The Bull Case for Tech in 2026: Why These Two Semiconductor and Cloud Giants Could Be Ready for Liftoff

Market Conditions Point to Extended Rally Potential

The S&P 500 bull market, now three years into its run since October 2025, typically extends to an average of eight years once it crosses the three-year milestone, according to Carson Group’s market research. This historical pattern suggests strong tailwinds ahead. The driving force behind this confidence is robust earnings expansion within the technology sector, complemented by HSBC’s projections that the S&P 500 could reach 7,500 as artificial intelligence spending on infrastructure continues to accelerate.

The tech-heavy Nasdaq Composite demonstrated this momentum with a 22% advance in 2025. Within this context, semiconductor and cloud infrastructure companies positioned at the forefront of the AI buildout appear particularly compelling for 2026, with both fundamental and technical indicators flashing green.

AMD: Capitalizing on the AI Hardware Boom

Advanced Micro Devices (NASDAQ: AMD) has already delivered an 81% return year-to-date, substantially outpacing the broader Semiconductor Sector’s 46% appreciation. This outperformance reflects AMD’s strengthened position in the artificial intelligence data center ecosystem, where its processors and graphics processing units face robust customer demand from major enterprises.

The company has secured supply contracts with leading technology firms including OpenAI, Oracle, and Microsoft, validating AMD’s role in the infrastructure layer of AI deployment. Management has signaled that data center segment revenue will accelerate sharply, with projections of exceeding 60% annual growth over the next three to five years—a significant step-up from the 52% compound growth rate achieved over the past five years.

Equally important is the momentum in AMD’s personal computing division. Client processor revenue reached $2.8 billion in Q3, up 46% year-over-year and marking a record. This growth stems from the adoption of AI-capable PCs and AMD’s market share expansion relative to Intel. Industry forecasts anticipate an 83% surge in AI PC shipments to 143 million units in 2026, positioning AMD to sustain its growth trajectory.

Wall Street anticipates AMD’s earnings-per-share will more than triple in 2026, reaching $6.44. At current valuations of 35 times forward earnings—well below the tech sector’s 46x average—there’s meaningful upside. If AMD achieves its EPS targets and trades in line with sector multiples, the stock could potentially reach $296, implying 34% appreciation from current levels.

Alphabet: Building the Full-Stack AI Platform

Alphabet (NASDAQ: GOOG), which has appreciated 67% so far in 2025, offers exposure to a different aspect of the AI opportunity. The search and advertising giant’s most recent quarter showed revenue acceleration of 16% year-over-year to $102.3 billion, while earnings expanded at the more impressive rate of 35%.

The company’s AI initiatives are driving engagement across its core businesses. Google Search’s AI-powered mode now serves 75 million daily active users despite launching earlier this year. The AI Overviews feature is generating “meaningful query growth,” while the Google Cloud segment reported 34% year-over-year revenue growth. Notably, this cloud business is expected to expand dramatically as the cloud AI market is projected to quadruple over the next five years to $327 billion in total addressable market.

Alphabet’s competitive advantage lies in its ability to offer customers a comprehensive stack: proprietary cloud infrastructure, custom-designed AI chips, and access to advanced large language models like Gemini. Recent developments underscore this positioning—Anthropic plans to deploy up to 1 million of Alphabet’s custom chips, and reports suggest Meta Platforms may become an additional customer for the company’s semiconductor offerings.

The company reported a $155 billion backlog in its cloud business at the end of the most recent quarter, up 46% sequentially. This metric signals sustained demand momentum and visibility into future revenue growth as enterprises accelerate their cloud AI deployments.

Though Alphabet’s near-term profitability will be pressured by heavy AI infrastructure investments, the company is positioning itself as a full-stack provider where margins should expand as scale increases. Trading at 29 times forward earnings—a discount to the broader tech sector—Alphabet offers an attractive entry point for investors betting on the multi-year AI infrastructure cycle.

The Bottom Line

Both AMD and Alphabet are positioned to benefit from the secular shift toward artificial intelligence deployment. Historical market patterns, combined with these companies’ specific advantages in their respective segments—semiconductors and cloud infrastructure—suggest 2026 could deliver meaningful gains for patient investors who establish positions now.