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

• Wall Street expects the S&P 500 to climb roughly 11% in 2026, below the advances of the previous three years
• Tech struggled in late 2025 with the Nasdaq posting two consecutive monthly losses as investors rotated toward economically sensitive sectors
• Investment managers like Nancy Tengler advise staying focused on tech 'winners' and buying dips, with Palantir (up 135% in 2025) and Oracle continuing gains

AI-Driven Tech Rally Continues into 2026

The stock market's first trading day of 2026 opened with technology stocks leading gains, mirroring the AI-driven momentum that dominated 2025. The Magnificent Seven stocks all traded higher, with Nvidia and Alphabet each advancing over 1%. Semiconductor stocks showed particular strength, led by Broadcom's 1.5% gain.

Despite concerns about high valuations and two consecutive months of losses for the Nasdaq Composite to close 2025, investors appear undeterred in their tech enthusiasm. The AI trade, which has been the market's best performer over the past three years, continues to attract capital even as strategists warned about companies needing to justify massive AI spending with profitable applications.

Notable 2025 performers maintaining momentum include Palantir Technologies, which surged 135% last year, and Oracle, which gained 17% despite volatility. Both stocks traded higher in premarket activity.

Market strategists remain divided on 2026's trajectory. Nancy Tengler of Laffer Tengler Investments advocates staying focused on tech names, stating "the winners are going to continue to win" and plans to buy any dips. However, many investors had called for market broadening, expecting economically sensitive sectors to take leadership from tech as a healthier development for extending the bull run.

According to Wall Street consensus, the S&P 500 is expected to climb approximately 11% in 2026—a solid but more modest gain compared to recent years' advances. Early trading suggests investors remain committed to the AI narrative, betting that technology's outperformance has further room to run despite valuation concerns and calls for profit validation.