Roadmap for Navigating the Market in 2026
In 2025 the main theme was AI. Specifically large-cap tech stocks such as the “Mag Seven”. These stocks were by far the biggest drivers of growth. “Mag Seven” stocks contributed to nearly 54 percent of S&P 500 growth while being weighted at 34 percent of the index (Three on Thursday, 2025). Google was up 70 percent in 2025 and Nvidia up 36 percent. This type of growth is unsustainable for long periods of time. I am not saying that there is a bubble building. I am saying that growth is going to cool in the coming years.
In 2026, I think growth is going to be more equally distributed across sectors. I also think it is going to be a big year for “pick and shovel” stocks. Pick and shovel stocks are companies that have helped fuel the AI CapEx build out. These include energy companies supplying data-centers, chip makers, and datacenter construction companies.
While I am bullish on the sector as a whole, I see a lot of upside in the energy sector specifically. One of the biggest problems in scaling datacenter and AI growth is energy constraints. We are already beginning to see an energy bottleneck where AI and chip advancement is outpacing energy infrastructure. According to Goldman Sachs, “The US power grid is already straining under the surge of data centers fueling AI models, with these massive facilities now accounting for about 6% of total US electricity demand. That share is expected to nearly double to 11% by 2030,” (Tan, 2025). To break the ensuing bottleneck, the United States energy infrastructure needs to be expanded greatly. This is going to lead to more partnerships between chipmakers and energy companies, sending stock prices to new unseen levels.
However, I wouldn’t count chipmakers out yet. Just because they had an explosive year in 2025 doesn’t mean growth won’t continue into 2026. The big shift however, will be the distribution of growth as talked about earlier. Large cap chipmakers are reaching a bottleneck in infrastructure and technology. Top Chip Companies are already suffering from supply chain constraints that are holding back innovation (Inside the AI Bottleneck, 2025). This opens the door wide open for smaller cap chip makers to catch up with their large cap counterparts.
Lastly, I think that general tech stocks are going to have an amazing year. This year is going to be the first year in which AI chips and software are at levels that can make meaningful differences in the business structure and general efficiency of companies. In 2026, companies will begin to more broadly leverage AI to drive more revenue and thus greater profits. Companies that restructure right now and center their business models around AI will be the biggest winners, while others that decide to stick to their old ways are going to be left behind.
Key Takeaways
Small cap > large cap
Mag Seven lag behind
Big year for ‘Pick and shovel” stocks
Very bullish on the energy sector
Bullish on tech stocks adapting to the AI wave