INVESTING.COM TOP 10 STOCKS FOR H2 2026
In a Nutshell
The video's core message is that the AI-driven market is shifting from semiconductor infrastructure to memory stocks and hyperscaler capex repricing, with rate hike expectations replacing cuts. The top H2 2026 picks are Qualcomm, Oracle, and Meta, selected for their discounted valuations (17x, 16-17x, and underperforming the S&P respectively) and positioning as cheaper AI alternatives to Nvidia. Memory stocks like Micron represent the dominant cyclical opportunity due to multi-year supply contracts, while the market increasingly favors capital-efficient companies over narrative-driven plays.
These notes were generated by AI and may contain inaccuracies.
The session brings together Assaf, Lon Jurik (Editor-in-Chief of Investing.com and VP of News, founder of StreetInsider.com in 1999), Thomas Montero (Global Head of Content at Investing.com), and Ricky Gutierrez (YouTube investor) to review the performance of the top 10 stocks selected in January and introduce 10 new stocks for the second half of the year.
Key disclaimers stated: the discussion contains strong convictions and contrary opinions but does not constitute financial advice; viewers should conduct their own research; past performance does not guarantee future results.
The AI-selected January list delivered strong results, with seven of ten stocks outperforming significantly. The standout performer was a semiconductor stock that returned 79% and at one point exceeded 120% gains within three months before experiencing 30-40% corrections.
Thomas Montero noted the first half of 2026 was characterized by a shift toward AI enablers and infrastructure plays. However, he identified a changing narrative for the second half: a repricing of interest rates and AI capital expenditure (capex). The market had expected rate cuts but is now pricing in potential hikes, requiring investors to reprice margins for 2027-2028 and push expectations for large AI margins further out to 2030.
Lon Jurik highlighted the rotation away from the "Magnificent Seven" stocks, with four of the seven underperforming the market year-to-date. He described massive free cash flow rotation from semiconductor stocks into memory stocks, noting that hyperscalers' free cash flow has dropped sharply due to ramping capex requirements.
Memory stocks (Micron, SanDisk) emerged as the dominant story, with IBM issuing a warning that customers are securing memory prices by cutting back on software purchases. Lon emphasized that memory supply constraints are creating pricing power for memory chip makers at the expense of hyperscalers.
Lon Jurik discussed the appointment of Kevin Wash as the new Fed Chair. Despite market pricing in rate hikes, Lon believes Wash (appointed by Trump) will maintain current rates and allow inflation to run higher rather than tightening policy. The recent favorable CPI print supports this view. Lon characterized this as the economy running hot with "levers on," suggesting continued opportunities.
Ricky Gutierrez raised concerns about memory stocks' cyclical nature, noting that Micron and SanDisk have historically experienced boom-bust cycles. He questioned whether the current AI-driven demand represents a structural shift or temporary phenomenon.
Lon responded that this cycle differs from previous ones because companies are locking in multi-year supply contracts rather than spot purchasing. He cited IBM's warning as evidence that customers are prioritizing memory purchases over other IT spending. Lon noted Micron's new plant announcement in New York will eventually add supply, but current capacity constraints favor suppliers.
Lon highlighted Micron's valuation at 6x forward earnings as "insane" if the company can maintain earnings power for three years. He suggested Micron could potentially become the largest market cap company, surpassing even Nvidia's earnings scale.
SpaceX completed the largest IPO in history at approximately $2 trillion valuation, closing at $140 per share with float under 5%. Thomas Montero expressed skepticism about the current valuation, suggesting $90 would be more reasonable given execution risks and the speculative nature of space-based data centers.
Lon Jurik reframed SpaceX not as a space company but as a data center company, citing $50 billion contracts for one gigawatt of capacity with Anthropic and Google. He noted Elon Musk built the infrastructure when memory and GPUs were cheaper, positioning SpaceX advantageously.
Ricky Gutierrez stated he would not invest, citing discomfort with investing in technology that doesn't yet exist and concerns about irrational valuations during market uncertainty. He noted SpaceX is already down 34-35% from IPO highs with private investors yet to sell.
Lon indicated he would scale into SpaceX positions gradually over six months but prefers exposure through Tesla, which he expects to merge with SpaceX within two years.
Thomas Montero identified SpaceX's IPO as marking a paradigm shift where companies remain private longer, squeezing public market value while accessing private capital. He predicted more companies like Anthropic and OpenAI will delay IPOs, making private market access increasingly important for retail investors.
The AI-generated list for the second half of 2026 employs multiple factors with conviction scores. The ranking differs significantly from the January list, with positions 10-6 representing value-oriented plays compared to the top five growth-oriented selections.
These stocks are positioned away from the AI supply chain squeeze but continue delivering profits in an overvalued market. They represent solid businesses that haven't become overly hyped, making them suitable for investors seeking stability while the broader market reaches record highs repeatedly.
The selection includes companies with strong fundamentals based on valuation and performance metrics. Transit Dime stands out as a company that consistently generates significant profits through its aerospace aftermarket business, demonstrating a track record built over many years.
Deckers Outdoors, maker of Uggs and Hoka products, represents a retail play that continues to see sustained consumer demand. Despite initial skepticism about Ugg boots when first introduced, they have maintained year-over-year sales growth with women purchasing new styles repeatedly. Hoka products also contribute to this ongoing retail success.
HCA represents a hospital sector investment with solid earnings performance. The portfolio also includes established investment banking services that are currently undergoing transitions, presenting potential valuation opportunities.
The discussion references a December 2025 live stream that featured nuclear fusion energy companies, which initially attracted investors but subsequently declined 40-50%. For long-term investors, the focus should be on fundamental analysis rather than short-term price movements.
These companies trade at extremely low P/E ratios, indicating minimal premiums. They offer an alternative for investors who want to avoid the volatility associated with AI-related stocks while still participating in market gains.
HCA specifically trades at a very low P/E ratio and appears technically oversold based on 52-week lows, making it more suitable for long-term investors rather than those seeking quick returns.
Meta Platforms has underperformed the market with only 1.4% year-to-date gains compared to the S&P 500's 10% increase. The primary reason is substantial capital expenditure, with planned spending of $125-145 billion on data center infrastructure.
The company plans to deploy 7 gigawatts of data centers in the current year, doubling to 14 gigawatts the following year. Meta demonstrates significant cost efficiency, building data centers at approximately $22 billion per gigawatt compared to the industry estimate of $100 billion per gigawatt for new hyperscalers.
Meta is developing its own AI chips under the code name "Iris," scheduled for September release, as companies seek alternatives to Nvidia's market dominance. The company has made substantial investments in AI talent, including $100 million compensation packages for researchers and the acquisition of Alexander Wang's company, primarily to secure his expertise.
Recent performance improvements coincided with the announcement of a new frontier AI model that will provide developer access through a token-based revenue model similar to OpenAI and Anthropic. Additionally, Meta is exploring renting excess compute capacity from its data centers.
Based on SpaceX's precedent of renting one gigawatt of compute for $50 billion, Meta's 14 gigawatts could theoretically generate $700 billion in rental revenue, though actual implementation would likely be more conservative.
Meta self-funds its growth through strong free cash flows rather than relying on debt financing. Current margins for this hyperscaler are around 50%, but projections suggest potential expansion to 60-70% by 2028-2029 as capital efficiency improves.
Instagram recently announced plans to develop subscription-based monetization products across Meta's subsidiaries, representing a strategic shift from the current advertising-focused business model. WhatsApp also presents untapped monetization potential.
Texas Instruments has benefited from AI supply chain dynamics and shows strong year-to-date performance. However, the stock trades at approximately 55 times earnings, raising concerns about sustainability when interest rates potentially increase.
The company participates in EV growth and other industrial sectors, with favorable capex cycles emerging in some business areas. The stock is viewed primarily as a momentum play rather than a long-term investment, with technical indicators showing overbought conditions on longer timeframes.
From recent lows of $175 three months ago, the stock has gained 60-65%, demonstrating strong short-term performance but also suggesting limited upside potential for extended holding periods.
Trip.com represents a significant value opportunity following substantial price declines due to litigation risks and concerns about China market growth. The company operates primarily in Chinese territory with a monopoly position in its market.
The regulatory overhang appears to be diminishing, with downside risks largely priced in. Growth catalysts include increased foreign travel to China due to visa policy changes and AI travel partnerships with Google.
Despite ongoing China-related uncertainties, the stock presents compelling long-term value based on current valuations versus growth potential. Oil price volatility remains a concern for any travel sector investment.
Trip.com shares characteristics with last year's Venture Global pick, which was selected based on earnings potential before external catalysts materialized. The company appears well-positioned for potential catalysts, though timing remains uncertain.
The investment thesis suggests potential for substantial long-term returns, possibly triple-digit gains, though realization may require patience as growth levers develop over time.
Trip.com trades at a 5x P/E ratio while generating more revenue than Tesla, making it attractive for value-focused, long-term investors. This fundamental cheapness supports inclusion in personal investment portfolios.
Oracle has emerged as a key player in AI data center construction, though this has involved substantial debt financing. Capital expenditure is projected at $90-95 billion with currently negative free cash flow. The company carries $167 billion in total debt and recently raised $5 billion in February, with plans for an additional $20 billion by year-end.
The company has utilized convertible preferred stock to avoid direct debt increases, though this dilutes equity upon conversion. Credit ratings were recently downgraded to BBB-1/BBB-, one notch above junk status, with credit default swaps indicating market concerns about potential default.
Oracle currently operates 1.2 gigawatts of AI capacity, planning to add 1 gigawatt this quarter and reach 10 gigawatts over three years. Based on SpaceX's $50 billion per gigawatt rental precedent, this capacity could theoretically generate $500 billion in revenue, though actual figures would be substantially lower due to existing locked contracts.
The company maintains $638 billion in cloud contract backlogs and has reduced workforce by 13% over the past year to align costs with expansion. Current trading at 16-17 times earnings represents a discount to the S&P 500's 21x multiple.
Larry Ellison's political connections and Oracle's position as a US-based AI infrastructure provider may provide additional strategic advantages. The stock presents significant volatility potential, with the possibility of substantial gains or losses depending on sentiment shifts around the company's debt-financed expansion strategy.
Oracle is positioned as a cheap AI play with significant potential, particularly when compared to the premium being paid for AI compute elsewhere. The stock trades at a lower valuation multiple than typical AI plays, making it rare in the current market. However, there are notable risks including concentration risk from the heavy bet on the OpenAI partnership, and concerns that OpenAI is not leading the AI race as previously expected. Despite these risks, the future potential remains substantial due to the discounted valuation relative to other AI investments.
Qualcomm was selected as the number one stock for the second half of 2026, surprising panelists given the concentration of AI plays on the list. The selection was unexpected, particularly since Oracle ranked as number two, making Qualcomm an unusual choice for the top position.
Qualcomm missed the initial AI wave, primarily known for mobile chips found in most mobile phones. The company recently made a significant push into the data center market, opening access to a trillion-dollar total addressable market (TAM). In June, Qualcomm announced their data center strategy and secured a partnership with Meta, who will use Qualcomm's GPUs in their upcoming buildout. This partnership provides significant backing from a major technology player.
Qualcomm acquired Modular, a company that develops AI models enabling different hardware to communicate without requiring code rewrites. The company is also positioned to benefit from the Internet of Things sector, including AI robotics and physical AI applications.
Several headwinds face Qualcomm:
- Potential loss of Apple as a customer in the US market, with rumors suggesting Apple may drop Qualcomm from the iPhone 18 US version while retaining them in other geographic regions
- Memory price increases, as Qualcomm was late to lock in memory prices compared to competitors like Nvidia, who secured favorable terms with Micron and Sandisk
- The company is described as a small player in AI, having missed the opportunity to secure advantageous memory pricing
Qualcomm trades at 17 times forward earnings compared to 21 times for the S&P 500, representing an undemanding multiple. The investment thesis centers on:
- Meta's backing providing validation
- Significant remaining opportunity in data centers
- Market desire to reduce dependency on Nvidia
- Potential for performance improvements that could drive substantial stock appreciation
The market is pricing in the risk of Apple dropping Qualcomm, demonstrating concentration risk when companies become overly dependent on single large customers. This situation parallels other AI suppliers to hyperscalers who may face similar challenges as companies develop in-house solutions. Qualcomm represents a value play that has already absorbed significant downside from missing AI growth, yet retains substantial room for recovery.
The chip market is highly cyclical and competitive, with Nvidia maintaining leadership through superior talent, R&D capabilities, and margins. Qualcomm's strategy relies on expansion among players seeking cheaper alternatives to Nvidia, particularly as margins compress for other market participants. The company is not expected to deliver 200-300% returns seen in other AI chip plays, and current performance reflects the absence of competitive products rather than just negative sentiment.
Qualcomm experienced a 100% gap up within 50 days from April, indicating favorable performance when sentiment aligned. However, if Apple drops the company as rumored, this could intensify negative sentiment. The stock appears to have already experienced its rally, with potential for further downside into the low hundreds before finding support. Long-term analysis on weekly timeframes dating back to 2019 shows the stock remains fundamentally bullish despite current challenges.
Stock selection lists are changing more rapidly than in previous periods, reflecting shifts in interest rate environments, oil markets, and broader economic factors. Timing, stock quality, momentum, and narrative strength have become increasingly important factors in investment decisions.
Investing Pro is offering up to 60% discount during a July sale period. The platform's ProPicks feature has demonstrated strong performance since inception nearly two years ago. New strategies and timeframes are being launched, expanding beyond monthly stock picks to include additional models and investment approaches for the second half of the year.
Key themes for the second half include:
- Continued earnings compounding at elevated rates
- Increased focus on capital efficiency
- Interest rates remaining a central narrative
- Greater emphasis on actual metrics and valuations rather than narratives alone
- Recognition that this remains a stock picker's market, potentially more so than earlier in the year
Access to information remains the key differentiator for long-term investment performance. Technical analysis should be complemented by fundamental understanding of companies being considered for investment. The combination of comprehensive research tools and informed decision-making improves investment outcomes compared to random stock selection or market timing approaches.
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