In 2026, the market has very clearly established which stocks it believes are artificial intelligence (AI) winners and losers. Software stocks in general have taken a big toll, but some are being affected by AI-driven fears more than others. Meanwhile, some hardware stocks are putting up monstrous returns, even as huge names like NVIDIA (NASDAQ: NVDA) have stalled.
These are the market’s biggest AI winners and losers so far in 2026, focusing on U.S. tech stocks with market capitalizations above $10 billion.
Applied Optoelectronics Rides the Transceiver Wave
Among U.S. technology stocks with market capitalizations currently above $10 billion, Applied Optoelectronics (NASDAQ: AAOI) is the market’s best performer of 2026. Shares have risen by more than 300%. Throughout the year, Applied has repeatedly announced that a major hyperscale customer is ordering its optical transceivers.
Applied’s rise comes as investors are rushing into optical transceiver stocks. Notably, Lumentum (NASDAQ: LITE), a much larger player in this space, has seen its share price rise more than 130% in 2026. Optical transceivers are becoming increasingly in demand as data center networking components because they allow companies to process more data at high speeds. Beginning 2026 with a market capitalization of just $2.4 billion, this trend has disproportionately benefited shares of Applied Optoelectronics.
With Applied’s market capitalization now approaching $12 billion, and its last 12 months' sales being $445 million, investors are pricing in vast growth going forward. Applied is growing rapidly, with revenues rising 84% year over year (YOY) in 2025.
Analysts expect this growth to accelerate, projecting a sales increase of nearly 110% in 2026. Analysts also see the firm being profitable on an adjusted basis for the first time since 2018. They project that Applied will generate adjusted earnings per share (EPS) above 80 cents, compared to a 26-cent loss per share in 2025.
Software Sell-Off Hits Atlassian From Multiple Angles
Atlassian (NASDAQ: TEAM) has been among the market’s hardest-hit software stocks amid fear of AI disruption. Overall, shares are down more than 60% in 2026. This is likely because, unlike many software companies, a large part of Atlassian’s customer base is software developers themselves. AI coding tools have made software development significantly easier, which in turn could reduce the number of software developers companies need.
Atlassian operates on a “seat-based” model, charging customers based on the number of their employees with access to their tools. If the number of software developers that its customers need falls, this directly impacts the firm’s seat-based model. Furthermore, markets may believe that Atlassian’s customers can quickly develop applications using AI tools that perform the same functions as their software.
For these reasons, the rising prevalence of AI coding has hit Atlassian harder than most software companies. Meanwhile, Atlassian’s growth continues to be strong, with revenues rising more than 23% YOY last quarter. Still, the risks that the company is facing raise significant questions around whether this growth can continue. Currently, the market is pricing Atlassian as a company that will see little, if any, free cash flow growth over the long term. The firm’s last 12 months' free cash flow fell 7% in its latest quarter.
SanDisk’s Incredible Run Continues
Despite SanDisk (NASDAQ: SNDK) rising by a whopping 559% in 2025, investors have continued to bid the stock higher and higher. Shares are up more than 250% in 2026, making SanDisk one of the market’s top-performing AI stocks. Overall, since going public in February 2025, SNDK has provided an astonishing return of over 2,200%.
SanDisk’s rise is being acutely driven by rapid demand for memory and storage chips within data centers. SanDisk is one of the world’s leaders in NAND flash memory, a relatively concentrated industry. Due to this, supply is extremely tight, meaning that the prices SanDisk can charge are exploding.
TrendForce projects that NAND Flash prices will rise 70% to 75% quarter over quarter (QOQ) in Q2 2026. This comes as TrendForce estimates that prices already rose 85% to 90% QoQ in Q1 2026. Together, if these forecasts are accurate, they imply NAND Flash price increases of 215% to 233% through the first six months of the year. Thus, it’s not too hard to see why SanDisk shares have risen so dramatically. Notably, forecasts project that SanDisk’s adjusted EPS will more than double to over $14 in just one quarter. This compares to SanDisk’s adjusted EPS last quarter of $6.20.
A Software Recovery Is Unlikely to Come Easily
Overall, Applied Optoelectronics, Atlassian, and SanDisk clearly sit on opposite ends of the spectrum when it comes to how the market sees AI affecting their businesses. Analysts continue to point to a big recovery ahead for Atlassian, with many projecting upside of 100% or more. While a rebound is possible, the release of new AI tools is unlikely to slow down in the near term. This could continue to exacerbate the already pronounced fears around software stocks.
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The article "These are the 3 Biggest AI Winners and Losers of 2026" first appeared on MarketBeat.
