2 Market-Beating Tech Stocks That Could Become Even Bigger Winners in AI

Artificial intelligence (AI) stocks didn’t exactly have a smooth start to 2026. With sky-high valuations, slowing enterprise spending, and growing competition, investors began to wonder whether the AI boom had moved too far and too fast.

However, the tech earnings season completely flipped the script. Semiconductor designer Arm Holdings (ARM) and cybersecurity giant Fortinet (FTNT) are proving that the AI revolution is expanding far beyond just GPUs. Shares of these companies have surged 88% and 44% year-to-date (YTD), respectively, crushing the S&P 500 Index's ($SPX) gain of 8% over the same period.

Here’s why these two names could be even bigger winners in the next phase of the AI boom.

Arm Holdings Is Becoming a Core Building Block for AI Data Centers

Arm is no longer just a smartphone architecture company. It is rapidly becoming a critical layer in cloud AI infrastructure, custom silicon, networking, edge AI, and autonomous systems. Arm ended fiscal 2026 on a strong note, with revenue rising 23% year-over-year (YOY) to $4.9 billion. Adjusted EPS rose to $1.77 per share. Arm’s growing dominance in AI infrastructure is its biggest growth driver. 

Data center royalty revenue more than doubled YOY, fueled by hyperscalers rapidly adopting Arm-based server chips and networking processors. Total royalty revenue in the year reached $2.61 billion, increasing 21% YOY, while licensing revenue rose 25% to $2.31 billion.

CEO Rene Haas believes the AI industry is shifting from simple chatbot-style queries toward continuous “agentic AI” workloads, which could create a CPU market opportunity exceeding $100 billion by 2030. To capitalize on this opportunity, Arm has launched its Arm AGI CPU platform, a processor specifically designed for agentic AI workloads. The company has already partnered with Meta Platforms (META), Amazon (AMZN), Alphabet (GOOGL), Nvidia (NVDA) and Microsoft (MSFT) to expand its AGI CPU platform. Arm said it now has more than $2 billion in customer demand lined up across fiscal 2027 and 2028 for the AGI CPU business.

What probably drove the ARM stock rally is management’s bold long-term projections. Management expects Arm to generate $15 billion in AGI CPU revenue and another $10 billion in IP revenue, bringing total annual revenue potential to $25 billion by fiscal 2031. Arm also projects that this could translate into more than $9 in annual EPS by then. Earnings rising from $1.77 to $9 per share in just over five years would be impressive growth. 

Arm already has been one of the market’s strongest-performing AI stocks so far in 2026. Following its strong rally and the fact that its growth story may still be in its early stages, ARM stock is trading at a premium of 98 times forward earnings. Analysts predict fiscal 2027 earnings will increase by 22% to $2.16 per share, further rising to $3.02 in fiscal 2028. If Arm continues to capitalize on the enormous AI infrastructure opportunity, this market-beating tech stock could become an even bigger AI winner over the next decade.

On Wall Street, ARM stock holds an overall “Moderate Buy” rating. Among the 30 analysts covering the stock, 19 rate it as a “Strong Buy,” three rate it as a “Moderate Buy,” seven recommend a “Hold” rating, and one analyst has a “Strong Sell" rating. The mean target price of $231.56 implies potential upside of 13% from here, while the highest price estimate of $326 indicates a possible 59% rally over the next 12 months.

Fortinet Is Protecting AI Data Centers

With Crowdstrike (CRWD) stealing the spotlight in cybersecurity, Fortinet is the unsung hero. Demand for cybersecurity is rapidly increasing, as each new AI data center, AI workload, and AI-powered network requires protection.

Fortinet’s Q1 report shows that it is increasingly becoming the company that enterprises turn to for security. Billings jumped 31% YOY to $2.09 billion, driving a revenue increase of 20% to $1.85 billion. Product revenue surged 41% to $645 million as customers continue to spend aggressively on new hardware and infrastructure upgrades.

Adjusted EPS growth of 41% to $0.82 was even more impressive. The company also generated $1.01 billion in free cash flow. That kind of cash generation is rare even among top software and cybersecurity companies. 

In the Q1 earnings call, management stressed how Fortinet is now involved in AI infrastructure projects. Notably, a cloud infrastructure company that focuses on GPU compute chose Fortinet to safeguard a new AI data-center expansion, while another major generative AI company has chosen Fortinet for a large data-center rollout in the Middle East. AI data centers require massive traffic throughput, segmentation, and security protection, and Fortinet’s high-performance FortiGate products are increasingly being used to protect these next-generation networks. This is significant for Fortinet's long-term growth prospects, as AI infrastructure spending might stay massive for years.

Fortinet’s single-platform FortiOS approach gives it a competitive edge. The company also builds its own proprietary ASIC chips, which help deliver faster performance at lower costs.

Given rising demand, Fortinet raised its full-year guidance. The firm now expects billings between $8.8 billion and $9.1 billion and revenue growth of 15% YOY. Adjusted EPS is expected to land between $3.10 and $3.16. As enterprises spend aggressively to secure AI systems, cloud networks, and critical infrastructure, Fortinet could become a compelling long-term AI play outside of the semiconductor industry.

On Wall Street, FTNT stock has a consensus “Hold" rating. Among the 43 analysts covering the stock, 10 rate it as a “Strong Buy,” 29 have a “Hold" rating, one analyst has a “Moderate Sell,” and three have a “Strong Sell" rating. FTNT stock has already surpassed its average price target of $105.83, while the Street-high price target of $130 implies potential upside of 14% from current levels.