The bullish pillars of artificial intelligence-driven earnings growth and lower interest rates should propel the stock market higher in 2026. This means investors likely want to start buying stocks with great upside potential as we close out 2025.
The two AI-boosted stocks we dive into today—First Solar and Arista Networks—offer longer-term growth potential. Both stocks are also trading at potentially attractive entry points heading into 2026.
Two things move the stock market more than anything else: earnings and interest rates.
The outlook for 2026 Tech earnings has improved significantly over the last several months. Meanwhile, total S&P 500 earnings growth is projected to reach 12.3% in FY26, up from 2025’s 11.4% (current estimate).
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The biggest companies in the world are all-in on AI, with AI hyperscalers Amazon, Microsoft, Alphabet, and Meta set to spend $400 billion on capital expenditures in 2025 alone—up over 300% against 2018 levels. These AI hyperscalers are set to spend even more in 2026.
Globally, companies are set to spend $7 trillion in capex on data center infrastructure by 2030. The power-hungry AI age is fueling an energy boom.
The U.S. is also attempting to reshore critical manufacturing, such as semiconductors. This backdrop creates a once-in-a-generation investment supercycle that investors must capitalize on.
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On top of that, Wall Street is betting that the Fed will lower interest rates again in 2026 as it focuses on the employment side of its dual mandate.
The last few months have also helped cool down the AI-focused portion of the stock market after the massive run off the market’s April lows. This backdrop provides solid entry points into plenty of best-in-class stocks across all things AI.
First Solar, Inc. FSLR is the largest U.S. solar manufacturer, ready to post massive earnings and revenue growth as the U.S. aims to boost domestic solar production and fight back against China’s dominance.
FSLR is already “unique among the world’s ten largest solar manufacturers for being the only U.S.-headquartered company and not manufacturing in China.”
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Despite the long-term upside for nuclear energy, small modular reactor projects aren’t set to break ground until the early 2030s (there are zero nuclear reactors currently under construction in the U.S.).
Solar is helping fill the energy capacity growth void as AI hyperscalers race to power their data centers as quickly as possible. Amazon, Microsoft, and other AI hyperscalers committed to large-scale solar projects in 2025.
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Solar energy is set to account for over 50% of new U.S. utility-scale electricity-generating capacity in 2025, crushing battery storage at 29%, wind at 12%, and natural gas at 7%. AI hyperscalers are racing to power their data centers as quickly as possible, providing a ton of runway for utility-scale solar.
The Arizona-based firm said this summer that its utility-scale solar offerings are ready to thrive as part of “America’s all-of-the-above power generation strategy.” First Solar is expanding its domestic manufacturing footprint in Alabama, Louisiana, and beyond.
FSLR’s buildout is supported by an impressive balance sheet of $13.5 billion in assets vs. $4.4 billion in liabilities. Its total booking backlog sits at 53.7 GW extending through 2030.
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First Solar is projected to grow its revenue by 22% in FY25 and FY26 to hit $6.27 billion next year, up from $4.21 billion in 2024. FSLR is set to expand its adjusted earnings per share (EPS) by 22% in 2025 and 59% in 2026 to $23.30 a share, nearly double 2024’s total ($12.02).
FSLR stock surged 305% in the past 10 years, outclimbing the S&P 500’s 260% and destroying its industry’s 30%. First Solar trades roughly 12% below its 2024 highs (near its 2008 peaks). The stock looks ready to possibly break out into a new trading range in 2026 as Wall Street continues to buy into the broader AI everything trade.
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Better yet, it trades at a 45% discount to its median, 90% below its highs, 53% below the S&P 500, and 38% under the Zacks solar industry at 11.1X forward 12-month earnings. This backdrop makes FSLR one of the more compelling value plays across the broader AI energy trade. It’s not surprising that 24 of the 33 brokerage recommendations Zacks has are “Strong Buys.”
Arista Networks ANETis a large-cap technology giant that operates in the increasingly critical AI infrastructure space. ANET is a compelling picks-and-shovels AI stock and a great long-term buy-and-hold candidate that works directly with AI hyperscalers Meta and Microsoft.
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Arista helps provide some of the ‘plumbing’ that keeps large-scale tech operations such as AI data centers running smoothly. Hyperscalers Microsoft MSFT and Meta META are two of Arista’s largest clients, signaling that ANET’s portfolio is full of some best-in-class offerings.
Arista is a client-to-cloud networking powerhouse for large AI, data center, campus, and routing environments. ANET’s networking infrastructure expanded rapidly over the past decade alongside the explosion of cloud computing, big data, and most recently, AI. The company’s stellar balance sheet ($10.1 billion in cash and equivalents and zero debt) should help expand its reach within AI and beyond.
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ANET grew its revenue from $361 million in 2013 to $7 billion in 2024, boosted by 32% average sales growth in the trailing four years. Arista is projected to grow its sales by 27% in FY25 and 21% in 2026 to reach $10.73 billion (more than doubling revenue between 2022 to 2026).
The networking infrastructure firm is projected to grow its adjusted earnings by 27% and 15%, respectively. Arista’s recent upward earnings revisions are part of an impressive long-term trend that will help it reach near around $4 a share by 2028 (vs. $2.27 in 2025).
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ANET skyrocketed ~2,800% in the past 10 years to blow away 5 of the Mag 7 stocks, including Meta and Microsoft—it is roughly neck-and-neck with Tesla. The AI infrastructure stock doubled the Zacks Tech sector in the past three years. Yet it trades 20% below its highs and 33% under its average Zacks price target.
Arista found support near its 200-day (and 50-week) before Thanksgiving. The stock could be ready to charge to its all-time highs and beyond once it overtakes its early 2025 peaks.
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This article originally published on Zacks Investment Research (zacks.com).
