AI has been the leading driver of stocks over the last 3-year bull market, which saw the major indexes surge by double-digits in each of those years. This year aims to make it number 4 with another double-digit gain.
The deals that are announced almost every week are stunning. The amounts of money being spent are unprecedented. Sales and earnings that many companies have seen so far have been record-setting. But we are still in the early phase of this transformational AI boom.
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Changing Landscape
Some of the AI winners of today will likely be the AI winners of tomorrow. But there are no guarantees. The rapid pace of innovation makes it difficult to predict who will dominate the industry. Plenty of new names could rise to the top that investors may not have heard of yet.
Despite all their improvements and growth, there are no guarantees that OpenAI, Anthropic, Google, xAI, and others will become long-term AI winners, given how quickly the technologies are evolving.
Given the rapid innovations and the plethora of possible evolutions beyond large language models (LLMs) and angentic AI, no one knows what the AI-driven landscape will look like in 5 years, or even the next 6 months.
Software stocks sold off sharply in early 2026 due to fears that advancing AI technologies could disrupt traditional software business models. Rapid improvements in large language models and generative AI tools have raised concerns that companies might build custom in-house solutions or replace expensive SaaS subscriptions with AI-driven alternatives.
Large Cap Technology Earnings and Growth
The continually improving 2026 earnings outlook for large-cap tech stocks shows that AI bubble fears might be overblown. Technology companies grew 22.5% last year and are projected to grow their adjusted earnings by 21.7% in 2026.
Despite AI bubble worries, spending on AI is only heating up this year. NVIDIA’s 4Q report and outlook confirm that the AI arms race remains in high gear. The AI hyperscalers spent $400 billion in capex last year and are projected to spend between between $600 billion and $700 billion in 2026.
Picks and Shovels Companies
Just like the gold analogy, you can mine for gold, or sell the picks and shovels to them instead. Names that should thrive no matter who wins the AI race are ‘picks and shovels’ companies. The companies supplying infrastructure for AI tool builders.
Regardless of how AI evolves or which companies transform into long-term, forward-facing winners, AI infrastructure remains a positive theme. AI technologies are evolving rapidly and shaking up various parts of the economy.
Mark Notes
One pattern in emerging technologies is that early leadership does not always determine long-term outcomes.
Artificial intelligence reflects a rapidly evolving space, where innovation, competition, and capital investment continue to shape the landscape.
Market history shows that during periods of technological change, different segments of an ecosystem can perform differently, including infrastructure providers, platform companies, and end-user applications.
Understanding how these layers interact can provide useful context when analyzing industries experiencing rapid transformation.
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This article is for general informational and educational purposes only. It is not intended as financial advice, investment guidance, or a recommendation to buy or sell any security. The content reflects publicly available information and broad market commentary. Readers should conduct their own research and consult a licensed financial professional before making investment decisions.