Investors hunt for AI winners in small-cap US tech stocks
U.S. small-cap tech stocks are surging in 2026 due to AI-driven demand, with the Invesco S&P SmallCap Information Tech ETF seeing $49.7 million in inflows this year after four years of outflows, while companies like MaxLinear and VIAVI report triple-digit gains despite inconsistent profitability. Analysts warn of speculative bubbles and potential risks from higher bond yields, though earnings growth for small-cap semiconductors is projected near 40% in Q2." "article": "U.S. small-cap technology stocks are experiencing a surge in 2026, driven by the AI boom and a shift in investor focus away from megacap firms like Nvidia and Intel. The Invesco S&P SmallCap Information Tech ETF has attracted $49.7 million in inflows this year, reversing four consecutive years of outflows, according to LSEG Lipper data. Oren Shiran, portfolio manager for Lazard’s small-cap ETF, noted that the AI trade has expanded to include smaller companies, which offer cheaper valuations and diverse AI-related opportunities like chipmaking and data center supplies. The S&P 600 small-cap tech index has risen nearly 54% this year, outpacing the S&P 500 tech index’s 20.1% gain, marking the widest gap since before 1995. However, some analysts caution that speculation may be inflating prices beyond fundamentals, with Hal Reynolds of Los Angeles Capital Management stating that small-cap tech valuations rely more on speculation than earnings growth. Small-cap semiconductor firms are leading the rally, with second-quarter profit growth expected at nearly 40%, per LSEG data. Adam Parker of Trivariate Research attributed investor optimism to AI-driven demand, though broader small-cap tech earnings growth is projected at just 7% next quarter, excluding bitcoin miner MARA Holdings. Top performers include VIAVI, a network test and optical security products maker, and MaxLinear, which reported a 43% revenue jump due to hyperscale customer demand. Shares of MaxLinear, VIAVI, Ultra Clean, and Vishay Intertechnology have surged over 100% in 2026, but their profitability remains volatile, with both MaxLinear and VIAVI swinging between profits and losses. Ichor Holdings, a semiconductor equipment component maker, has seen a fourfold share increase despite reporting no net profit since December 2022. Rising global bond yields could further pressure smaller tech firms, which rely heavily on debt-fueled expansion.
U.S. small-cap technology stocks are experiencing a surge in 2026, driven by the AI boom and a shift in investor focus away from megacap firms like Nvidia and Intel. The Invesco S&P SmallCap Information Tech ETF has attracted $49.7 million in inflows this year, reversing four consecutive years of outflows, according to LSEG Lipper data. Oren Shiran, portfolio manager for Lazard’s small-cap ETF, noted that the AI trade has expanded to include smaller companies, which offer cheaper valuations and diverse AI-related opportunities like chipmaking and data center supplies. The S&P 600 small-cap tech index has risen nearly 54% this year, outpacing the S&P 500 tech index’s 20.1% gain, marking the widest gap since before 1995. However, some analysts caution that speculation may be inflating prices beyond fundamentals, with Hal Reynolds of Los Angeles Capital Management stating that small-cap tech valuations rely more on speculation than earnings growth. Small-cap semiconductor firms are leading the rally, with second-quarter profit growth expected at nearly 40%, per LSEG data. Adam Parker of Trivariate Research attributed investor optimism to AI-driven demand, though broader small-cap tech earnings growth is projected at just 7% next quarter, excluding bitcoin miner MARA Holdings. Top performers include VIAVI, a network test and optical security products maker, and MaxLinear, which reported a 43% revenue jump due to hyperscale customer demand. Shares of MaxLinear, VIAVI, Ultra Clean, and Vishay Intertechnology have surged over 100% in 2026, but their profitability remains volatile, with both MaxLinear and VIAVI swinging between profits and losses. Ichor Holdings, a semiconductor equipment component maker, has seen a fourfold share increase despite reporting no net profit since December 2022. Rising global bond yields could further pressure smaller tech firms, which rely heavily on debt-fueled expansion.
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