcom Inc. (NASDAQ:AVGO) is a global designer and supplier of semiconductor and infrastructure software solutions. Its semiconductor products serve data centers, networking, broadband, wireless, storage, and industrial markets. The company also has an established software portfolio, which consists of cybersecurity, enterprise automation, and mainframe operations. The company’s strong focus on innovation is reflected in its products being used by leading OEMs, cloud providers, and telecom firms around the world.
Broadcom Inc. (NASDAQ:AVGO) is showing strong momentum as it delivered record Q1 2025 results with a total revenue of $14.9 billion, up 25% YoY, and consolidated adjusted EBITDA of $10.1 billion, up 41% YoY. The semiconductor segment generated revenue of $8.2 billion, up 11% YoY, driven by AI revenue of $4.1 billion, which grew by a whopping 77% compared to last year. The infrastructure software segment revenue reached $6.7 billion, up 47% YoY and 15% sequentially. The share of software revenue is growing, which transforms AVGO into a more diversified technology player.
Broadcom Inc. (NASDAQ:AVGO) is making significant R&D investments in next-generation AI technologies, including the development of the industry’s first 2-nanometer AI XPU and advancing networking capabilities to enable AI clusters scaling towards 1 million XPUs. Beyond their current three hyperscale customers, AVGO has engaged with four additional hyperscalers to develop custom accelerators for training next-generation frontier models. In the software segment, the company has successfully converted over 60% of customers to subscription models. As a pioneer in AI-related hardware, AVGO represents one of the best innovative stocks to invest in.
1. NVIDIA Corporation (NASDAQ:NVDA)
Average analysts’ upside: 55.93%
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) is a global leader in graphics processing units (GPUs) and AI software. The company designs and manufactures GPUs for gaming, data centers, professional visualization, and automotive markets, as well as system-on-a-chip (SoCs) for mobile devices. Its leading products are GeForce GPUs in gaming and A100 GPUs used in AI applications, machine learning, and high-performance computing. The company also develops software platforms such as CUDA and NVIDIA Deep Learning AI to enable innovation in various industries. The US-based company ranked 2nd on our recent list of 10 Hot AI Stocks to Buy Now.
NVIDIA Corporation (NASDAQ:NVDA) delivered another record quarter with Q4 revenue of $39.3 billion, up 12% sequentially and 78% on a YoY basis, significantly exceeding their outlook of $37.5 billion. For fiscal 2025, the company achieved total revenue of $130.5 billion, representing a remarkable 114% increase from the prior year. Data Center revenue was particularly strong at $115.2 billion for fiscal 2025, more than doubling from the previous year. The fourth quarter saw record Data Center revenue of $35.6 billion, up 16% sequentially and 93% YoY, driven by the successful Blackwell ramp and continued Hopper 200 growth.
The Blackwell architecture has demonstrated unprecedented success, with $11 billion in revenue during Q4, marking the fastest product ramp in the company’s history. NVIDIA Corporation (NASDAQ:NVDA) is experiencing extraordinary demand for Blackwell, particularly as AI evolves beyond perception and generative AI into reasoning. Management expects strong growth in 2025, with data centers increasingly dedicating most of their Capex to accelerated computing and AI. The company’s outlook for Q1 is robust, with expected revenue of $43 billion, plus or minus 2%, driven by significant Blackwell ramp-up and sequential growth in both the Data Center and Gaming segments.
Overall, NVIDIA Corporation (NASDAQ:NVDA) ranks first among the best innovative stocks. While we acknowledge the potential of NVDA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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