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Welcome to Episode #489 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, is joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey went solo to look at hidden AI Revolution stocks you should have on your short list.
Why look at “hidden” companies that are cashing in on AI?
They tend to be cheaper, on a valuation basis. The investing crowds haven’t swarmed these companies yet, but they have solid earnings growth and are seeing an uptick from AI.
Many of the “hidden” companies are old economy companies. They aren’t technology companies, per say. But they have products that are in demand for the AI infrastructure build out, especially in building the data centers.
Can You Screen for Hidden AI Stocks?
As on prior podcasts covering the “hidden” AI Revolution stocks, there’s no screen you can run to uncover these companies. I wish there was. Alas, you must do the work to look through the companies that have good earnings growth.
Tracey also looks at the chart as red-hot charts usually indicate there’s something going on that is AI driven.
$700 billion is expected to be spent on AI this year. This has created opportunities.
BorgWarner designs and manufactures the systems that define the way the world moves forward, including propulsion solutions. Founded in 1928, it has a market cap of $14.9 billion.
Mostly associated with the auto industry, BorgWarner is now also building turbines that can power data centers.
Shares of BorgWarner are up 56% year-to-date to new all-time highs. But it’s still attractively priced with a forward price-to-earnings (P/E) ratio of 14. Earnings are expected to grow 5.5% in 2026 but 11.2% in 2027.
BorgWarner pays a dividend, currently yielding 0.9%.
Should a propulsion company like BorgWarner be on your AI stock short list?
Caterpillar manufactures construction and mining equipment, industrial gas turbines, and diesel-electric locomotives. It’s been in business for more than a hundred years.
Shares of Caterpillar are up 66.9% year-to-date to new all-time highs. Earnings are expected to be up 29.2% in 2026 and 24.3% in 2027 as the company is getting more business due to the data center buildout.
Caterpillar isn’t cheap on a P/E basis. It trades at 38.4x. But Caterpillar is also a Zacks Rank #1 (Strong Buy) stock. That is Zacks top recommendation.
Should red-hot Caterpillar be on your AI stock short list?
United Rentals is the largest equipment rental company in the world. Shares are up 29.6% year-to-date and are trading near their all-time highs.
United Rentals reported record first quarter 2026 earnings and saw growth in large projects. Earnings are expected to rise 12.4% in 2026 and 12.2% in 2027.
United Rentals trades with a forward P/E of 22.6. This isn’t cheap, but it’s not over-extended either. United Rentals also pays a dividend currently yielding 0.7%.
Should United Rentals be on your AI stocks short list?
What Else Should You Know About Hidden AI Stocks in 2026?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of BWA in the Zacks Value Investor portfolio and CAT in Zacks Insider Trader.]
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3 Hidden AI Revolution Stocks to Buy Now
Key Takeaways
Welcome to Episode #489 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, is joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey went solo to look at hidden AI Revolution stocks you should have on your short list.
Why look at “hidden” companies that are cashing in on AI?
They tend to be cheaper, on a valuation basis. The investing crowds haven’t swarmed these companies yet, but they have solid earnings growth and are seeing an uptick from AI.
Many of the “hidden” companies are old economy companies. They aren’t technology companies, per say. But they have products that are in demand for the AI infrastructure build out, especially in building the data centers.
Can You Screen for Hidden AI Stocks?
As on prior podcasts covering the “hidden” AI Revolution stocks, there’s no screen you can run to uncover these companies. I wish there was. Alas, you must do the work to look through the companies that have good earnings growth.
Tracey also looks at the chart as red-hot charts usually indicate there’s something going on that is AI driven.
$700 billion is expected to be spent on AI this year. This has created opportunities.
Buy the companies getting a piece of that pie.
3 Hidden AI Revolution Stocks to Buy Now
1. BorgWarner, Inc. (BWA - Free Report)
BorgWarner designs and manufactures the systems that define the way the world moves forward, including propulsion solutions. Founded in 1928, it has a market cap of $14.9 billion.
Mostly associated with the auto industry, BorgWarner is now also building turbines that can power data centers.
Shares of BorgWarner are up 56% year-to-date to new all-time highs. But it’s still attractively priced with a forward price-to-earnings (P/E) ratio of 14. Earnings are expected to grow 5.5% in 2026 but 11.2% in 2027.
BorgWarner pays a dividend, currently yielding 0.9%.
Should a propulsion company like BorgWarner be on your AI stock short list?
2. Caterpillar Inc. (CAT - Free Report)
Caterpillar manufactures construction and mining equipment, industrial gas turbines, and diesel-electric locomotives. It’s been in business for more than a hundred years.
Shares of Caterpillar are up 66.9% year-to-date to new all-time highs. Earnings are expected to be up 29.2% in 2026 and 24.3% in 2027 as the company is getting more business due to the data center buildout.
Caterpillar isn’t cheap on a P/E basis. It trades at 38.4x. But Caterpillar is also a Zacks Rank #1 (Strong Buy) stock. That is Zacks top recommendation.
Should red-hot Caterpillar be on your AI stock short list?
3. United Rentals, Inc. (URI - Free Report)
United Rentals is the largest equipment rental company in the world. Shares are up 29.6% year-to-date and are trading near their all-time highs.
United Rentals reported record first quarter 2026 earnings and saw growth in large projects. Earnings are expected to rise 12.4% in 2026 and 12.2% in 2027.
United Rentals trades with a forward P/E of 22.6. This isn’t cheap, but it’s not over-extended either. United Rentals also pays a dividend currently yielding 0.7%.
Should United Rentals be on your AI stocks short list?
What Else Should You Know About Hidden AI Stocks in 2026?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of BWA in the Zacks Value Investor portfolio and CAT in Zacks Insider Trader.]