With just over two months remaining in the year and major stock indexes near record levels, some investors may be concerned about lofty market valuations and question how long the artificial intelligence (AI) driven surge can persist. On the other hand, some see AI as a transformative force that will drive productivity, profit growth, and investment gains for years to come.
No matter your perspective, making sweeping changes to your investment plan based on emotions is unwise. A smarter strategy is to focus on companies you believe justify their valuations, even if economic conditions worsen, AI investment slows, or other challenges disrupt short-term forecasts.
These are five growth stocks I’m especially enthusiastic about for 2026.
Image source: Nvidia.
Going all-in on AI
Since many AI-related stocks are trading at high valuations, investors should be careful not to focus solely on one segment of the AI ecosystem. Nvidia ( NVDA -0.31%), Oracle ( ORCL -4.95%), and ASML ( ASML 1.27%) are three distinct businesses, each with significant long-term AI growth prospects.
Nvidia
Having risen more than 34% so far this year, Nvidia is set to outperform the S&P 500 ( ^GSPC 1.07%) in 2024, following an over 800% increase from early 2023 through the end of 2024. Despite these gains, the stock remains reasonably valued due to its rapid earnings expansion.
Nvidia’s cutting-edge graphics processing units (GPUs) and related software excel at managing demanding AI tasks. As long as large-scale cloud providers continue investing heavily in data centers, Nvidia’s profits are likely to keep climbing.
Oracle
Oracle is one of the fast-growing hyperscalers in the industry. Its Oracle Cloud Infrastructure ranks fourth in market share, trailing Amazon Web Services, Microsoft Azure, and Alphabet’s Google Cloud. Still, I believe Oracle could become the leading AI cloud provider by 2031.
Of course, this outlook depends on OpenAI’s planned 10-gigawatt data center project proceeding as expected. Even without OpenAI, Oracle is well-positioned to capture market share from established players, as its facilities are specifically designed for AI rather than general computing needs.
Oracle is undoubtedly the riskiest pick among these stocks, but for those seeking a bold, long-term investment, it’s worth considering.
ASML
ASML may be the most straightforward way to invest heavily in AI. The company produces photolithography machines essential for making semiconductors. This process is vital in chip manufacturing, as it involves etching circuit patterns onto silicon wafers.
ASML holds a monopoly on state-of-the-art extreme ultraviolet (EUV) systems, which use specialized light to create extremely fine features. These tools are crucial for producing chips with densely packed transistors, such as the GPUs Nvidia makes for parallel computing.
In essence, ASML offers a comprehensive way to benefit from the rising demand for AI chips.
A tech stock that goes against the grain
The rise of AI is putting pressure on the software-as-a-service model for companies like Adobe ( ADBE 3.07%).
Adobe’s business depends on subscription fees, charged monthly or annually based on user count. However, if customers can accomplish more with fewer resources, companies might reduce the number of subscriptions they need. Additionally, if a competitor’s AI-powered tool can match some of Creative Cloud’s features at a lower price, Adobe’s competitive edge could be threatened.
Even with these challenges, Adobe’s current valuation is attractively low. The stock has dropped 26% this year and is down 34.5% over the past five years, while the S&P 500 has gained 90% in that time. Adobe now trades at just 20.5 times earnings and 15.2 times free cash flow, compared to its five-year average price-to-earnings ratio of 43.6.
While Nvidia, Oracle, and ASML command high valuations due to their growth outlooks, Adobe is priced as though its peak has passed. I believe dismissing Adobe is a mistake. For investors seeking value in tech stocks for 2026, Adobe could be a standout opportunity.
Netflix’s resilience in downturns justifies its premium price
Looking beyond the tech sector, Netflix ( NFLX 3.36%) stands out as a communications powerhouse. Alongside Nvidia and Oracle, Netflix is part of the “Ten Titans,” a select group of growth stocks that together make up an impressive 39% of the S&P 500.
Although Netflix trades at a premium, it remains one of the market’s strongest companies. With consumers cutting back on non-essential spending due to inflation and rising living costs, one might expect Netflix to lose subscribers or face pricing pressure. However, Netflix has continued to rapidly grow its cash flow, driven by increasing revenue and improving margins.
It’s easy for a business to thrive in favorable conditions, but those that continue to perform well during tough times are the ones worth holding for the long term.
Netflix’s outstanding performance serves as a benchmark for growth investors. It demonstrates that customers are choosing Netflix over other entertainment options, highlighting the platform’s value. This also suggests that Netflix is relatively immune to economic downturns, making it an appealing choice for investors who are cautious about the market’s direction in 2026.
