After a wave of selloffs through November and December, AI and big-tech stocks are mounting a strong rebound. The move has led to a debate on whether the AI bubble has finally popped or the selloff was a pause in a much wider trend.
Based on recent developments, the answer appears clearer. The AI selloff was not driven by collapsing demand or fading innovation. Instead, it stemmed from short-term financing fears surrounding the enormous cost of building the global AI infrastructure. As those concerns begin to ease, markets are once again repricing AI exposure, this time with a sharper focus on where the money actually flows.
What Triggered The AI Selloff?
The AI boom is capital-intensive on an unprecedented scale. Data centers, GPU clusters, power connections, and networking infrastructure cost hundreds of billions of dollars. Estimates now put hyperscaler AI capex for 2026 at $520–$530 billion.
That buildout is funded through three channels: Cash financing, where companies like Microsoft (NASDAQ: $MSFT), Alphabet (NASDAQ: $GOOG), and Meta Platforms (NASDAQ: $META) reinvest massive free cash flow, Debt financing, primarily through bond markets, and private equity financing, backing large, standalone data center projects
While cash financing remained healthy, stress emerged in the debt and private equity markets late in 2025. Several AI-related bond deals struggled, and high-profile private equity funding discussions stalled. That was enough to spook investors, especially in highly leveraged AI infrastructure stocks.
Importantly, this was a financing issue, not a demand issue. AI workloads, model training, and enterprise adoption never slowed.
Why AI Stocks Are Bouncing
The narrative shifted dramatically after reports that OpenAI is exploring a venture fundraising round of up to $100 billion, potentially the largest in history. A raise of that size signals that sovereign wealth funds and large institutional capital are stepping in, reframing AI as a strategic, long-duration global investment, not a speculative cycle.
That development eased fears around financing viability and triggered a sharp rebound in AI-linked equities, particularly those that were hit hardest during the selloff.
Follow the Money, Not the Headlines
A key lesson heading into 2026 is that the biggest winners may not be the AI model developers, but the companies selling the infrastructure that powers them.
One clear example is CoreWeave, a highly leveraged “NeoCloud” operator that builds AI data centers and rents compute to hyperscalers. When AI spending surged earlier in 2025, CoreWeave stock exploded. When financing fears surfaced, it collapsed from near $200 to the low-$60s. As spending expectations rebound, the stock has already begun to recover, highlighting both the risk and upside of leveraged AI infrastructure plays.
Another standout is Micron Technology (NASDAQ: $MU). Micron supplies memory critical to AI data centers and has historically been a highly cyclical stock. What caught investors’ attention recently was not just a strong earnings beat, but forward guidance, which jumped from roughly 60–70% growth to as high as 150–170%. That guidance was issued even before the OpenAI funding reports, reinforcing the view that AI infrastructure spending is accelerating into 2026.
Why Nvidia May Face Headwinds
Despite its dominance, Nvidia (NASDAQ: $NVDA) is no longer the uncontested favorite it once was. The reason is competition from its own largest customers.
Alphabet, Meta, Amazon (NASDAQ: $AMZN), Microsoft, and OpenAI are all pushing aggressively into custom AI silicon. Google’s TPUs, Amazon’s Trainium chips, and in-house accelerator programs are increasingly replacing Nvidia GPUs for internal workloads. At the same time, Big Tech is collaborating to reduce reliance on Nvidia’s CUDA software ecosystem.
Nvidia remains a powerhouse, but facing a coordinated push from the world’s largest technology companies introduces real long-term pressure on margins and market share.
The Stocks Leading the Rebound
Screening for AI stocks that led during the boom, fell hardest during the selloff, and are now rebounding reveals a clear trend: NeoCloud and infrastructure operators. Key names include Applied Digital (NASDAQ: $APLD), Nebius Group (NASDAQ: $NBIS), and Oracle (NYSE: $ORCL). Among them, smaller and faster-growing players like APLD and NBIS offer higher-beta exposure to renewed AI spending.
Bottom Line
AI remains a compelling long-term investment heading into 2026, but selectivity matters. The next phase of the cycle favors infrastructure providers, memory suppliers, and data-center operators, not just headline AI names. Volatility is likely, but the structural AI buildout is far from over, and the stocks tied directly to that spending could potentially lead the next wave of new highs.
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