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Those saying AI stocks are done are missing the big picture.
The first quarter of 2026 shows a split in the AI stock market. While major AI hyperscalers like Nvidia, Alphabet, Apple, Amazon, Meta Platforms, and Microsoft have seen their stock prices decline, other AI-related companies, particularly semiconductor stocks and data center infrastructure providers, have experienced significant gains. Examples include Taiwan Semiconductor Manufacturing (up 13.7%), Texas Instruments (up 15.1%), ASML (up 22.1%), Vertiv (up 61.8%), and Micron Technologies (up 32.3%). This indicates a selective market, not necessarily punishing past winners, but favoring certain segments within the AI ecosystem.
The market's current behavior towards AI stocks doesn't seem to be driven by traditional valuation metrics like price-to-earnings ratios. Instead, there's a clear distinction in how different types of AI companies are being rewarded. Companies that are primarily 'manufacturing companies' – such as chipmakers with their own fabrication plants and industrial equipment manufacturers – are outperforming. These entities are receiving significant AI investment. Conversely, the 'hyperscalers' (major tech companies driving AI spending) and 'fabless' semiconductor companies (like Nvidia, which designs but doesn't manufacture its own chips) are experiencing slumps. The market appears to be impatient for tangible returns from AI investments, thus favoring companies that are directly benefiting in the near term from the massive capital expenditure by larger tech players. The author suggests that despite this, AI remains a sustainable long-term trend, making dips an opportune time for investment.