Wall Street analysts have spent 2026 accumulating buy ratings on the development of AI. The stocks they ignored performed better.
S&P 500 stocks (^GSPC) with the largest share of buy ratings from analysts have lagged those with the smallest share for most of the year, according to Michael Kantrowitz, Piper Sandler’s chief investment strategist. Measured year over year, this is the third worst period in Piper data dating back to 1995.
“The MOST favored stocks on the short side have underperformed their LEAST favored stocks for most of 2026,” Kantrowitz wrote in a note to clients Wednesday.
This week showed what that looks like. Alphabet had its worst month ever, Intel had its worst day since 1974 and the Nasdaq (^IXIC) suffered its biggest daily decline since June as Big Tech results reignited concerns about AI spending.
Adding it all up, the AI business has lost about $5 trillion in market value since Oct. 6, according to Yahoo Finance calculations, including about $1.6 trillion on Friday alone. Nvidia and Alphabet, two of Piper’s favorites, lost about $835 billion each, or about a third of the total.
The rest of the market held up. The other 625 big U.S. stocks listed by Yahoo Finance gained about $1.3 trillion during the same period, led by Eli Lilly (LLY), Walmart (WMT) and Exxon Mobil (XOM). It’s the fall of Wall Street’s favorites, which is happening in a single month.
Piper picks the top and bottom two groups from each of the index’s 11 sectors, so it’s not one technology against everything else.
Only two crises were deeper, in 2001-2002 and 2010. Both were close to major turning points in the market, the first when the tech bubble burst and the second when stocks recovered from the financial crisis.
Why it affects more wallets than you think
Most investors own Wall Street’s favorite stocks, whether they chose them or not. Nvidia (NVDA) and Alphabet (GOOGL) are among the largest weightings in the S&P 500, so any index fund or 401(k) that tracks it draws on their fortunes.
The crisis also shows how an overly widespread idea can harm investors. While almost every analyst already likes a stock, much of the good news is in the price, and there are few new buyers left to convince. A disappointment then bites.
This is what the favorites are up against. Six of the nine names on Piper’s list are down this year, from Alphabet and power producer Vistra (VST) to Wynn Resorts (WYNN) and Take-Two Interactive (TTWO). The exceptions are three AI development names: Nvidia, Arista Networks (ANET), and Comfort Systems (FIX).
Meanwhile, almost all of the underappreciated stocks are up, led by stable names like Kenvue (KVUE) and Illinois Tool Works (ITW). As a group, however, they have only roughly kept pace with the S&P 500. This is less a flight of laggards than a fall of favorites.
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