AI Stock Frenzy: How Top Hedge Fund Managers Are Positioning for 2026

The Nasdaq bull market is attracting serious institutional firepower into artificial intelligence plays. Recent 13F filings reveal that some of Wall Street’s most prominent fund managers made aggressive moves into two tech giants during the third quarter—and their conviction is worth examining.

Major Players Double Down on AI Leaders

Stanley Druckenmiller (Duquesne Family Office), Israel Englander (Millennium Management), Ken Griffin (Citadel Advisors), and Philippe Laffont (Coatue Management) all significantly increased their exposure to AI-driven businesses. The positioning tells an interesting story:

• Englander made the largest bets, accumulating 2.2 million shares of Alphabet (now his fifth-largest holding) and 793,500 shares of Meta Platforms (his eighth-largest position)
• Griffin deployed 1.4 million shares of Meta Platforms, making it his fourth-largest position
• Laffont allocated heavily with 7.3 million Alphabet shares (his third-largest holding) and 355,000 Meta Platforms shares (his largest position)

This coordinated institutional interest reflects confidence in the bull market’s staying power. Historically, the Nasdaq Composite has delivered 31% annual returns during bull market cycles since 1990—a benchmark suggesting meaningful upside potential through 2026 and beyond.

Meta Platforms: AI Content Engine Driving Engagement

Meta’s competitive edge centers on its AI infrastructure and content recommendation systems. The company operates three of the four largest social networks globally, generating consumer preference data that informs both content curation and advertising targeting.

Third-quarter results validated this approach. CEO Mark Zuckerberg noted that AI recommendation systems are “delivering higher quality and more relevant content.” The metrics back this up:

• Facebook engagement rose 5%
• Threads usage climbed 10%
• Instagram video engagement surged 30%

Financial performance followed suit with revenue jumping 26% to $51 billion and GAAP net income reaching $7.25 per diluted share (up 20%). The market reacted negatively to capital expenditure guidance for 2026, but Wall Street consensus expects 17% annual earnings growth over the next three years—reasonable given industry forecasts for 14% annual ad tech spending expansion through 2030.

At 30 times earnings and trading 15% below record highs, Meta’s valuation appears justified by its AI-powered advertising momentum.

Alphabet: Defending Search Dominance Through AI

Alphabet faces headwinds from generative AI disruption to traditional search advertising, yet the company has responded by embedding AI throughout its ecosystem. Google Search now features AI Overviews, while new tools like AI Max help brands leverage machine learning for campaign targeting and creative optimization.

The cloud division represents a secondary growth engine. Google Cloud ranks third globally in infrastructure spending and has captured two percentage points of market share in two years, primarily through AI capabilities. Analyst rankings reinforce this positioning—Gartner designated Google the most capable cloud platform for AI development, while Forrester recognized its leadership in large language models.

Third-quarter financials demonstrated execution. Revenue accelerated 16% to $102 billion (versus 15% in the prior-year period), while GAAP earnings jumped 35% to $2.87 per share. CFO Anat Ashkenazi emphasized strong demand for AI infrastructure, particularly custom processors and Gemini models.

Despite shares advancing 70% year-to-date and a 32 times earnings valuation, the 16% expected annual earnings growth justifies current levels. Prospective investors might consider initiating a small position given the company’s diversified AI exposure across search, advertising, and cloud infrastructure.

The Bull Market Thesis

Both companies exemplify how the current bull market cycle rewards businesses embedding AI at scale. The combination of institutional accumulation, AI-driven revenue acceleration, and reasonable valuations relative to growth rates suggests meaningful opportunities remain available for investors positioned through 2026.