AI stocks rotation due to sector rotation

What happened: In recent weeks, a shift has occurred in the market, dubbed the "Great Rotation," with investors moving away from technology stocks, particularly those focused on artificial intelligence (AI). This rotation has led to a decline in AI stocks, with the Nasdaq Composite Index and specific AI players like AMD, Broadcom, and Micron experiencing volatility. The rotation began in early 2025 and has continued into 2026, driven by concerns about the war in Iran and general worries about AI, as well as big tech's capital spending on infrastructure.

Market impact: The "Great Rotation" has significantly impacted AI stocks, with those previously leading market gains now slipping. This shift has opened up opportunities for investors, with some analysts highlighting AMD, Broadcom, and Micron as potential beneficiaries due to their specific AI-related projects. Meanwhile, smart money is pivoting to more reliable investments like dividend stocks, with Procter & Gamble, Realty Income, and Brookfield Renewable being favored.

What to watch next: Investors should keep an eye on AMD's progress with inference and agentic AI, as well as Broadcom's custom AI chips, to see if these companies can capitalize on the AI sector's potential resurgence. Additionally, the upcoming earnings reports from AI-focused companies and the broader market's reaction to geopolitical developments, such as the situation in Iran, will provide crucial insights into how this narrative evolves.