Energy stocks are the only sector really making money in 2o26.
I made that clear in yesterday’s issue, and it’s been a recurring theme for weeks.
But here’s the thing…
Even after energy’s fantastic run, it still accounts for only about 3.5% of the S&P 500 Index.
Meanwhile, Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOGL) are each individually worth more by market cap than the entire energy sector combined.
I like energy.
I like it a lot.
It rates well on my Green Zone Power Ratings system, and I’m heavily allocated to energy in Green Zone Fortunes. My readers have done fantastically well investing in energy, and I believe they’re just getting started.
But let’s be clear.
The stock market is still completely dominated by tech. As goes tech, so goes the broader market. That’s just the way the math works out right now.
So, let’s revisit the tech sector today.
The Iran war is the market’s main preoccupation, but we should remember that there were powerful megatrends in place long before the bombs started dropping.
At the top of the list is AI, of course. AI is upending the business models of many software and services companies. That was true before the war, and it will still be true long after the smoke has cleared.
The war doesn’t change that. If anything, it will likely accelerate AI adoption even more.
So, let’s dig into what’s driving this trend!
A Peek Under the Hood
2026 hasn’t been a strong year for tech stocks, and this is reflected in their Green Zone Power Ratings.
Only eight out of the 76 stocks rate as “Bullish.” Another 25 rate as “Neutral.” And more than half, 43 out of 76, rate as “Bearish.”
Overall, the tech sector is a bit of a minefield. My system is telling us that tech, as a broad sector, is best avoided. If we’re going to hunt for tech stocks, we really need to choose wisely.
Where Does Technology Pick Up Points?
Let’s dig deeper into the tech sector to see what’s driving its ratings.
Tech, and particularly software, has historically been an “asset light” business. It generally doesn’t require a lot of heavy investment to run a tech company, and their products are infinitely scalable.
You can replicate software literally infinite times at a marginal cost of zero. Economics like that just flat-out don’t exist in other industries.
So, it should come as no surprise that the vast majority of tech stocks rate as “Bullish” on their quality factor. The number is a staggering 69 out of 76.
Tech stocks also rate exceptionally well on growth, with 52 out of the 76 stocks rating as “Bullish” on that factor as well.
After that, it really trails off. Only 26 rate momentum “Bullish,” and a measly 10 and 5 for value and volatility, respectively.
High-Momentum Tech Stocks
It’s important to remember that quality and growth are inherently backward-looking. These factors measure what profitability or growth rates were like weeks or months ago.
That’s usually a strong indicator of future profitability or growth, but during times of rapid change – such as an AI revolution – these factors can shift quickly. So, let’s focus primarily on momentum today.
I screened for the 10 tech stocks with the highest momentum factors. These are the tech companies that are bucking the generally bearish sector trend and continuing to push higher.
These 10 stocks share one very important trait.
They are all primarily hardware companies. There isn’t a true software or services stock on the list.
Wall Street is having a hard time handicapping the risk that AI poses to the software sector. It’s still too early to say if Wall Street is overreacting to the threat that AI renders most software providers obsolete.
But it is very clear that the AI revolution will need chips, storage, memory, etc. So, that’s what investors are buying right now.
Teradyne (TER), Lam Research (LRCX), Applied Materials (AMAT), Micron Technology (MU) and Keysight Technologies (KEYS) all rate as “Bullish” on my Green Zone Power Ratings system.
In my Infinite Momentum Tech Titans portfolio, my readers have been long Lam Research, Applied Materials and Micron for months and are sitting on open gains of 90% to 223%.
On the other hand, one stock you might want to avoid would be Intel (INTC). While it rates a fantastic 88 on its momentum score, it rates a pitiful 8 overall, making it one of the riskiest stocks in the S&P 500 to own.
To good profits,
Adam O’Dell
Editor, What My System Says Today
