AI Stocks Reset In 2026. What's Next For Apple, Nvidia, Google And Microsoft?

Volatility has surged for artificial intelligence stocks in early 2026. Worries over AI disrupting industries has spurred a market rotation out of tech and into the S&P 500’s energy, materials, consumer staples, health care sectors. Many of the top-performing AI stocks last year have retreated. But there are bright spots and possible openings for investors to consider.

In today’s update for AI stocks, we take a look at Nvidia (NVDA), Apple (AAPL) and Microsoft (MSFT) and catch-up with new developments for “hyperscalers” — the biggest tech builders of huge data centers.

Since the emergence of OpenAI’s ChatGPT in late 2022, Apple has lagged in artificial intelligence. Apple stock gained 11% in 2025, under-performing the S&P 500, and is down 3% this year.

On the one hand, investors continue to be concerned about the long-awaited upgrade of the Siri voice assistant with AI features. But the IBD relative strength line of Apple stock has stabilized. And, Apple stock has formed a cup-with-handle base.

Apple’s capital spending hikes have been moderate compared to the hyperscalers. And, some investors may like that amid volatility in AI stocks.

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Instead of massive increases in capital spending, Apple has been leveraging partnerships with Google and OpenAI, effectively renting their massive data center infrastructure instead of building its own. And, Apple has agreed to use Google’s Gemini AI model.

“Apple now has to rely on Google for its AI strategy, which is a double edge sword,” Wedbush analyst Daniel Ives told IBD in an email. “Minimal capex could be viewed as a good thing but Apple is dependent on Sundar (Alphabet CEO Pichai) and Google and that remains a concern. It’s showtime for Apple on AI as investors do not want Cupertino to miss out on this 4th Industrial Revolution.”

Nvidia Earnings Due Feb. 25, GTC Follows

Looking ahead, Nvidia’s earnings report on Feb. 25 could bring more volatility for AI stocks. Nvidia’s GPUs face more competition. OpenAI is now using AI chips from Nvidia rival Cerebras. Some analysts are already looking for “visibility” into Nvidia’s 2027 sales growth expectations.

“We believe most investors are looking past the Nvidia earnings to annual GTC conference in mid-March for Nvidia to talk about inference roadmap using Groq’s (technology) and provide an early outlook for 2026/27 AI sales,” said Citi analyst Atif Malik in a report.

Nvidia agreed to buy AI accelerator maker Groq in January for about $20 billion.

Microsoft Stock Under-Performs

The, there’s Microsoft’s under-performance. Microsoft stock has retreated 17% in 2026.

“Investors are concerned about Microsoft’s large increase in capital spending,” said economist Ed Yardeni in a Feb. 19 note. (Cloud computing unit) Azure’s revenue climbed 39% last quarter, which beat estimates but was below the 40% growth in the prior quarter."

Yardeni added: “There has also been tepid adoption of the company’s AI service, Copilot. Microsoft sold 15 million Microsoft 365 Copilot seats, which underwhelmed analysts given that Microsoft has customers that pay for more than 450 million seats to access Microsoft 365’s business software. That result also pales in comparison to Google Gemini’s 560 million monthly users and OpenAI’s ChatGPT’s 900 million weekly active users.”

Meanwhile, Google’s Workspace enterprise software has long been a Microsoft Office competitor and is now leveraging Gemini.

AI Stocks: Hyperscaler Capital Spending

Investors are scrutinizing capital spending hikes by hyperscalers such as Amazon.com (AMZN), Google and Meta Platforms (META).

As of the market open on Feb. 19, none of the hyperscaler companies, including Microsoft and Oracle (ORCL), are in positive territory in 2026. Shares pulled back following recent earnings reports amid worries that the hyperscalers are building too much AI infrastructure, too fast.

Four hyperscalers — Google, Amazon, Meta and Microsoft — are now expected to spend $645 billion in 2026, representing growth of 56% or $230 billion on a dollar basis.

Google may still have positive free cash flow this year but not Amazon or Meta, analysts say. Google’s stock buyback in 2025 fell 26% to $45.71 billion. In Q4, Google repurchased only $5.5 billion of its own shares versus $15.5 billion a year earlier.

Even with their strong balance sheets, hyperscalers such as Meta and Google are borrowing. Google last week raised $32 billion in new bond sales to fund its artificial-intelligence ambitions.

AI Stocks: Software Takes Hit

Software stocks have been hammered, even Palantir Technologies (PLTR), amid concern AI model builders OpenAI and Anthropic will emerge as competitors. There’s growing investor angst over generative AI software coding tools and automated AI assistants, and how they might impact traditional software product growth and profit margins.

The iShares Expanded Tech-Software Sector ETF, an industry index that includes many big-cap software companies, has dropped 22% in 2026. But it stabilized last week.

Snowflake (SNOW) reports earnings on Feb. 25 along with Salesforce (CRM). Management commentary and updates on AI business trends could move the stocks.

The debut of “OpenClaw,” open-source software for powering personal agents, has further fueled a sell-off in software stocks, which gained momentum in January because of Anthropic’s launch of “Cowork” tools.

One of the new AI buzzwords is “SaaS-pocalypse,” referring to the notion that AI agents will replace software-as-a-service companies. Investors in AI stocks may also want to be familiar with “outcome-based pricing,” a software revenue shift to agentic automated workflows from per-seat based business models.

Then, there’s the “system of record” debate. That term refers to software companies like Salesforce and ServiceNow (NOW) that some analysts contend are better positioned to monetize AI because of their data troves.

For investors in software AI stocks, the biggest question is how “coopetition” between AI model builders and incumbent software firms will play out in the enterprise market.

Vertiv, Lumentum, Ciena Out-Perform

In 2026, investors seem to prefer some data center plays over AI accelerator suppliers amid intensified competition.

Among AI stocks advancing have been  Vertiv Holdings (VRT), Lumentum Holdings (LITE) and Ciena (CIEN). Goldman Sachs on Feb. 19 upgraded Credo Technology (CRDO) to buy. Arista Networks (ANET) has gained over 6% as investors monitor AI networking competition with Nvidia.

The IBD Methodology: How To Invest In Stocks While Managing Risks

Further, ChatGPT builder OpenAI continues to be a drag on some AI stocks amid worries it won’t deliver on huge data center buildout commitments, More positive news from OpenAI could spark a rebound in AI plays associated with the company.

Amid worries over an AI bubble, many AI stocks have retreated from 52-week or record highs. What’s clear is that investors need to be picky when looking at semiconductor, software and other plays. For many companies — Google, Facebook parent Meta and Microsoft among them — the rise of generative AI poses both risk and opportunity.

Many companies suddenly tout AI product roadmaps. In general, look for artificial intelligence stocks that use artificial intelligence to improve products or gain a strategic edge.

2026 AI Stocks Scorecard

Reasons To Worry About AI Bubble

One reason the artificial intelligence stocks trade has faltered is investor concern over some tech companies adding massive debt to fund data center infrastructure buildouts.

Other investor concerns over an AI bubble include the securitization of loans to data center infrastructure builders as well as the growing “circularity” in the AI ecosystem, which blends investments with commercial relationships.

Yet another worry is that costly AI data center infrastructure depreciates over time from an accounting point of view. That impacts earnings.

Finally, there’s the enormous power needs of AI data centers. There’s mounting concern over the U.S. electrical grid lagging China’s amid massive data center buildouts. Also, some lawmakers are raising alarms over rising electricity prices for consumers.

Artificial Intelligence Stocks And Analysis

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Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, quantum computing, cybersecurity and cloud computing.

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