Nvidia CEO Jensen Huang recently stated that the 30% drop in the S&P North American Technology Software Index, pushing it into a bear market, is an illogical reaction to AI advancements. Huang believes AI tools will integrate with existing software rather than replace it. He highlighted Microsoft, Datadog, AppLovin, Atlassian, and HubSpot as attractive software stocks, noting their proactive integration of AI into their products and services.
Despite Huang's optimism, some analysts are more cautious. Stifel analyst Brad Reback downgraded Microsoft to Hold, citing high market expectations for 2027, Azure cloud limitations, increased investments, and strong AI competition from Google and Anthropic. Similarly, DA Davidson downgraded Amazon to Neutral, pointing to AWS losing its cloud lead to Microsoft Azure and Google Cloud, along with Amazon's lack of an in-house AI lab and OpenAI partnership. Both analysts anticipate increased spending and competitive pressures impacting profitability for these tech giants.
In the broader AI infrastructure space, Broadcom launched the industry's first enterprise Wi-Fi 8 platform in early February 2026, featuring its BCM49438 processing unit and Trident X3+ BCM56390 Ethernet switch to support AI-ready networks. This move, alongside significant AI spending by companies like Alphabet and Amazon, underscores Broadcom's crucial role in both custom AI accelerators and essential networking components. Meanwhile, Meta Platforms is making a substantial commitment, planning up to $135 billion in capital expenditure for 2026 to reorient its business around AI, aiming to transform its ad platform and develop AI-centric products like smart glasses.
Lam Research reported strong earnings in late January 2026, with higher sales and net income, and maintained its US$0.26 quarterly dividend, signaling its commitment to advanced semiconductor manufacturing for AI. While Nvidia remains a stronger AI investment, projected to grow 52% in fiscal 2027 compared to Intel's 2% in 2026, Nvidia did acquire a $5 billion stake in Intel and announced collaboration. Analysts also favor Apple, MongoDB, and Western Digital for long-term growth, with Apple's App Store revenue up 7% in January and MongoDB seeing continued Atlas revenue growth due to its AI product lineup.
Smaller players like SoundHound AI are developing agentic AI voice chatbots for specific niches, such as restaurant orders for White Castle and Five Guys. However, SoundHound faces challenges due to a lack of unique technology and competitive advantage against rivals like Apple's Siri, along with potential issues regarding diverse AI training data. Conversely, Ondas Inc., despite being labeled a "worst AI stock" by some on Reddit, saw its price target raised from $10 to $16 by Northland analyst Michael Latimore in January, following strong fiscal year 2026 revenue guidance.
Key Takeaways
- Nvidia CEO Jensen Huang views the 30% drop in software stocks as illogical, believing AI will integrate with existing software, not replace it, and highlighted Microsoft, Datadog, AppLovin, Atlassian, and HubSpot as attractive.
- Analysts downgraded Microsoft and Amazon due to high market expectations, Azure cloud limits, increased investments, and strong AI competition from Google, Anthropic, and Microsoft Azure.
- Amazon's AWS is noted for losing its cloud lead to Microsoft Azure and Google Cloud, compounded by its lack of an in-house AI lab and OpenAI partnership.
- Nvidia remains a stronger AI investment, projected to grow 52% in fiscal 2027, despite its $5 billion stake and collaboration with Intel, which is expected to grow only 2% in fiscal 2026.
- Broadcom launched the industry's first enterprise Wi-Fi 8 platform in early February 2026, positioning itself as a key player in AI accelerators and networking infrastructure, benefiting from large AI spending by Alphabet and Amazon.
- Meta Platforms plans up to $135 billion in capital expenditure for 2026 to reorient its business around AI, transforming its ad platform and developing AI-centric products like smart glasses.
- Lam Research reported strong earnings in late January 2026, focusing on advanced semiconductor manufacturing for AI and high-performance computing.
- Top analysts recommend Apple, MongoDB, and Western Digital for long-term growth, citing Apple's strong Services revenue, MongoDB's AI product lineup, and Western Digital's position in the growing AI and cloud storage market.
- SoundHound AI's agentic AI voice chatbot for restaurant orders faces challenges due to a lack of unique technology, competitive advantage against rivals like Apple's Siri, and potential insufficient diverse AI training data.
- Ondas Inc. received an Outperform rating and a raised price target from $10 to $16 by Northland analyst Michael Latimore in January, following strong fiscal year 2026 revenue guidance, despite some Reddit concerns.
Nvidia CEO Jensen Huang sees value in AI software stocks
Nvidia CEO Jensen Huang believes the recent drop in software stocks due to AI fears is illogical. The S&P North American Technology Software Index fell 30%, entering a bear market. Huang thinks companies will use AI tools with existing software, not replace it. He highlighted five software stocks that look attractive now: Microsoft, Datadog, AppLovin, Atlassian, and HubSpot. These companies have integrated AI into their products and services.
Nvidia CEO Jensen Huang says AI software stocks are a good buy
Nvidia CEO Jensen Huang stated that the recent decline in software stocks, caused by worries about AI, is illogical. The S&P North American Technology Software Index dropped 30%, putting it in a bear market. Huang believes AI tools will work alongside current software, not replace it. He pointed out five software stocks that are now attractive: Microsoft, Datadog, AppLovin, Atlassian, and HubSpot. These companies are integrating AI into their offerings.
Analysts downgrade Microsoft and Amazon stocks due to AI concerns
Stifel analyst Brad Reback downgraded Microsoft stock to Hold, cutting its price target to $392. He believes market expectations for 2027 are too high due to Azure cloud limits, rising investments, and strong AI competition from Google and Anthropic. DA Davidson also downgraded Amazon to Neutral, citing AWS losing its cloud lead to Microsoft Azure and Google Cloud. Analyst Gil Luria noted Amazon's lack of an in-house AI lab and OpenAI partnership. Both analysts expect increased spending and competitive pressures to impact profitability.
Nvidia remains top AI investment despite Intel collaboration
While Intel's stock rose after Nvidia bought a $5 billion stake and announced collaboration, Nvidia remains the stronger investment. Intel's foundry business struggles, and its stock now trades at over 100 times earnings. Analysts expect Intel's revenue to grow only 2% in fiscal 2026 and 8% in 2027. In contrast, Nvidia is projected to grow 52% in its fiscal 2027. Nvidia's strong position in GPU-driven data centers makes it a better choice for investors in the growing AI computing market.
Broadcom launches Wi-Fi 8 and boosts AI infrastructure role
In early February 2026, Broadcom launched the industry's first enterprise Wi-Fi 8 platform. This new system uses Broadcom's BCM49438 processing unit and Trident X3+ BCM56390 Ethernet switch to support AI-ready, multi-gigabit networks. This launch, along with large AI spending by companies like Alphabet and Amazon, highlights Broadcom's key role in both custom AI accelerators and the necessary networking infrastructure. Broadcom's dual focus on compute and networking components for AI positions it uniquely to benefit from the growing AI market.
Top analysts favor Apple MongoDB and Western Digital for growth
Top Wall Street analysts are recommending Apple, MongoDB, and Western Digital for long-term growth. Analyst Daryanani noted Apple's January App Store revenue grew 7%, with strong Services revenue up 14% in the December quarter. For MongoDB, analyst Ikeda sees continued Atlas revenue growth due to its AI product lineup and strong database features. Bank of America analyst Wamsi Mohan reaffirmed a buy rating for Western Digital, expecting the AI and cloud storage market to grow over 25% through 2030, with HDDs gaining market share.
Lam Research shows strong earnings and AI focus
In late January 2026, Lam Research reported higher sales and net income for the quarter and six months. The company also provided strong guidance for the March 2026 quarter and kept its US$0.26 quarterly dividend. Lam Research announced leadership changes, including adding Cadence CEO Anirudh Devgan to its board, and expanded its technology partnership with CEA-Leti. These actions highlight Lam Research's commitment to advanced semiconductor manufacturing for AI and high-performance computing. While the stock has strong earnings momentum, some investors question if its high valuation already reflects AI-related growth.
Ondas stock target raised despite Reddit concerns
Ondas Inc. is considered one of the worst AI stocks by some on Reddit. However, on January 20, Northland analyst Michael Latimore raised his price target for Ondas from $10 to $16, giving it an Outperform rating. This increase followed strong fiscal year 2026 revenue guidance from Ondas management.
Amazon holds data advantage over SoundHound AI
SoundHound AI is developing an agentic AI voice chatbot that successfully handles restaurant orders for companies like White Castle and Five Guys. While its technology offers accuracy and speed benefits, SoundHound faces challenges expanding beyond this niche. The company lacks unique technology and a strong competitive advantage against rivals like Apple's Siri and other AI chatbots. A major long-term problem for SoundHound is its potential lack of diverse AI training data, as restaurant order transcripts may not be enough for broader customer service applications. This makes SoundHound's growth difficult, especially since it is currently unprofitable and cash-flow-negative.
Meta invests heavily in AI for future growth
Meta Platforms is significantly reorienting its business around artificial intelligence, planning up to $135 billion in capital expenditure for 2026. This massive investment aims to transform its core ad platform into an AI-first ecosystem and develop AI-centric products like smart glasses and an AI video app. While Meta reported strong Q4 2025 sales of $59.9 billion, its 2025 net income was slightly below 2024. Investors are watching closely to see if this large AI and data center build will lead to stronger earnings or prolonged margin pressure. The company faces risks from high costs and competition in AI wearables, but management expects 2026 operating income to exceed 2025.
Sources
- Nvidia CEO Jensen Huang Has Good News for Investors. Here Are 5 AI Stocks to Buy Now.
- Nvidia CEO Jensen Huang Has Good News for Investors. Here Are 5 AI Stocks to Buy Now.
- 5 big analyst AI moves: Microsoft stock downgraded as it’s ’time for a break’ By Investing.com
- Forget Intel: This GPU Powerhouse Could Turn the AI Compute Boom Into Market‑Beating Returns
- Broadcom’s Wi‑Fi 8 Launch And Hyperscaler AI Builds Might Change The Case For Investing In AVGO
- Top Wall Street analysts like these stocks for long-term growth potential
- Is Stronger Earnings, AI R&D Push and New Leadership Altering The Investment Case For Lam Research (LRCX)?
- Is Ondas (ONDS) one of the worst AI stocks to invest in according to Reddit?
- Forget SoundHound AI: This Colossus AI Stock Is the Only Player That Truly Owns the Data
- Meta’s Massive AI Capex Puts Profit Outlook And Ad Model In Focus
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