Investors in 2025 saw a broadening rally in artificial intelligence, with concerns rising about a bubble in tech stocks and the disruption AI brings. While giants like Alphabet and Nvidia thrived, memory chips and hard drives emerged as better investments. 2026 will focus on AI’s ROI and proof of its potential.

Neocloud companies, once AI darlings, now face scrutiny for their role in the AI bubble. OpenAI’s lack of profitability raises questions about its hefty spending commitments with Oracle Corp. Oracle stock has plummeted over concerns about OpenAI, leading to fears over the company’s financial health and debt load.

In 2025, investors found new AI trades in “boring” tech sectors like memory and storage companies. Capital expenditures continue to grow, with a focus on the AI ecosystem and infrastructure. The trend is set to continue in 2026, with attention shifting to beaten-down software stocks as potential opportunities.

Software stocks struggled in 2025, with growing fears of AI disruption impacting valuations. Companies like ServiceNow and Salesforce underperformed, facing existential competition from AI chatbots and agents. The underperformance of the SaaS group may continue into 2026, but some analysts believe the sector is undervalued relative to fundamentals.

In 2025, concerns over high valuations didn’t hinder the performance of hot stocks like Palantir and Tesla. Palantir surged despite skepticism due to valuation, while Tesla hit a record high despite concerns about slowing EV sales. Both companies are expected to see revenue growth in 2026, highlighting the disconnect between high valuations and market performance.

Read more at Yahoo Finance: What’s Coming for Tech Stocks in 2026