Investor excitement about artificial intelligence is anticipated to propel Big Tech stocks this year, yet Wall Street forecasts gains across other sectors as well.
Over the past two weeks, Industrials, Materials, Energy, and Consumer Staples have all outperformed the broader market, with each sector rising 5.5% or more.
The small-cap Russell 2000 index has climbed 8% since the year began, outpacing the S&P 500, which is up more than 1% over the same period.
"It's a broadening playbook," Oppenheimer chief investment strategist John Stoltzfus stated on Friday.
Stoltzfus holds the most bullish price target for the S&P 500 on Wall Street this year at 8,100, while other analysts predict double-digit percentage gains that could push the benchmark toward 7,500 or 7,600.
"What we're seeing is a rotation, and it's not necessarily away from technology, as we would think," he added. "It's some profit taking to broaden one's exposure and diversification."
Keith Lerner, co-chief investment officer at Truist Advisory Services, concurs. His firm's approach has been to increase holdings in industrials while also upgrading healthcare and energy stocks.
"I wouldn't get rid of the tech at this point. I think there are more opportunities beyond tech, is the way I would think about it," Lerner said.
Strategists express optimism following recent earnings reports.
Goldman Sachs and Morgan Stanley reported one of their strongest years for investment banking since the pandemic, lifting their share prices.
Taiwan Semiconductor Manufacturing Co.'s robust results boosted semiconductor stocks and reinforced views that the AI cycle is accelerating.
Shares of memory chipmaker Micron and equipment makers ASML and Applied Materials have all risen at least 25% year-to-date.
Performance in the AI chip sector indicates artificial intelligence and tech are likely to lead the market again this year as enterprise adoption expands.
"As we wait for that to unfold, I think tech, especially big tech and AI as a theme, is the core of this market," Barclays head of US equity strategy Venu Krishna remarked. "Our core conviction is that it'll sustain this year, even though the level of scrutiny around that [AI] has decidedly increased."
A key test will be whether software stocks, facing AI disruption, can stabilize. Microsoft, Salesforce, and ServiceNow have all declined since the start of the year as investors assess AI's effects.
Meanwhile, the market is observing whether Big Tech continues to invest in AI and achieve strong returns from such spending.
Among the "Magnificent 7," Alphabet is up 6% and Amazon 3%, while Apple, Microsoft, Meta, and Tesla are down since the beginning of 2026.
AI chip leader Nvidia has gained nearly 1%.