Tech results due; is AI paying off?

Investors have made a pile of money recently by focusing on niche stocks in the AI trade.

- BY JERAN WITTENSTEIN AND RYAN VLASTELICA

Earnings from some of the world's biggest technology companies will offer an indication of whether they should stick to that strategy in 2026.

The Magnificent Seven tech giants - Alphabet Inc., Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Corp., Nvidia Corp. and Tesla Inc. - have led the stock market higher for much of the last three years. But that reversed at the end of 2025 as Wall Street grew skeptical of the hundreds of billions of dollars the companies are spending to develop artificial intelligence and when the returns on those investments will materialize.

An index tracking the group closed at a record on Oct. 29, and since then the shares of five of the seven members are down and trailing the Standard & Poor's 500 index. Alphabet, which has soared almost 20% during that stretch, and Amazon.com are the only stocks on higher ground.

In response, traders have been piling into the recipients of Big Tech's largesse. Memory and storage maker Sandisk Corp. is up more than 130% since the Magnificent Seven index hit an all-time high and then retreated, while Micron Technology Inc. has jumped 76% and Western Digital Corp. has gained 67%. Power producers and generator makers have also advanced, and even materials companies are outperforming on expectations for accelerating economic growth and the appeal of cheaper valuations.

"Tech has become more of a show-me story," said Darrell Cronk, chief investment officer, wealth and investment management at Wells Fargo, which manages $2.3 trillion. "If Big Tech can continue to deliver, I think capital will start flowing in tech's direction again."