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Buy 3 High-Flying AI-Led Mid-Cap Stocks With More Room to Grow in Q4
Key Takeaways
Ultra Clean is seeing rising demand as customers outsource more subsystem work amid greater system complexity.
Fastly is benefiting from AI-driven traffic growth, especially across its Security and Compute businesses.
Avnet enters fiscal 2027 with broad demand growth, higher backlog and attractive valuation metrics.
The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to other AI-powered data center infrastructure. As a result, aside from AI infrastructure giants, a handful of mid-cap stocks have also flourished year-to-date providing triple-digit returns. Some of these stocks have more price upside potential in fourth-quarter 2026.
The chart below shows the price performance of our three picks year to date.
Image Source: Zacks Investment Research
Ultra Clean Holdings Inc.
Zacks Rank #1 Ultra Clean develops and supplies critical subsystems, components and parts, and cleaning and analytical services for the AI semiconductor industry in the United States and globally. UCTT offers outsourced solutions for the development, design, component sourcing and cleaning, prototyping, engineering, and manufacturing and testing of advanced systems.
Innovative Products
UCTT offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component-neutral design and manufacturing and component testing capabilities.
Customers of UCTT are primarily original equipment manufacturers for the AI semiconductor capital equipment, flat panel, solar and medical device industries. Management said customers are sharing longer-range forecasts as system complexity and manufacturing requirements increase. UCTT sees opportunities to capture more outsourced subsystem work as customers prioritize final integration and testing capacity.
Solid Estimate Revisions
Ultra Clean has an expected revenue and earnings growth rate of 32.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 60 days.
UCTT has an expected revenue and earnings growth rate of 36.9% and more than 100%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 33.9% over the last 60 days.
Image Source: Zacks Investment Research
Massive Price Upside Potential
The stock price has soared 180.8% year to date. Despite this, UCTT currently has a forward P/E of 25.56X for the current financial year, below the industry average of 29.88X. The short-term average price target of brokerage firms represents an increase of 76.1% from the last closing price of $77.69. The brokerage target price is currently in the range of $120-$150. This indicates a maximum upside of 93.1% and no downside.
Fastly Inc.
Zacks Rank #2 Fastly provides infrastructure software offering cloud computing, image optimization, security, edge-computing technology and streaming solutions expanding into areas such as application security and AI-driven workloads. The company’s Fastly AI Accelerator is a semantic caching solution that allows developers to optimize their LLM generative AI applications.
AI Traffic Creates New Monetization Paths
FSLY is aligning its platform with machine traffic that requires real-time decisions on access, security and monetization. Management said AI-generated traffic is growing roughly 6.5 times faster than human traffic, with related demand appearing most clearly in Security and Compute and also in Network Services.
FSLY’s Edge Cloud Platform offers more efficient performance as developers need only a single line of code instead of repeated calls to the AI provider to update their application to a new API endpoint.
Strong Estimate Revisions
Fastly has an expected revenue and earnings growth rate of 18.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 65.6% over the last 60 days.
FSLY has an expected revenue and earnings growth rate of 14.4% and 24.8%, respectively, for the next year. The Zacks Consensus Estimate for next-year’s earnings has improved 6.5% over the last seven days.
Image Source: Zacks Investment Research
Long-Term View
FSLY views AI-driven demand as a tailwind across the business. Fastly is expanding capacity while retaining a more measured infrastructure model than peers building separate networks or GPU-heavy platforms.
AI tool usage is contributing to traffic growth among some of the company’s fastest-growing customers, with the impact most pronounced in Security and Compute and also evident in Network Services.
Avnet Inc.
Zacka Rank #1 Avnet holds a formidable position as a global technology solutions provider with relationships across suppliers and customers. AVT’s broad portfolio spans AI semiconductors, components of passive and electromechanical devices, embedded offerings and supply-chain services, allowing it to support industrial, transportation, AI-powered data center and other applications.
Market Recovery Broadens
AVT enters fiscal 2027 with broad-based demand growth, longer lead times and higher backlog supporting further sales and earnings expansion. Demand has expanded beyond AI and data center builds into industrial, networking, aerospace and defense.
In the fourth quarter of fiscal 2026, all end markets increased in double digits both year over year and sequentially. Farnell’s recovery and tighter working-capital execution add to AVT’s upside, while lower leverage should gradually improve financial flexibility.
Solid Estimate Revisions
Avnet has an expected revenue and earnings growth rate of 23.5% and 84.3%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 43.2% over the last 60 days.
AVT has an expected revenue and earnings growth rate of 4.4% and 7.4%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 56.1% over the last 60 days.
Image Source: Zacks Investment Research
Attractive Valuation
The stock has a forward P/E of 9.87X compared with the industry’s P/E of 16.44X and the S&P 500’s P/E of 17.75X. It has a P/S of 0.31X compared with the industry’s P/S of 0.53X and the S&P 500’s P/S of 2.97X. AVT has a P/B of 1.68X compared with the industry’s P/B of 1.67X and the S&P 500’s P/B of 3.57X.
View the Zacks #1 Rank List
Image: Bigstock
Buy 3 High-Flying AI-Led Mid-Cap Stocks With More Room to Grow in Q4
Key Takeaways
The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to other AI-powered data center infrastructure. As a result, aside from AI infrastructure giants, a handful of mid-cap stocks have also flourished year-to-date providing triple-digit returns. Some of these stocks have more price upside potential in fourth-quarter 2026.
Here, we have narrowed our search to three AI-powered mid-cap stocks with a favorable Zacks Rank. These are: Ultra Clean Holdings Inc. (UCTT - Free Report) , Fastly Inc. (FSLY - Free Report) and Avnet Inc. (AVT - Free Report) . Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our three picks year to date.
Image Source: Zacks Investment Research
Ultra Clean Holdings Inc.
Zacks Rank #1 Ultra Clean develops and supplies critical subsystems, components and parts, and cleaning and analytical services for the AI semiconductor industry in the United States and globally. UCTT offers outsourced solutions for the development, design, component sourcing and cleaning, prototyping, engineering, and manufacturing and testing of advanced systems.
Innovative Products
UCTT offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component-neutral design and manufacturing and component testing capabilities.
Customers of UCTT are primarily original equipment manufacturers for the AI semiconductor capital equipment, flat panel, solar and medical device industries. Management said customers are sharing longer-range forecasts as system complexity and manufacturing requirements increase. UCTT sees opportunities to capture more outsourced subsystem work as customers prioritize final integration and testing capacity.
Solid Estimate Revisions
Ultra Clean has an expected revenue and earnings growth rate of 32.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 60 days.
UCTT has an expected revenue and earnings growth rate of 36.9% and more than 100%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 33.9% over the last 60 days.
Image Source: Zacks Investment Research
Massive Price Upside Potential
The stock price has soared 180.8% year to date. Despite this, UCTT currently has a forward P/E of 25.56X for the current financial year, below the industry average of 29.88X. The short-term average price target of brokerage firms represents an increase of 76.1% from the last closing price of $77.69. The brokerage target price is currently in the range of $120-$150. This indicates a maximum upside of 93.1% and no downside.
Fastly Inc.
Zacks Rank #2 Fastly provides infrastructure software offering cloud computing, image optimization, security, edge-computing technology and streaming solutions expanding into areas such as application security and AI-driven workloads. The company’s Fastly AI Accelerator is a semantic caching solution that allows developers to optimize their LLM generative AI applications.
AI Traffic Creates New Monetization Paths
FSLY is aligning its platform with machine traffic that requires real-time decisions on access, security and monetization. Management said AI-generated traffic is growing roughly 6.5 times faster than human traffic, with related demand appearing most clearly in Security and Compute and also in Network Services.
FSLY’s Edge Cloud Platform offers more efficient performance as developers need only a single line of code instead of repeated calls to the AI provider to update their application to a new API endpoint.
Strong Estimate Revisions
Fastly has an expected revenue and earnings growth rate of 18.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 65.6% over the last 60 days.
FSLY has an expected revenue and earnings growth rate of 14.4% and 24.8%, respectively, for the next year. The Zacks Consensus Estimate for next-year’s earnings has improved 6.5% over the last seven days.
Image Source: Zacks Investment Research
Long-Term View
FSLY views AI-driven demand as a tailwind across the business. Fastly is expanding capacity while retaining a more measured infrastructure model than peers building separate networks or GPU-heavy platforms.
AI tool usage is contributing to traffic growth among some of the company’s fastest-growing customers, with the impact most pronounced in Security and Compute and also evident in Network Services.
Avnet Inc.
Zacka Rank #1 Avnet holds a formidable position as a global technology solutions provider with relationships across suppliers and customers. AVT’s broad portfolio spans AI semiconductors, components of passive and electromechanical devices, embedded offerings and supply-chain services, allowing it to support industrial, transportation, AI-powered data center and other applications.
Market Recovery Broadens
AVT enters fiscal 2027 with broad-based demand growth, longer lead times and higher backlog supporting further sales and earnings expansion. Demand has expanded beyond AI and data center builds into industrial, networking, aerospace and defense.
In the fourth quarter of fiscal 2026, all end markets increased in double digits both year over year and sequentially. Farnell’s recovery and tighter working-capital execution add to AVT’s upside, while lower leverage should gradually improve financial flexibility.
Solid Estimate Revisions
Avnet has an expected revenue and earnings growth rate of 23.5% and 84.3%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 43.2% over the last 60 days.
AVT has an expected revenue and earnings growth rate of 4.4% and 7.4%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 56.1% over the last 60 days.
Image Source: Zacks Investment Research
Attractive Valuation
The stock has a forward P/E of 9.87X compared with the industry’s P/E of 16.44X and the S&P 500’s P/E of 17.75X. It has a P/S of 0.31X compared with the industry’s P/S of 0.53X and the S&P 500’s P/S of 2.97X. AVT has a P/B of 1.68X compared with the industry’s P/B of 1.67X and the S&P 500’s P/B of 3.57X.