The AI tech trade isn’t over. Investors have just become choosier about which players might emerge as winners heading into 2026.
Tech (XLK) stocks have been on a rollercoaster recently as concerns over funding for Oracle (ORCL) data centers and construction delays from CoreWeave (CRWV) rattled AI plays.
“I do believe these are all hyper-valid concerns for the theme, and with the market now breaking out the ‘scrutiny scalpel’ we are finally seeing appropriate ‘winners and losers’ dispersion, and that’s a good thing,” Nomura Securities equity derivatives analyst Charlie McElligott wrote in a note on Thursday.
However, Micron Technology’s (MU) blockbuster results sparked a rebound in AI trades. The memory chipmaker beat Wall Street estimates on Q1 revenue and EPS, helped by AI-fueled demand.
McElligott compared Micron’s earnings’ “upside shock” to Nvidia’s (NVDA) results in May 2023, which acted as a catalyst for the broader AI boom.
“Point-being, there is still blood left in this AI stone,” McElligott wrote.
Investors have been watching for potential funding risks within the AI trade after Oracle stock fell following a Financial Times report that Blue Owl Capital would not support Oracle’s $10 billion data center project.
The concerns are particularly notable given the market concentration among the largest tech companies in the S&P 500 (^GSPC).
Goldman Sachs analysts forecast S&P 500 earnings growth of over 12% in 2026, largely driven by the top seven stocks in the index. Those include Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL, GOOG), Amazon (AMZN), Broadcom (AVGO), and Meta (META). Together, they account for roughly a quarter of the index’s earnings.
Meanwhile, the “Magnificent 7” tech players are up an average of 21% this year, compared with a 16% gain for the S&P 500, according to Yahoo Finance data.
Sevens Report Research founder Tom Essaye told Yahoo Finance he expects to see winners and losers within the group heading into next year.
Read more: How to protect your portfolio from an AI bubble
“I think we’re going to see some pretty massive bifurcation,” Essaye said.” The next evolution of this trade, where there are going to be winners and losers within the Mag 7.”
He said that his favorite stock is Alphabet because of the growth prospects for Google’s Gemini artificial intelligence product.
“I think companies like Oracle that are not overextended financially, but are sort of raising eyebrows with a lot of the spending that AI, I think that companies like that could struggle,” he added.
