Dear Reader, | If you have any kind of money in the stock market ... | You MUST watch this urgent broadcast to understand what's happening ... | Because our research shows we're in for a very turbulent 2026. | And people who are ignoring the signs risk total financial ruin ... | Because it could erase years of gains from investors' portfolios. | Consider yourself warned. | Click here to watch this urgent message - before it's too late. | Sincerely, | Eliza Lasky,
Weiss Advocate | | | | | | |  | Fresh Insight for You |
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The Great Tech Rotation of 2026 |
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Something big is happening in the market right now. |
And if you're scratching your head wondering why your Amazon and Microsoft shares are struggling while your buddy's small-cap portfolio is crushing it, you're not alone. |
Here's what's going on. |
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The Numbers Don't Lie |
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We're watching the biggest rotation out of big tech in years. Those giant tech companies are down 1.7% this year. Meanwhile, smaller companies? They're up nearly 6%. |
And here's where it gets personal: the Nasdaq Composite, which tracks over 3,000 tech-heavy stocks, is sitting at 23,031.21. |
Think about it this way. The Nasdaq has been the darling of the market for years. It's where all the big tech names live. Apple, Microsoft, Amazon, Alphabet, Meta—they're all there. When the Nasdaq struggles, it means the backbone of your 401(k) is probably struggling too. |
That's not a small difference. That's your money choosing a completely different direction. |
The Russell 2000, which tracks smaller companies, just hit an all-time high around 2,670.34. At the same time, the tech-heavy Magnificent Seven ETF (MAGS) sits at 63.46. |
Compare that to the Russell 2000, which was actually up slightly today at 2,670.34. |
While big tech bleeds, small caps are holding steady. |
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Why Tech Is Getting Hammered |
Three big reasons are pushing money out of big tech right now. |
First, the price tags got too high. Small-cap stocks are trading at about 15 times their expected earnings. The S&P 500? That's at 22 times earnings. When smaller companies look like bargains compared to the market average, investors start paying attention. |
And here's the kicker: analysts expect the Magnificent 7's profits to grow about 18% this year. That's the slowest pace since 2022. The other 493 companies in the S&P 500? They're expected to grow 13%. |
That gap matters more than you might think. For years, big tech grew profits way faster than everyone else. That justified the premium prices. But now? The gap is closing fast. |
Second, regulators are circling. Alphabet is in court right now dealing with its search monopoly ruling. They can't make those exclusive default search deals anymore, you know, the ones that made Google the default on every iPhone. |
Apple's got its own mess. A $7 billion class action trial just started in February over App Store commissions. That's real money, and it could force major changes to how Apple does business. |
Third, AI just ate their lunch. Anthropic just dropped some game-changing AI plugins for their Claude system. This thing can do legal reviews, accounting work, and complex coding—all on its own. |
Within a week, software giants like Salesforce, ServiceNow, and Adobe saw their stock prices drop by double digits. Investors realized that if AI can do the work, why pay for expensive enterprise software subscriptions? |
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$650 Billion Spending |
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Here's where it gets weird. |
Big tech companies are going to spend more money on AI infrastructure than ever before. We're talking $650 billion in 2026, that's a massive jump from last year. |
Microsoft, Amazon, Google, Meta, and Apple are pouring cash into this stuff like there's no tomorrow. |
But investors aren't impressed. Why? |
Stephen Yiu, who runs the Blue Whale Growth Fund, put it bluntly: "I would not want to position into the AI spenders. I would rather be on the receiving end." |
He'd rather own companies that benefit from AI spending, not the ones writing the checks. |
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The Chip Stock Comeback Story |
And here's where the story gets interesting. Just when everyone thought chip stocks were done for the year, they bounced back hard. |
Remember that brutal 5% drop in the semiconductor index we saw earlier this week? Yeah, well, investors apparently decided that was an overreaction. |
As for February 6, 2026, the Nasdaq is actually advancing. The S&P 500 and Nasdaq 100 are both climbing as the "AI-fueled tech stock rout eases." Chip stocks are leading the charge back up. |
Why the sudden optimism? |
McKinsey & Company predicted that the semiconductor market is expected to reach $1 trillion in value by 2030. |
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Just in Q4 2025, semiconductor sales hit $236.6 billion. That's a 37.1% increase from the same period the year before. |
Logic chips: the ones made by Nvidia, AMD, and Intel, jumped 39.9% to $301.9 billion. That's huge. These are the chips doing all the heavy AI computation. |
Memory chips rose 34.8% to $223.1 billion. Every AI model needs massive amounts of memory to function. That's money in the bank for companies like Micron and SanDisk. |
So demand isn't dropping off. It's shifting and growing. |
| | | | Chip stocks just bounced back hard. What are you doing next? | |
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Stock Market Rotation |
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So if money's leaving tech, where's it going? |
Basic materials are crushing it. Mining, metals, gold—these old-school sectors are up over 9% this year. Industrials and energy aren't far behind. |
Why? Because building all those AI data centers requires copper wiring, massive amounts of electricity, and industrial infrastructure. You can't run a data center on software alone. |
Michael Arone from State Street calls this the "physical reality" of 2026. For years, tech was all about efficiency and virtualization, doing more with less. But AI needs real stuff. Power plants. Copper mines. Natural gas pipelines. |
That's creating opportunities in places investors ignored for years. |
Small caps are having their moment. The Russell 2000 is up 5.94% in value stocks and over 6% in growth stocks. Compare that to large-cap growth stocks, which are up just 0.13% this year. |
These smaller companies benefit from something big: the "One Big Beautiful Bill Act" passed in 2025. It extended 100% bonus depreciation for domestic manufacturing. That means companies can write off equipment costs immediately, making it cheaper to invest in American factories. |
More manufacturing means more demand for industrial equipment, logistics, and materials. All stuff that helps smaller, focused companies more than giant tech platforms. |
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What You Should Know |
This rotation isn't a one-week blip. Michael Arone thinks it could run for several quarters, driven by "a powerful one-two punch of an economy that's doing better than expected, supported by fiscal and monetary stimulus and combined with broadening earnings growth." |
But here's the thing: rotations don't last forever. |
Big tech isn't going away. These companies still print money. They still dominate their markets. And yes, they're still investing in the future. |
The question isn't whether Microsoft or Apple will survive. They will. The question is whether they're worth the prices investors are paying right now. |
For the past two years, putting money into big tech was the obvious move. Now? It's less obvious. The rest of the market is catching up in earnings growth. Valuations are more attractive outside tech. And the regulatory environment is getting tougher. |
That doesn't mean you should panic-sell your tech holdings. But it does mean the next year might look different from the last three. |
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Bottom Line |
If your portfolio is heavy in big tech, and a lot of portfolios are, you're probably feeling some pain right now. That's normal during a rotation. |
But this rotation is also creating opportunities. Small caps haven't looked this attractive in years. Industrial and materials companies are benefiting from real, tangible demand. And energy stocks are getting a boost from AI's massive power needs. |
The market is basically saying: "We've been obsessed with software. Now we need hardware again." |
That shift won't happen overnight. Big tech will still be important. But the easy money in mega-cap tech might be behind us for a while. |
The smart move? Don't fight the rotation. Pay attention to what's working now. And remember that diversification isn't just a buzzword, it's how you survive when the market changes direction. |
Because the market always changes direction. That's the only thing you can count on. |
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Disclaimer: This analysis is for educational purposes only and should not be considered investment advice. Always do your own research before making investment decisions. |
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