MW These stocks are the market's new momentum plays as Big Tech loses steam
By Michael Brush
A veteran money manager shares his top picks
Investors continue to question the profitability of Big Tech's AI investments and tech-stock valuations - and that's leading them to put money on new momentum leaders.
Momentum investing basically says to go with what's working. Refined by investing legends such as Martin Zweig, William O'Neil and Jesse Livermore over the past century, this strategy posits that stock-price trends tend to persist.
To find out which stocks currently have the best momentum, I recently caught up with Travis Prentice, a money manager at The Informed Momentum Company (IMC). IMC has $2.4 billion under management in 13 strategies across market caps and geographies. Prentice enhances the momentum signal by identifying business momentum - solid growth in fundamentals including profit margins, earnings and sales - supported by qualitative factors such as evidence of innovation, new products and services, new management and mergers.
The AI trade
AI investing isn't dead. You just have to be more selective. Prentice has lightened up on tech giants such as Meta Platforms (META)), Oracle $(ORCL)$, Apple $(AAPL)$ and Amazon.com (AMZN) because he sees mediocre momentum potential. Investors are questioning hyperscalers' return on their AI investments.
The growing popularity of AI "agents," or task-specific software powered by AI, has investors worried about software companies such as Microsoft $(MSFT)$, Salesforce (CRM), Intuit $(INTU)$ and Adobe $(ADBE)$. Prentice is neutral about them, too. "AI is moving into the disruption phase, and the most disrupted sector is software, based on the stock performance," he said.
One exception: Alphabet $(GOOGL)$ $(GOOG)$. Prentice said it's a hyperscaler with the potential to move higher. Alphabet has positive stock-price momentum that will likely continue because it is supported by bullish underlying business trends.
Beyond Alphabet, Prentice said he sees positive momentum in shares of AI-related memory and storage companies. The ongoing data-center build-out has invigorated new product cycles and pricing power for these businesses. Prentice singled out Micron Technology $(MU)$, Western Digital $(WDC)$, Sandisk $(SNDK)$ and Seagate Technology Holdings $(STX)$. "The memory trade has caught fire," he said.
Meanwhile, the semiconductor-manufacturing equipment needed to make memory chips remains in tight supply. That boosts demand at wafer fab equipment and test equipment makers, including KLA $(KLAC)$, Teradyne $(TER)$ and MKS $(MKSI)$. Wafer fab equipment spending is expected to grow 9.4% a year to $155.2 billion in 2028, Bank of America analyst Vivek Arya estimated.
The data-center build-out will also continue to support demand for networking products, which helps explain the momentum in shares of Ciena $(CIEN)$ in optical transport and switching, Lumentum Holdings $(LITE)$ in optical and photonic products, Credo Technology Group $(CRDO)$ in designing and selling high-speed data-connectivity products, and Coherent $(COHR)$ in offering optoelectronic components and devices and lasers.
Aerospace and defense
"Geopolitical risk has increased, and it is bullish for military spending," Prentice said. Prentice singled out these defense-industry stocks as favorites: RTX $(RTX)$, whose Pratt & Whitney and Raytheon divisions make military aircraft engines and missile-defense systems; L3Harris Technologies $(LHX)$ in communications systems, avionics and electronic warfare systems; Huntington Ingalls Industries $(HII)$ in military shipbuilding; GE Aerospace $(GE)$ in military aircraft propulsion systems; and Kratos Defense & Security Solutions $(KTOS)$, which supplies military drones and rockets.
Metals and mining
Military spending and the AI data-center build-out are key drivers for companies involved with metals and rare-earth minerals.
"Modern military equipment consumes vast quantities of critical minerals, while the AI-driven capital expenditure boom is fueling a surge in copper, silver and other metals," wrote analysts Paul Wong and Jacob White at Sprott, a metals-sector money manager. "AI infrastructure is now considered a matter of national security, further elevating the strategic importance of physical natural resources."
This explains the bullish stock price momentum Prentice sees in the metals sector. He singled out seven companies as the biggest potential winners from here. They are: Newmont $(NEM)$, the world's largest gold mining company; Freeport-McMoRan $(FCX)$ in copper, gold and molybdenum; Hecla Mining $(HL)$ in precious-metals mining; Royal Gold $(RGLD)$, a precious-metals royalty company; Southern Copper (SCCO), one of the world's largest pure-play copper producers; Albemarle $(ALB)$, which supplies lithium for batteries; and Alcoa $(AA)$ in aluminum and bauxite.
Michael Brush is a columnist for MarketWatch. At the time of publication, he owned META, ORCL, AMZN, MSFT, CRM, GOOGL, NVDA and MU. Brush has suggested META, ORCL, AAPL, AMZN, MSFT, CRM, GOOGL, NVDA, MU, KTOS and FCX in his stock newsletter, Brush Up on Stocks. Follow him on X @mbrushstocks
More: These 20 stocks are strong choices for momentum investors
Plus: Big Tech stocks are quickly falling out of favor. Here's the market's new momentum trade.
-Michael Brush
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January 28, 2026 08:15 ET (13:15 GMT)
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