My conviction stays strong with AI related stocks! If the Santa Rally extends into January, AI stocks are likely to lead the charge.

Historically, the final five trading days of December and the first two of January deliver positive returns nearly three‑quarters of the time. This year, optimism is fueled by resilient U.S. economic data, falling jobless claims, and growing expectations that the Federal Reserve will begin easing rates in 2026.

Momentum is strongest in sectors tied to secular growth themes. Semiconductors and AI infrastructure remain front and center.

Nvidia (NVDA) remains the poster child of the AI boom. Despite concerns about valuation, its GPUs are the backbone of generative AI, cloud computing, and enterprise adoption. Demand from hyperscalers and corporates shows no signs of slowing, and the recent pullback has created a more attractive entry point. If AI spending continues to accelerate into 2026, Nvidia’s dominance in GPUs positions it as a high‑conviction core holding.

Broadcom (AVGO) is another standout. Often overlooked compared to Nvidia, Broadcom supplies critical networking chips that enable AI workloads to scale. Its diversified portfolio across semiconductors and software gives it resilience, while its cash flow generation supports shareholder returns. As enterprises expand AI infrastructure, Broadcom’s role in connecting and optimizing data centers makes it a compelling conviction play.

Storage and data infrastructure are equally important in the AI ecosystem. Seagate (STX) and Western Digital (WDC) may not grab headlines, but they provide the backbone for storing and managing the massive datasets that AI requires. As adoption spreads beyond tech giants into mainstream enterprises, demand for storage solutions is expected to surge. These names offer exposure to AI growth at more reasonable valuations compared to the headline GPU stocks.

Beyond hardware, Microsoft (MSFT) continues to integrate AI into its software stack, from Copilot in Office to Azure AI services. This positions Microsoft as both a platform and distribution channel for AI adoption. With recurring revenue streams and enterprise penetration, Microsoft offers a balanced way to play AI without the volatility of pure hardware names.

The risks are clear. Valuations across AI leaders remain stretched, and profit‑taking in January could trigger short‑term volatility. Regulatory scrutiny around AI usage and export restrictions on advanced chips also pose challenges. Yet the secular growth story is intact: enterprises are only beginning to deploy AI at scale, and the infrastructure build‑out will take years.