This Could Be the Biggest AI Trade of 2026 VIEW IN BROWSER BY LUCAS DOWNEY, EDITOR, TRADESMITH’S ALPHA SIGNALS Mega-cap tech stocks may be falling violently out of favor lately… But there’s one related group that remains red-hot. And that’s the semiconductor makers that are helping to solve a major problem for other tech companies. Memory storage is the new bottleneck holding back the AI boom, as Jensen Huang of Nvidia (NVDA) said at the Consumer Electronics Show this month. The major players in this arena, like Micron (MU) and Western Digital (WDC), have soared given this surge in AI-fueled memory demand. And if history is a guide, these leaders could continue on their sharp northbound trajectory. It’s just one example of a broader market trend that’s making it much more exciting to be a stock picker right now. Breadth has expanded to levels not seen in a very long time. Let’s get a look at the opportunity now, then we’ll explore exactly how much upside MU and WDC could have ahead. The Average Stock Is Crushing the S&P 500 by a Wide Margin Here’s a cool fact. If you throw a dart blindfolded at a list of S&P 500 stocks, you now have a two-thirds chance of landing on a stock that’s outperforming the market. At this point, the S&P 500 itself is up 1.53% YTD. But when you look at the YTD returns of individual stocks, the average gain is much better – 3.95%. It’s just the “Magnificent 7” mega-caps that are dragging down the S&P at this point. And here’s the kicker – that outperformance is widespread, too. 62% of all stocks in the S&P 500 are beating the market-cap-weighted index: 
Stick this graphic on the fridge. It’s a sign of how many hidden opportunities could be out there. When you have breadth readings this strong, mammoth-sized trends unfold. Many top performers in 2026 are semiconductor companies that can help solve the memory shortage. MU is up 49.8% year to date, while WDC is up 53.8%! Yet if you’ve missed out on their torrid rally, there could be a lot more gas left in the tank for those two stocks in particular. Why Micron and Western Digital Can Keep Climbing Data center operators just can’t get enough of memory storage solutions like High-Bandwidth Memory (HBM). This could be the biggest AI trade of 2026. The shortage of these high-performance chips is getting so severe that chipmakers are pulling production away from traditional electronics like PCs. Micron is one of the big memory producers that (in December) announced how it would exit the consumer business to focus on higher-margin chips for AI data centers. And this pivot has Micron not only beating earnings, but also guiding substantially higher for next quarter. The company forecasted revenues of $18.7B vs. analyst estimates of $14.2B. More impressive was the EPS guide of $8.42/share vs. estimates of $4.78/share. No wonder the stock has soared 84% in three months. And a lot of gains have come recently with the equity ripping 22.2% in 10 trading sessions: 
Momentum like this may make you want to duck and run… but in Micron’s case, the right move could be to lean in. These spurts of strength are often followed by further gains. Back to 1989, our data reveals 288 instances when shares of MU gained 22.2% or more over a 10-day period. Here’s what happened next: - One month later, the stock gained an average of 3.8%.
- Two months later, shares jumped 8.4%.
Also notice at the two-month mark that the positive win rate sits at 63%: 
Whenever fundamentals are dramatically improving and history confirms further upside… That’s not a stock to bet against. And it’s not just Micron flashing strong upside. Western Digital (WDC), which produces Hard Disk Drives (HDD) and Solid State Drives (SSD) is also participating in the memory/storage boom. WDC shares have more than doubled over the past three months. And much like MU, the stock has surged 25.9% over the last two weeks: 
That is one impressive chart. And here’s where the opportunity unfolds. Back to 1987, our data show 254 instances where WDC climbed 25.9% or more in a 10-day period. And typically – it didn’t stop there. - One month after this level of rise, WDC gained 5.2%.
- Two months later, WDC shares jumped 10.8%.
Again, notice the healthy 62% positivity rate at the two-month mark: 
These two stocks, Micron and Western Digital, are part of a massive stealth AI trade… and what our TradeSmith data reveals is that this could last a lot longer than you might think. Couple this with the strong breadth readings in markets, and you’ve got a one-two punch for outperformance. As a reminder, one year ago, DeepSeek worries rattled markets… especially semiconductors. While most talking heads warned of an AI capex slowdown, TradeSmith beat the drum to own semiconductors. The Semiconductor ETF (SMH) jumped 70% a year after this signal. Clearly, memory lane is powerful! And when you deploy cutting-edge software to investigate trends like this, it really helps cut through the noise with cold, hard data. We’ll certainly keep you posted on those opportunities here at TradeSmith Daily. Regards, 
Lucas Downey
Editor, TradeSmith’s Alpha Signals In Case You Missed It 
The AI revolution is dead in the water without nuclear energy. And Luke Lango says the most important player in this drama hasn’t made their move yet. The United States Government. Luke believes the White House is about to take an unprecedented step: A direct equity stake in a specific U.S. nuclear company. This company holds the key to deploying nuclear power fast – years ahead of traditional plants. Click here to get the details on the company Luke believes is next in line for a government windfall. | 
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