In early morning trading, shares of key artificial intelligence (AI) hyperscalers saw notable gains as Wall Street entered a new year, fueled by persistent optimism surrounding the growth of the AI and Big Tech sectors. Notable players from the “Magnificent 7,” including chipmaking giant Nvidia, along with hyperscalers Oracle and Google, each recorded increases exceeding 1% prior to the market opening on Friday.
Additionally, a selection of AI-focused companies—with Meta, Microsoft, and Amazon among them—also witnessed gains of over 0.5%. The AI trade had faced significant challenges in the latter half of 2025, as concerns mounted regarding escalating valuations and excessive spending within the sector. Despite these worries, major companies in the AI field have demonstrated resilience, leading Wall Street strategists to maintain a bullish outlook.
The performance of an exchange-traded fund (ETF) that tracks this sector, known as XLK, has been impressive, boasting a return of over 13.5% in the past six months. Nicole Inui, HSBC’s head of equity strategy for the Americas, noted in the bank’s 2026 outlook that the current market dynamics echo the late 1990s tech boom, emphasizing that technology remains a driving force. “Back then, like today, tech is leading, return concentration is high, and a new technology is promising to be transformational,” Inui remarked. She expressed confidence that the market could experience another year of double-digit gains, buoyed by an AI-led capital expenditure boom.
Goldman Sachs strategist Peter Oppenheimer added to the bullish sentiment in his client outlook. He acknowledged the risks associated with over-concentration and high valuations across equity markets but suggested that prevailing investor optimism might counteract bearish narratives. “Despite the higher-than-average valuations across equity markets, there is potential for upside risks to our central forecasts if investor optimism, driven by the AI and easing narratives, triggers further valuation expansion, in common with most optimism phases of bull markets,” Oppenheimer stated.
As confidence continues to build in the capabilities and prospects of AI, market participants remain watchful of the evolving landscape, hoping for sustained growth in the technology sector.
