AI Stocks Lead as Wall Street Kicks Off 2026 with Cautious Optimism

U.S. stocks are beginning 2026 much like they started 2025, with artificial intelligence shares leading the charge while the broader market shows mixed performance. On Friday, the S&P 500 posted a modest gain, the Nasdaq dipped slightly, and the Dow Jones Industrial Average rose by approximately 0.6% or 319 points.

AI-driven stocks, which were at the core of last year’s market rally, continue to be a dominant theme as 2026 gets underway—despite ongoing skepticism from some corners of Wall Street. Analysts also point to global economic growth and expected interest rate cuts as supportive factors for U.S. equities moving forward.

“Most asset classes performed well in 2025,” noted Jim Reid, Deutsche Bank’s head of macro research and thematic strategy, on Friday. “This was driven by continued global expansion, enthusiasm over AI’s potential, and further easing from central banks.”

Wall Street strategists largely agree. According to a Bloomberg survey, every analyst—spanning both major and boutique firms—expects the S&P 500 to rise in 2026, with a consensus forecast of a 9% annual gain. That would be only slightly below the index’s 20-year average return. As of December 29, none predicted a yearly decline.

The S&P 500 rose more than 16% in 2025, despite headwinds from President Donald Trump’s sweeping global trade measures. The surging AI sector played a key role in securing the index’s third straight year of gains.

AI-related stocks opened the new year on a strong note. Companies like Sandisk, Micron, Western Digital, Intel, and Constellation Energy ranked among Friday’s top performers. The gains were sparked by reports of two upcoming AI IPOs in Asia and a new research paper from China’s DeepSeek, outlining more efficient paths for AI development.

Major tech names Nvidia, Broadcom, and Taiwan Semiconductor also rose sharply to end the week.

Home furnishing retailers RH and Wayfair closed significantly higher after Trump announced a delay on new tariffs that were set to go into effect January 1. The proposed duties would have applied to items like upholstered furniture, vanities, and kitchen cabinets.

Precious metals also saw some early strength. Gold and silver, which had their best annual performance since the 1970s in 2025, opened slightly higher. However, gold slipped by the end of the session, while silver gave up most of a nearly 4% gain to end up just 1.8%.

Crude oil prices edged lower, continuing the trend from 2025 when oil posted its largest annual drop since 2020. That decline contributed to falling gasoline prices, with AAA reporting on Friday that the average price per gallon dropped to $2.83, down from $3.06 a year earlier.

Market activity remained subdued amid light trading volume—a common feature during the holiday season and early January.

Despite solid gains in 2025, U.S. stocks lagged their global counterparts by the widest margin since 2009. The S&P 500’s 16% return was outpaced by a more than 30% jump in the MSCI All Country World Index excluding the U.S., with several international markets seeing even stronger performance.

South Korea’s Kospi index soared 76%, powered by tech giants like Samsung and AI chipmaker SK Hynix. Japan’s Topix, Germany’s DAX, and the U.K.’s FTSE 100 all saw gains of over 20%.

Japan's Topix was bolstered by Kioxia, a memory manufacturer that surged 540% in 2025, becoming the world’s best-performing stock—highlighting the explosive demand for computing power driven by AI growth.

Still, Bank of America senior U.S. economist Aditya Bhave highlighted a growing disconnect between a weakening labor market and continued strength in consumer spending. “It feels like we’re walking a fine line—we’re just waiting to see which direction things will tip,” he said.

Bank of America projects a more modest 3.7% rise for the S&P 500 in 2026. “It’s not as thrilling as recent years, but there are still plenty of areas with strong upside potential,” said Savita Subramanian, the firm’s head of U.S. equity strategy.