Honestly, the stock market right now feels like it's trying to shake off a massive hangover. We’ve spent years obsessed with the "Magnificent Seven," but if you look at what stocks are up this week, the leaderboard looks way different than it did even six months ago. The big tech giants are mostly treading water or even dipping, while a ragtag group of biotech firms, regional banks, and infrastructure players are the ones actually making people money.
It’s a weird time. Small-caps are finally catching a breeze. The Russell 2000 actually rose while the Nasdaq and S&P 500 slipped on Friday. If you’re only watching the Dow, you’re missing the real action happening in the corners of the market that usually get ignored.
The Small-Cap Revenge and Why the Big Guys Are Stalling
For most of 2025, it was easy. You bought Nvidia, you bought Microsoft, and you went to lunch. But 2026 has started with a slap to the face for the tech-heavy crowd. Treasury yields just hit a four-month high, and that usually acts like gravity for expensive software stocks.
We are seeing a massive "rotation." That’s just a fancy Wall Street word for "investors are bored of overpriced tech and want to find value elsewhere." According to Michael Arone at State Street, small-cap companies are currently outpacing the big guys by a wide margin. In fact, small-caps are up over 5% year-to-date, while the S&P 500 is barely scraping by with a 0.5% gain.
Who is actually winning?
- ImmunityBio (IBRX): This one is on fire. It surged nearly 40% on Friday alone. When a biotech company gets this kind of momentum, it’s usually because of clinical trial data or a massive partnership. They closed at $5.52, and the volume was insane—182 million shares traded compared to their usual 11 million.
- PNC Financial (PNC): Regional banks were supposed to be dead, right? Wrong. PNC just hit a four-year high. They beat earnings expectations and announced they’re ramping up share buybacks. When a bank says they have so much cash they want to buy back their own stock, investors tend to notice.
- Argan (AGX): Up over 16% recently. They deal in power industry services. As everyone realizes that AI needs massive amounts of electricity, the people who build the power plants (like Argan) are becoming the "picks and shovels" play of the year.
The AI Trade has Moved to the Basement
Don't get it twisted—AI is still the main story, but the characters have changed. People are selling the software companies and buying the hardware and infrastructure.
Take Sandisk (SNDK) for example. While everyone was looking at Palantir, Sandisk quietly returned over 500% last year and continues to be a focal point because of the massive shortage in flash memory. You can't run a data center without storage, and Sandisk is sitting on the gold mine.
Then there’s the quantum side of things. Stocks like D-Wave Quantum (QBTS) and Rigetti Computing are the new speculative darlings. D-Wave was up over 200% last year and is still showing signs of life as we head deeper into January. It’s risky, sure, but that’s where the growth is hiding right now.
The "Boring" Winners
- Honeywell (HON): Up about 2% recently. It’s a conglomerate. It’s not sexy. But they are winning because they’re involved in everything from aerospace to automation.
- IBM: Yes, your grandfather’s favorite stock. It’s been a top gainer in the Dow lately. Why? Because their enterprise AI actually makes sense to businesses that don't want to spend billions on "chatbots" but need real data processing.
- Riot Platforms (RIOT): Up 16% after securing a huge data center lease with AMD. The line between "Bitcoin miner" and "AI data center provider" is getting very, very blurry.
What Most People Get Wrong About This Rally
A lot of folks see the S&P 500 dipping slightly and think the market is in trouble. That’s the wrong way to look at it. What’s actually happening is a healthy "broadening."
When only seven stocks are carrying the entire market, it’s like a table with one leg. If that leg snaps, everything falls. Right now, we’re seeing hundreds of smaller stocks start to carry their own weight. This is actually a good thing for the long-term health of your portfolio, even if your Nvidia position looks a little red today.
There's also the "shutdown" factor. Remember the U.S. government shutdown back in late 2025? It created a data vacuum. We are just now getting the delayed reports on retail sales and industrial production. Investors are flying a bit blind, which is why they are flocking to "real" companies with "real" earnings like PNC or Honeywell, rather than speculative software firms that promise profits in 2030.
Breaking Down the Sector Performance
If you want to know what stocks are up, you have to look at the sectors. Technology is actually the worst-performing sector so far in 2026, down about 0.40%.
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On the flip side, Basic Materials and Industrials are crushing it. Materials are up over 9% since the year started. Why? Infrastructure. The "One Big Beautiful Bill Act" (as some are calling the recent fiscal stimulus) is pumping money into domestic manufacturing and power grids.
Why the "Magnificent Seven" aren't so magnificent lately
- Apple (AAPL): Stuck in a range. Regulatory pressure in Europe and the US is acting like a wet blanket.
- Tesla (TSLA): Dealing with a rotation into small-cap industrials.
- Alphabet (GOOGL): Investors are worried about their search monopoly being nibbled away by AI-native competitors.
Actionable Steps for Your Portfolio
So, what do you actually do with this information? Don't just chase the 40% gainers like ImmunityBio—that's a quick way to lose your shirt if you don't know what you're doing.
1. Check your "Tech Weight": If 80% of your money is in tech, you're getting hammered by the current rotation. It might be time to look at those "boring" industrials or materials ETFs like XLI or XLB.
2. Watch the Yields: Keep an eye on the 10-year Treasury yield. If it keeps climbing toward 5%, growth stocks will keep struggling. If it stabilizes, we might see tech find its footing again.
3. Look at "Infrastructure AI": Stop looking for the next ChatGPT and start looking for the companies building the power plants and cooling systems that keep the chips running. Companies like Argan or Vertiv are where the smart money is moving.
4. Small-Cap Exposure: If you don't own any small-caps, you're missing the strongest trend of the quarter. A simple Russell 2000 index fund is an easy way to capture this "David vs. Goliath" reversal we're seeing.
The market isn't dying; it's just moving house. The winners of 2024 and 2025 are passing the torch to the builders, the bankers, and the biotech innovators. If you want to stay ahead, you have to follow the money, and right now, that money is heading toward the companies that actually build things and make money today.