Imagine waking up to headlines of the S&P 500 skyrocketing in 2026 – history whispers that it could happen, and these two standout stocks might just be the golden tickets for investors ready to ride the wave!
But here's where it gets controversial: Is this bull market destined to last, or are we setting ourselves up for a potential letdown? Let's explore the data and see what the experts are saying.
The ongoing S&P 500 bull market, which kicked off in October 2022, celebrated its third birthday in October 2025. That's a milestone worth noting! Ryan Detrick, the head market strategist at Carson Group, a respected financial services firm, has analyzed historical data stretching back to 1950. His findings reveal that once a bull market reaches the three-year mark, it's far more likely to extend to an impressive average of eight years. Detrick attributes his optimism to the robust earnings growth powering tech companies. On top of that, analysts at HSBC are forecasting that the S&P 500 could climb to around 7,500 points, fueled by relentless investment in artificial intelligence (AI) infrastructure. To put AI into simple terms for beginners, think of it as computer systems designed to mimic human intelligence, like recognizing patterns or making decisions – it's revolutionizing everything from smart assistants to advanced data processing.
Tech shares, in particular, have been shining brightly in 2025. Just look at the Nasdaq Composite, an index heavy on technology stocks, which delivered a whopping 22% increase. The exciting part? This momentum is expected to carry into 2026, supported by a wider market upswing. These trends signal that grabbing a couple of tech gems that have dazzled in 2025 could position you for even bigger leaps next year. And this is the part most people miss: Not all tech stocks are created equal – the ones tied to AI and innovation are often the real winners.
Let's zoom in on the first pick: Advanced Micro Devices, or AMD for short.
AMD's stock has surged an eye-popping 81% in 2025 alone, easily outpacing the PHLX Semiconductor Sector index's solid 46% gain. This outperformance stems from AMD's rising prominence in the AI data center space, where its graphics processing units (GPUs) – think of them as powerful chips that handle complex visual computations, often used in gaming or AI training – and server processors are in high demand.
To illustrate, AMD has locked in deals with heavyweights like OpenAI, Oracle, and Microsoft to supply its AI chips. These partnerships are key drivers behind AMD's anticipation of a revenue boost in data centers starting next year. During its latest financial analyst day, the company highlighted projections for its data center revenue to grow at an annual rate over 60% over the next three to five years – that's a step up from the 52% growth seen in the previous five years.
Even more promising, AMD's personal computing (PC) division is thriving. In the third quarter, its client processor revenue jumped 46% year over year, hitting a record $2.8 billion. This success is linked to the boom in AI-powered PCs, which integrate smart features like voice recognition or predictive text, as well as AMD's growing edge over competitors like Intel. For context, an AI PC might automatically adjust your screen brightness or suggest better routes in navigation apps based on your habits.
Looking ahead, 2026 is poised to be stellar for AI PC sales, with shipments forecasted to explode by 83% to 143 million units. This positions AMD to maintain its stellar growth trajectory. Analysts predict its earnings per share could triple to about $6.44 next year. Currently, the stock is valued at 35 times forward earnings – a metric that estimates future profits – compared to the U.S. tech sector's average of 46. In plain English, this means investors might be getting a relative bargain, as the stock isn't overpriced relative to its peers.
If AMD hits that $6.44 earnings target and its valuation aligns with the industry's norm, the share price could reach $296. That translates to a potential 34% upside from current levels. So, snapping up this tech powerhouse now could be a savvy move, as it seems primed for further gains in 2026.
Now, onto the second recommendation: Alphabet, the parent company of Google.
Alphabet's shares have risen a remarkable 67% in 2025, making it a standout in the so-called 'Magnificent Seven' group of elite tech stocks. This performance isn't accidental; it's fueled by the company's significant bets on AI technologies.
In the most recent quarter, Alphabet's total revenue climbed 16% year over year to $102.3 billion, while earnings soared 35% from the previous year. Growth was strong across its search engine and cloud services. Executives attribute this to AI innovations, such as the Gemini app (a virtual assistant that answers questions conversationally), AI-enhanced search features, and robust cloud computing setups that handle vast amounts of data.
For example, Google's AI search mode now attracts 75 million daily users since its launch earlier this year – a testament to its growing appeal. Similarly, the AI Overviews tool in searches is boosting 'meaningful query growth' by providing more comprehensive answers, like summarizing complex topics in easy-to-digest ways.
On the cloud side, Alphabet reported a 34% year-over-year revenue increase. But here's the kicker: Experts foresee even faster expansion in 2026 and beyond, as the cloud AI market is projected to quadruple in size over five years, potentially reaching $327 billion by the end. Alphabet provides a versatile cloud platform where businesses can train AI models (teaching computers to recognize patterns, for instance), customize apps, and deploy them efficiently. This infrastructure relies on chips from companies like Nvidia and AMD, plus Alphabet's own custom designs.
Recently, Anthropic announced plans to use up to 1 million of Alphabet's proprietary chips, and whispers suggest Meta Platforms might join as a customer for AI chip needs. Additionally, Alphabet's cloud business boasts a $155 billion backlog at quarter's end, up 46% from the previous period – a clear sign of surging demand for cloud-based AI solutions that enhance productivity, like automating tasks in offices.
Overall, Alphabet is positioning itself as a comprehensive AI provider, offering everything from cloud tools to advanced language models like Gemini (which generate human-like text for chatbots or content creation). While heavy AI investments might pressure short-term profits in 2026, the long-term outlook is bright as these initiatives pay off.
The company's growth is expected to pick up steam as AI becomes more integrated into daily life. That's why investing in Alphabet now makes sense – it's trading at a favorable 29 times forward earnings, offering a discount to the tech sector average. But is this AI frenzy sustainable, or could regulatory hurdles or competition derail it? That's a debate worth having.
What do you think? Are you bullish on these stocks based on history and AI trends, or do you worry the market is inflating expectations? Could the bull market fizzle out sooner than predicted? Share your opinions, agreements, or disagreements in the comments – let's discuss!
