Key Takeaways
- Meta Platforms and Super Micro Computer are two AI stocks that are expected to perform well in 2026.
- Palantir Technologies is an AI stock that investors would be wise to avoid in 2026 due to its high valuation.
- The rise of artificial intelligence is expected to add over $15 trillion to global gross domestic product by 2030.
- The stock market’s hottest trend is the rise of artificial intelligence, with many companies benefiting from this trend.
- Investors should be cautious of companies with high valuations, as they may be more vulnerable to a stock market correction.
Introduction to AI Stocks
The stock market has been on a tear in recent years, with the S&P 500 rallying more than 16% in 2025, marking its third consecutive year of gains topping 15%. While the prospect of lower interest rates and stock-split euphoria have played a role in lifting the tide on Wall Street, the rise of artificial intelligence (AI) has undeniably been the stock market’s hottest trend. As the analysts at PwC believe, "Providing software and systems with the tools to make near-instantaneous decisions without human oversight is an advancement that… can add more than $15 trillion to global gross domestic product by 2030." However, not all AI stocks are created equal, and some may be more likely to succeed than others in the new year.
Meta Platforms: A Genius Buy
According to the article, "Meta Platforms (META +0.34%) is more of a genius buy in the new year than social media colossus Nvidia." The advantage of buying Meta Platforms’ stock is that investors have a rock-solid foundation to fall back on if history were to repeat and the AI bubble bursts in 2026. As the article states, "Meta generates approximately 98% of its net sales from advertising on its family of apps." With an average of 3.54 billion people visiting its websites daily, including Facebook, WhatsApp, Instagram, Threads, and Facebook Messenger, Meta has exceptional ad-pricing power. Additionally, Meta has several uses for AI, including deploying generative AI solutions on its social media advertising platforms, which is allowing advertisers to tailor static and video messages to individual users. As the article notes, "Meta has the luxury of taking risks and investing in high-growth initiatives without needing an immediate payoff from these investments."
Super Micro Computer: A Risk-Reward Profile
As the article states, "Investors on Wall Street have to be objective and willing to adjust their opinion(s) on a publicly traded company if the variables change." While the author has been a decisive skeptic of customizable rack server and storage solutions specialist Super Micro Computer (SMCI +1.56%) over the previous two years, their tune has changed for 2026. With the insatiable demand for Nvidia’s graphics processing units (GPUs) and Taiwan Semiconductor Manufacturing’s ability to ramp up its GPU output, Super Micro Computer’s risk-versus-reward profile has shifted completely to favor reward. As the article notes, "Management’s annual sales forecast of ‘at least $36 billion’ for fiscal 2026 equates to 64% revenue growth." With Supermicro stock now trading at a forward P/E of only 10, yet sporting estimated sales growth of 64% (per management for fiscal 2026) and 22% (based on Wall Street’s estimate for fiscal 2027) over the next two years, its shares look like a bargain.
Palantir Technologies: A Stock to Avoid
As the article states, "Not all AI stocks are necessarily worth buying in the new year." Although Palantir Technologies (PLTR +3.26%) has been one of Wall Street’s hottest stocks to own, with a gain of more than 2,500% over the previous three years, it heads the list of AI stocks to avoid in 2026. While Palantir isn’t a bad or poorly run company, its valuation no longer makes any sense. As the article notes, "Since the dawn of the internet revolution in the mid-1990s, companies at the forefront of next-big-thing innovations have run into trouble when their price-to-sales (P/S) ratios have topped 30." With Palantir ending Jan. 2 at a P/S ratio of 110, its stock is overvalued and may be vulnerable to a stock market correction.
Conclusion
In conclusion, the rise of artificial intelligence is expected to add over $15 trillion to global gross domestic product by 2030, making it a trend that investors cannot afford to ignore. While some AI stocks, such as Meta Platforms and Super Micro Computer, are expected to perform well in 2026, others, such as Palantir Technologies, may be more likely to struggle due to their high valuations. As the article notes, "The stock market is also historically expensive, and that’s potentially bad news for pricey stocks like Palantir." Investors should be cautious of companies with high valuations and look for stocks with strong fundamentals and a solid risk-reward profile.
https://www.fool.com/investing/2026/01/07/2-ai-stocks-buy-hand-over-fist-in-2026-1-to-avoid/