Some of the biggest technology stocks in the market could wake up in 2026 after a recent slump, according to Melius Research. Five of an “Elite 8” group of mega-cap tech stocks are in the red so far this year, underperforming the broader market, as growth stocks have been weighed down by geopolitical fears , elevated valuations, concern about circular AI financing and a broader market rotation into smaller, value-oriented names. What Melius calls the Elite 8 expands on the “Magnificent Seven” group to include Broadcom alongside Nvidia , Tesla , Apple , Meta , Amazon , Microsoft and Alphabet . Of those, Alphabet is the leader this year, rising nearly 6.5%, as Wall Street backs Google’s AI leadership. Apple and Broadcom, meanwhile, are each down more than 6%. Gains in what Melius head of technology research Ben Reitzes calls the “shortage cohort” — makers of AI components that are in short supply — have come at the expense of the Big Tech stocks. Most notably, those companies are benefiting from a shortage of memory chips , a key component of consumer electronics devices and critical parts of the infrastructure needed to build out data centers. This rotation can’t last for long, however, according to Reitzes. Not for long “Investors may chase shortages for a bit longer — but fundamentals for most in the Elite 8 remain very strong and likely won’t underperform for long,” Reitzes wrote in a Monday note to clients. “The 8 biggest tech companies are about flat on average since Nov. 1st … There are lots of excuses from a rally that needs to broaden out (lower rates), AI fatigue and higher costs for components. To that end, there’s been a violent rotation into the ‘shortage cohort’ of DRAM, HDD, CPU and NAND stocks and the Russell 2000 is outperforming the S & P 500 by over 650 basis points year to date,” the analyst continued. “Can Nvidia, Broadcom and Microsoft stocks make a comeback? We still think so.” Reitzes believes that as the cost of on-premise servers and storage jumps — in some cases by as much as 50% this year — that more companies will want to turn to the cloud for both their AI and traditional workloads, where price increases are more manageable. That, in turn, should benefit companies such as Nvidia, Broadcom, and Microsoft, given their cloud-based services. “Even traditional cloud pricing was rising at Microsoft and Nvidia GPU instances are seeing price hikes at Amazon,” Reitzes explained in his note, adding that he has seen pricing increase for Nvidia’s H100 and H200 chips at major cloud companies since the November launch of Anthropic’s latest AI model, Claude Opus 4.5 . Anthropic’s inference explosion should give a lift to Amazon Web Services and Google Cloud revenues, he said. “If there is upside to Cloud revenues, capex will see upside too — not just due to DRAM and components,” Reitzes said.
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