Meet the 2026 stock market. It’s the same AI-reliant market of 2025

The year 2026 is off to a familiar start, with tech stocks dominating the market just as they did in the previous year. On the first trading day of the year, the “Magnificent Seven” stocks, including Nvidia and Alphabet, saw gains of around 3% and 2% respectively. Semiconductors also performed well, with the VanEck Semiconductor ETF rising almost 4%, and companies like Micron and AMD posting gains of more than 7% and 5%.

Artificial intelligence was the top-performing trade of 2025, but as the year came to a close, investors started to shift their focus away from high-valued tech stocks. The Nasdaq Composite, which is heavily weighted towards tech companies, ended the year with two consecutive months of losses. This rotation in the market has led many strategists to believe that tech stocks may face challenges in 2026, as investors begin to demand more profitability from companies investing heavily in AI.

Despite these concerns, investors seem to be sticking with their favorite tech stocks in the new year. Nancy Tengler, the investment chief at Laffer Tengler Investments, expressed her intention to buy selectively on any dips, as she did in the previous year. Stocks like CrowdStrike and AMD are among her top picks for the year. Tengler believes that tech stocks will continue to outperform in 2026, as the winners are expected to keep winning.

While tech stocks are still in favor at the beginning of the year, some AI stocks like Palantir and Oracle are not seeing the same level of enthusiasm from investors. Palantir, which had a remarkable 135% gain in 2025, was down slightly, while Oracle, which had a volatile 17% increase last year, only added about 1%.

According to the 2026 CNBC Market Strategist Survey, Wall Street anticipates that the S&P 500 will see an 11% increase in 2026. However, some experts are more cautious about the market outlook. Bank of America strategist Savita Subramanian pointed out that the S&P 500 is expensive, signaling potential risks for the index in 2026. Adam Parker of Trivariate Research also expressed concerns about the high level of optimism on the Street for the year.

Despite these reservations, tech stocks continue to show strength at the start of the year, indicating that the AI trade still has momentum for the time being. It remains to be seen how the market will evolve in 2026 and whether tech stocks will maintain their leadership position throughout the year.