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Buy 5 AI-Centric Mid-Cap Stocks Despite Recent Downturn of This Space
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Key Takeaways
CGNX benefits from AI-driven machine vision demand and margin expansion from pricing and cost actions.
FSLY leverages edge computing platform to run AI logic, boosting secure, high-performance digital delivery.
PEGA sees strong growth in AI-powered cloud solutions, with rising adoption driving revenue momentum.
Wall Street witnessed an astonishing rally in the last three years buoyed by an unprecedented explosion of artificial intelligence (AI) technologies. The AI rally also continued in the first two months of 2026.
Of late, a large section of financial experts and researchers has become skeptical about the sustainability of the AI trade. Moreover, the break-out of war in the Middle East, surging crude oil prices and sticky inflation significantly dented market participants’ confidence.
As investors booked profits on highly overvalued technology stocks, the tech-heavy Nasdaq Composite index tumbled 7% in first-quarter 2026. The Technology Select Sector SPDR (XLK) — one of the 11 broad sectors of the S&P 500 Index — fell 6.3% year to date. Its close resemblance — the Communication Services Select Sector SPDR (XLC) — also declined 5.5% year to date.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Cognex Corp.
Zacks Rank #1 Cognex’s commitment to lead in AI for industrial machine vision is expected to shape its growth trajectory. CGNX is benefiting from structural margin expansion driven by portfolio optimization, pricing firming and identified cost actions. This supports durable operating leverage and healthy cash conversion.
CGNX’s growth is increasingly balanced across logistics, packaging, consumer electronics, semiconductor and a stabilizing auto cycle. A revamped go-to-market model is widening the customer funnel and lifting sales productivity, while an AI-enabled roadmap broadens use cases and mix quality. CGNX’s debt-free balance sheet and consistent buybacks and dividends add support.
Cognex has an expected revenue and earnings growth rate of 7.7% and 22.6%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 10.6% over the last 60 days.
Fastly Inc.
Zacks Rank #2 Fastly provides infrastructure software offering cloud computing, image optimization, security, edge computer technology and streaming solutions. FSLY’s specialized platform allows businesses to deliver secure, high-performance digital experiences.
FSLY’s network differs from traditional content delivery networks (CDNs) because it operates on Varnish, a web accelerator that empowers developers to run custom code, including AI logic, directly at the “edge of the internet.”
FSLY provides its CDN platform as part of a comprehensive solution, which includes DDoS protection capabilities for protection from Layer 3 and 4 DDoS attacks, bot management, advanced rate limiting and Next Gen WAF.
FSLY’s other solutions, like Media Shield, enable large streaming companies using multiple CDNs to reduce duplicate content requests, making streaming faster, more efficient, and less demanding on infrastructure.
Fastly has an expected revenue and earnings growth rate of 14% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 60% over the last 60 days.
Genpact Ltd.
Zacks Rank #2 Genpact is poised for growth with AI-driven solutions, including the Digital SEPs approach and Genpact Cora platform, which are accelerating clients’ digital transformations.
AI presents a significant growth opportunity. G’s Digital Smart Enterprise Process (SEP) is a patented approach to enhance the performance of clients’ business processes using AI. Digital SEPs decrease inefficiency and improve process quality using AI, advanced domain-specific digital technologies, Lean Six Sigma methodologies, and experience-centric principles.
Genpact Cora is an automation to an AI-based platform that combines the company’s proprietary automation, analytics and AI technologies into a single common platform, accelerating clients’ digital transformations. We believe that G is well-positioned to take advantage of future AI advancements.
Genpact has an expected revenue and earnings growth rate of 7.1% and 9.9%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 2.6% over the last 60 days.
Cirrus Logic Inc.
Zacks Rank #1 Cirrus Logic is gaining momentum from heightened smartphone demand and product diversification, with notable expansion into PCs, AI-enabled interfaces, automotive and prosumer markets.
PCs represent a large and relatively stable market, and successful penetration here could meaningfully diversify CRUS’ revenue over time. Strong demand for new amplifiers and 22-nm codecs extended product life cycles and supported CRUS’ long-term revenue trajectory. Going ahead, CRUS aims to leverage mixed-signal expertise, expand the addressable market and drive shareholder value.
Cirrus Logic has an expected revenue and earnings growth rate of 4.8% each, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 17.4% over the last 60 days.
Pegasystems Inc.
Zacks Rank #1 Pegasystems is benefiting from strong revenues driven by robust demand for its AI-powered and cloud-based solutions. PEGA benefits from strong growth in Pega Cloud ACV, which increased 30% year-over-year, driven by higher client adoption and migration.
PEGA’s focus on digital transformation, AI-driven solutions, and its Blueprint tool contributed significantly to client engagement and operational efficiency. PEGA’s focus on digital transformation, AI-driven solutions, and its Blueprint tool is contributing significantly to client engagement and operational efficiency.
Pegasystems has an expected revenue and earnings growth rate of 13.6% and 31%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 4.6% over the last 30 days.
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Buy 5 AI-Centric Mid-Cap Stocks Despite Recent Downturn of This Space
Key Takeaways
Wall Street witnessed an astonishing rally in the last three years buoyed by an unprecedented explosion of artificial intelligence (AI) technologies. The AI rally also continued in the first two months of 2026.
Of late, a large section of financial experts and researchers has become skeptical about the sustainability of the AI trade. Moreover, the break-out of war in the Middle East, surging crude oil prices and sticky inflation significantly dented market participants’ confidence.
As investors booked profits on highly overvalued technology stocks, the tech-heavy Nasdaq Composite index tumbled 7% in first-quarter 2026. The Technology Select Sector SPDR (XLK) — one of the 11 broad sectors of the S&P 500 Index — fell 6.3% year to date. Its close resemblance — the Communication Services Select Sector SPDR (XLC) — also declined 5.5% year to date.
Despite these headwinds, we recommend five AI-centric mid-cap stocks with a favorable Zacks Rank to invest for long term. These are: Cognex Corp. (CGNX - Free Report) , Fastly Inc. (FSLY - Free Report) , Genpact Ltd. (G - Free Report) , Cirrus Logic Inc. (CRUS - Free Report) and Pegasystems Inc. (PEGA - 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 five picks in the past month.
Image Source: Zacks Investment Research
Cognex Corp.
Zacks Rank #1 Cognex’s commitment to lead in AI for industrial machine vision is expected to shape its growth trajectory. CGNX is benefiting from structural margin expansion driven by portfolio optimization, pricing firming and identified cost actions. This supports durable operating leverage and healthy cash conversion.
CGNX’s growth is increasingly balanced across logistics, packaging, consumer electronics, semiconductor and a stabilizing auto cycle. A revamped go-to-market model is widening the customer funnel and lifting sales productivity, while an AI-enabled roadmap broadens use cases and mix quality. CGNX’s debt-free balance sheet and consistent buybacks and dividends add support.
Cognex has an expected revenue and earnings growth rate of 7.7% and 22.6%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 10.6% over the last 60 days.
Fastly Inc.
Zacks Rank #2 Fastly provides infrastructure software offering cloud computing, image optimization, security, edge computer technology and streaming solutions. FSLY’s specialized platform allows businesses to deliver secure, high-performance digital experiences.
FSLY’s network differs from traditional content delivery networks (CDNs) because it operates on Varnish, a web accelerator that empowers developers to run custom code, including AI logic, directly at the “edge of the internet.”
FSLY provides its CDN platform as part of a comprehensive solution, which includes DDoS protection capabilities for protection from Layer 3 and 4 DDoS attacks, bot management, advanced rate limiting and Next Gen WAF.
FSLY’s other solutions, like Media Shield, enable large streaming companies using multiple CDNs to reduce duplicate content requests, making streaming faster, more efficient, and less demanding on infrastructure.
Fastly has an expected revenue and earnings growth rate of 14% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 60% over the last 60 days.
Genpact Ltd.
Zacks Rank #2 Genpact is poised for growth with AI-driven solutions, including the Digital SEPs approach and Genpact Cora platform, which are accelerating clients’ digital transformations.
AI presents a significant growth opportunity. G’s Digital Smart Enterprise Process (SEP) is a patented approach to enhance the performance of clients’ business processes using AI. Digital SEPs decrease inefficiency and improve process quality using AI, advanced domain-specific digital technologies, Lean Six Sigma methodologies, and experience-centric principles.
Genpact Cora is an automation to an AI-based platform that combines the company’s proprietary automation, analytics and AI technologies into a single common platform, accelerating clients’ digital transformations. We believe that G is well-positioned to take advantage of future AI advancements.
Genpact has an expected revenue and earnings growth rate of 7.1% and 9.9%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 2.6% over the last 60 days.
Cirrus Logic Inc.
Zacks Rank #1 Cirrus Logic is gaining momentum from heightened smartphone demand and product diversification, with notable expansion into PCs, AI-enabled interfaces, automotive and prosumer markets.
PCs represent a large and relatively stable market, and successful penetration here could meaningfully diversify CRUS’ revenue over time. Strong demand for new amplifiers and 22-nm codecs extended product life cycles and supported CRUS’ long-term revenue trajectory. Going ahead, CRUS aims to leverage mixed-signal expertise, expand the addressable market and drive shareholder value.
Cirrus Logic has an expected revenue and earnings growth rate of 4.8% each, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 17.4% over the last 60 days.
Pegasystems Inc.
Zacks Rank #1 Pegasystems is benefiting from strong revenues driven by robust demand for its AI-powered and cloud-based solutions. PEGA benefits from strong growth in Pega Cloud ACV, which increased 30% year-over-year, driven by higher client adoption and migration.
PEGA’s focus on digital transformation, AI-driven solutions, and its Blueprint tool contributed significantly to client engagement and operational efficiency. PEGA’s focus on digital transformation, AI-driven solutions, and its Blueprint tool is contributing significantly to client engagement and operational efficiency.
Pegasystems has an expected revenue and earnings growth rate of 13.6% and 31%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 4.6% over the last 30 days.