The opening trading day of 2026 mirrored the momentum of the previous year, with technology stocks once again leading the market. The Magnificent Seven rallied at the start of the new year, as Nvidia and Alphabet each rose nearly 3%. Semiconductor stocks posted strong gains, with the VanEck Semiconductor ETF up almost 4%. Micron and AMD surged more than 7% and 5%, respectively, reflecting continued investor enthusiasm for AI-driven hardware. Artificial intelligence remained the dominant theme of 2025, and early signs suggest it will continue to shape 2026. However, the AI rally showed signs of fatigue toward the end of last year, as concerns over stretched valuations prompted some investors to shift toward more cyclical sectors. The Nasdaq Composite, heavily weighted toward tech, ended 2025 with two consecutive months of losses, fueling speculation that a rotation into value and economic-sensitive stocks could take hold in the new year. Many strategists had anticipated this shift, viewing a broadening of the market as a necessary step to sustain the bull run. They argued that diversification would help reduce reliance on a handful of high-flying tech names and create a more resilient foundation for future growth. Yet, so far in 2026, investors are staying firmly in tech, with no clear sign of a major pivot. Nancy Tengler, chief investment officer at Laffer Tengler Investments, said she plans to take advantage of any dips, just as she did throughout 2025. She highlighted CrowdStrike and AMD as key holdings in her portfolio. While CrowdStrike edged slightly lower Friday, AMD gained nearly 6%. “The tech names are where you want to be focused, and I think at least for another year,” Tengler said. “Because the winners, in our view, are going to continue to win.” AI-focused stocks like Palantir and Oracle, which delivered strong returns in 2025—Palantir up 135%, Oracle up 17%—were less active on Friday. Palantir dipped less than 1%, while Oracle added about 1%. Their muted moves suggest some profit-taking, but not a retreat. According to the 2026 CNBC Market Strategist Survey, Wall Street expects the S&P 500 to rise around 11% this year—solid, but below the gains seen in the past three years. Some analysts remain cautious. Bank of America’s Savita Subramanian warned the S&P 500 is expensive, with “risks to the index abound in 2026.” Her year-end target of 7,100 is one of the lowest among surveyed strategists. Meanwhile, Adam Parker, founder of Trivariate Research, expressed concern about the level of optimism on Wall Street. “The consensus is pretty bullish,” he said on CNBC’s “Squawk on the Street.” “You’re betting on strong earnings growth, and I don’t know if that’s as likely.” Despite these warnings, the strong start to 2026 underscores that the AI-driven rally still holds significant momentum. For now, the market appears to believe the long-term story behind artificial intelligence remains intact.