From the war in Iran to inflation-revival concerns, the U.S. stock market had a turbulent yet solid first half of 2026, with all leading benchmark averages registering impressive gains.
However, not everyone shared in the market’s gains, as investors came for the chips and ditched software names, creating clear winners and losers in the stock market.
Artificial intelligence (AI) was the major driving force behind the rally, but there was one caveat: Traders dove into companies that benefit from AI without having to pay for it.
This contrasts with the last few years, when only a handful of companies—nicknamed the Magnificent Seven—propped up the markets.
Microsoft, Meta Platforms, and Tesla fell about 21 percent, 13.4 percent, and 4.1 percent, respectively, in the first half. Amazon, Apple, and Nvidia posted modest gains of roughly 5.3 percent, 6.6 percent, and 6.4 percent, respectively, while Alphabet was the standout performer, climbing about 12.1 percent.
Investors and policymakers have focused on trillion-dollar capital expenditures—and for good reason. The tech sector’s infrastructure buildout is bolstering economic growth prospects and generating more revenue for companies exposed to AI.
“The Magnificent 7 aren’t broken; they are evolving,” Jay Woods, chief market strategist at Freedom Capital Markets, told The Epoch Times in an emailed note. “There will be winners and losers, and we are starting to see that split now.
“For the first time since the AI boom began, investors aren’t chasing the companies spending the money, but shifting toward the companies building the AI ecosystem.”
Winners
The “RAMpocalypse” has drawn attention for its potential chipflation implications, which could mean businesses and consumers face higher prices for everyday goods.
With a single AI server rack containing thousands of packaged chips, data centers are devouring available supply. Various companies—Apple, HP, Lenovo, Microsoft, and Sony—are responding by raising prices for their products, such as the iPad or the Xbox.
As a result, investors are betting big on chipmakers.
SanDisk, the flash memory storage designer and manufacturer, was the top winner in the S&P 500 in the first six months of the year. Shares posted a more than 700 percent increase, topping $2,000.
Micron Technology, another memory chipmaker powering data centers and AI accelerators, also surged by around 200 percent as shares eyed $1,000.
Intel, which has enjoyed year-long momentum due to the U.S. government’s 10 percent stake in the chipmaker, also advanced 200 percent.
Hard disk drive manufacturer Western Digital increased by about 180 percent to above $500, while semiconductor maker Marvell Technology jumped 170 percent to $240.
“It’s not just Nvidia, it’s not just Broadcom. You’re seeing names like Marvell and Intel shining brightly right now,” Bob Lang, chief options analyst and founder of Explosive Options, said in an emailed note to The Epoch Times.
“Seeing strong margins in the memory names like Sandisk, Micron—those are not changing for the time being.”
Semiconductor-related exchange-traded funds—also known as ETFs—are firmly in an uptrend, as they post higher highs and higher lows.
Losers
To kick off the year, traders were immersed in a software scare dubbed the “SaaSpocalypse.”
The chief concern was that various AI models, particularly Anthropic’s Claude, would destroy the business models of software companies, such as Salesforce and Adobe.
“The software sector became a huge story over the first half of 2026. Concerns over capex and the ironic fact that AI was disrupting the AI growth story in the software space caused many skeptics to ask how they can continue to thrive,” Woods said.
Shares of tax software firm Intuit and real estate services platform CoStar plunged about 58.5 percent and 56.9 percent, respectively. Cognizant Technology Solutions Corp, a multinational IT services provider, fell about 53.1 percent in the first half. Adobe, Salesforce, and ServiceNow also declined about 38.4 percent, 38.3 percent, and 32.7 percent, respectively, from January to June.
Some software stocks—particularly Datadog, Microsoft, Okta, and Twilio—have enjoyed a rebound. But the sharp drop was too much for others to overcome.
The iShares Expanded Tech-Software Sector ETF suffered an 11.8 percent loss in the first half of the year.
Second Half Outlook
Momentum could be on the side of Wall Street.
Investors have priced in a resolution to the four-month-old war in Iran. Traders have been gradually decreasing the odds of a Federal Reserve interest rate hike in September or October. Inflation fears have subsided as global energy markets stabilize. Economic growth prospects remain intact, and consumers are still opening their wallets.
Based on the stock market’s welcome of the second half, the U.S. equities arena could be cheering on further gains for the rest of the year.
The blue-chip Dow Jones Industrial Average—finishing the holiday-shortened trading week at an all-time high—is inching toward 53,000. The S&P 500 is hovering around 7,500, while the tech-heavy Nasdaq Composite Index is close to 26,000.
And these gains could extend into the new year.
Market watchers are projecting a 21 percent increase in the S&P 500 price over the next 12 months, according to FactSet Insights.
But this does not mean risk has fled the market.
“Today’s market has become increasingly momentum-driven, focused on short-term fixes and, frankly, a bit of gambling,” Eric Clark, portfolio manager at Accuvest Global Advisors, said in a note emailed to The Epoch Times.
“Momentum can drive markets for periods of time, but it also tends to become overheated and occasionally crashes.”
This could also be an opportunity to acquire high-quality stocks at a discount, he added.
Another factor for investors to consider is the midterm elections in November, which are typically the most volatile periods for stocks in a presidential cycle, “often producing meaningful pullbacks before investors gain clarity on the political landscape,” Woods writes.
He added, however, that history suggests the November volatility could bring attractive opportunities for longer-term investors.
With four months until the midterm elections, prediction markets suggest a 43 percent chance that Democrats will take both chambers, according to Polymarket. Meanwhile, 40 percent suggest the Republicans will hold the Senate but lose the House.
