AI Stocks: Speculative Hype or Disciplined Growth?

Although many AI stocks finished 2025 on a sour note, 2026 is starting the opposite way. Several bullish signals are appearing for AI stocks, including:

AI Valuations Are Reasonable

Numerous leading AI stocks, such as Nvidia (NVDA) have been consolidating for several months. Nvidia shares peaked in October (as of now) and have moved sideways. However, the company’s fundamentals have only become stronger. The result? Nvidia’s valuation metrics, such as its price-to-sales ratio have retreated dramatically, making the stock attractive to a wider swath of Wall Street institutions, including those that focus on valuations. NVDA, which had a P/S of 200x in 2023, now has a P/S of just ~24x.

Taiwan Semi: A Good Barometer of the AI Industry

Taiwan Semiconductor (TSM) is arguably the most important AI barometer in the market. The company is a pure-play manufacturer who supplies parts that are indispensable to companies like Advanced Micro Devices (AMD) and Nvidia. Thursday, TSM shares rallied on news that the company beat earnings and raised forward guidance. Most notably, TSM’s management team made a point of dispelling AI bubble fears. Zacks Consensus Estimates suggest double-digit EPS growth in 2026.

Google Search Cannibalization Fears are Unfounded

Several Wall Street analysts expressed concerns that Alphabet’s (GOOGL) AI business could eat into its dominant, lucrative search business. However, the data shows that not only has Google’s ‘Gemini’ search integration not negatively impacted its search business, it’s strengthened it.

Deregulation will Spur AI growth

President Trump has issued numerous executive orders that reduce regulatory red tape. AI companies will benefit dramatically from the administration’s focus on procuring innovation and reducing stringent oversight.

Price and Volume Action Provides Clues

On Thursday, several AI stocks moved higher on heavy volume turnover. For instance, CoreWeave (CRWV) gained nearly 10% on Thursday as volume turnover surged. Heavy volume on strong green days is a hallmark of accumulation.

Bottom Line

The narrative surrounding artificial intelligence is shifting from speculative hype to disciplined growth. Reasonable valuations, robust earnings, and a supportive regulatory landscape suggest AI stocks have room to run.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research