AI Stocks Rattled On Disruption Worries. This Week's Winners Defy The Noise.

Volatility has surged for artificial intelligence stocks in early 2026. Worries over AI disrupting industries has spurred a market rotation. And, many of the top-performing AI stocks last year have pulled back.

Investors are scrutinizing capital spending hikes by hyperscalers such as Amazon.com (AMZN), Google-parent Alphabet (GOOGL) and Meta Platforms (META). As of the market open on Feb. 13, none of the hyperscaler companies, including Microsoft (MSFT) and Oracle (ORCL), are in positive territory in 2026.

Software stocks have been hammered, even Palantir Technologies (PLTR). But some data center plays, such as Vertiv Holdings (VRT) and Lumentum Holdings (LITE), remain  bright spots.

“Fears that new companies using artificial intelligence  will replace incumbent operators have hurt stocks across a wide range of industries over the past two weeks,” said economist Ed Yardeni in a report. “Software companies, insurance brokers, data providers, alternative asset managers, and investment brokerage companies all felt the impact. Despite this broad-based damage, the S&P 500 isn’t in the red this week or year-to-date.”

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Among AI stocks advancing so far this week include Vertiv, Credo Technology (CRDO), Arista Networks (ANET),  Datadog (DDOG);  and Ciena (CIEN).

Vertiv reported earnings and stated that organic order growth surged to 252% year-over-year in Q4, driving order backlog to a record $15 billion. Arista raised its 2026 revenue guidance when reporting fourth quarter earnings.

Credo on Feb. 9 reported preliminary fiscal Q3  revenue results and updated its Q4 outlook. Meanwhile, Cloudflare (NET) reported earnings and noted gains in its AI business.

Nvidia Earnings Due Feb. 25

Looking ahead, Nvidia’s (NVDA) earnings report on Feb. 25 could bring more volatility for AI stocks. Nvidia’s GPUs face more competition. Some analysts are already looking for “visibility” into Nvidia’s 2027 sales growth expectations.

After Google and Amazon hiked their 2026 capital spending outlooks, their shares sold off. 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. Meta’s stock buyback is decelerating as well. Amazon doesn’t have a buyback and is very unlikely to start one.

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

Meanwhile, AI model builders OpenAI and Anthropic continue to push into the enterprise market. That’s making investors in software stocks and bonds uneasy. There’s growing investor angst over generative AI software coding tools and automated AI assistants, and how they might impact traditional software product growth.

AI Stocks: Software Takes Hit

Anthropic’s January launch of Cowork, which leverages the company’s “Claude” AI models and coding tools, pressured software stocks. Then, Anthropic’s roll out of new Cowork tools that automate legal and financial work, sparked a big software sell off on Feb. 3.

There’s also growing investor angst over the “per seat” licensing business models of some software companies if artificial intelligence improves productivity but results in the elimination of jobs.

Software stocks are the canary in the coal mine, said Goldman Sachs analyst Ben Snider in a report.

“The investor search for insulation from AI disruption risk has accelerated the ongoing cyclical rally,” he said. “After years of focus on identifying stocks with the greatest potential AI exposure, concerns about disruption have pushed investors back toward ‘real economy’ industries, including those leveraged to recent signs of accelerating economic growth.”

He noted that software stocks have retreated some 29% from their highs last September amid concerns of AI disruption. “In recent conversations, investors have focused both on incremental downside risk to software profit growth as well as existential risk to the industry,” Snider added.

The iShares Expanded Tech-Software Sector ETF, an industry index that includes many big-cap software companies, has dropped 23% in 2026.

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 build out commitments, noted Morgan Stanley analyst Joseph Moore in a report.

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 build-outs. Also, some lawmakers are raising alarms over rising electricity prices for consumers.

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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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