Technology stocks have been taking a beating lately. However, the information technology sector has outperformed its peers and has primarily been responsible for the broader market rally over the past three years.
Artificial intelligence (AI), especially generative AI, stocks have emerged as the industry’s darling as their widespread adoption has been boosting Wall Street. The space is poised to get a further boost with the advent of agentic AI, while tech companies continue to pump billions of dollars into AI infrastructure.
Needless to say, the AI boom is far from over, and there’s still a lot of room to play, as the recent decline appears to be temporary. We have identified three AI-driven stocks that are poised to excel in the second half of 2026.
These three stocks are Micron Technology, Inc MU, Applied Materials, Inc. AMAT and Cisco Systems, Inc. CSCO. Each of our picks currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Micron Technology
Micron Technology, through its global brands, namely Micron, Crucial and Ballistix, markets high-performance memory and storage technologies, including Dynamic Random Access Memory (DRAM), NAND flash memory, NOR Flash and other technologies. The company’s solutions are used in leading-edge computing, consumer, networking, mobile, automotive, industrial and data center products.
Micron Technology recently announced that it has reached a deal with Anthropic to co-design next-generation AI memory and storage architectures. The strategic partnership includes a long-term supply arrangement, Micron's investment in Anthropic's Series H funding round and deployment of Claude AI across Micron's engineering and manufacturing operations.
The company also recently launched its expanded portfolio of AI-optimized memory and storage products, which includes HBM4, a 256GB SOCAMM2 module, 256GB DDR5 RDIMMs, and the 245TB Micron 6600 ION SSD. The new range of products is aimed at boosting AI training and inference workloads from data centers to edge devices.
The company’s third-quarter fiscal 2026 revenue outlook of around $33.5 billion reflects strong AI infrastructure spending.
Moreover, Micron has a debt-to-equity ratio of 5.1%, which is lower than the Computer - Integrated System industry’s 36.8%. The company’s ROE stands at 72.4% compared to the sub-industry’s 22.1%. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year and next-quarter earnings has improved 26.1% and 46.3%, respectively, over the last 60 days.
Applied Materials, Inc.
Applied Materials is a leading supplier of equipment used to manufacture semiconductor devices, flat panel displays and solar photovoltaic products. Applied Materials has given a boost to its AI semiconductor development through innovations in materials engineering, advanced packaging, and memory technologies.
The company earlier this year introduced new deposition, etch, and materials-modification systems to boost next-generation AI chips, including 2nm-and-beyond logic technologies. Applied Materials has also announced the acquisition of NEXX in a bid to expand its advanced packaging capabilities. The technology will help larger AI accelerator designs using chiplets, HBM stacks, and advanced substrates, giving more powerful AI systems.
Last month, Applied Materials introduced new semiconductor manufacturing systems that are focused on DRAM and advanced packaging for AI chips. These will allow higher-yield HBM stacking and improved AI accelerator performance.
The Zacks Rank #1 company has a debt-to-equity ratio of 22%, which is lower than the Electronics-Semiconductors industry’s 66.3%. The company’s ROE stands at 37% compared to the sub-industry’s 35.2%. The company has an expected earnings growth rate of 28.8% for the current year. The Zacks Consensus Estimate for current-year and next-quarter earnings has improved 8.7% and 8.6%, respectively, over the last 60 days.
Cisco Systems, Inc.
Cisco Systems has given a boost to its AI strategy by developing secure, high-performance networking infrastructure for the AI era. Last year, the Zacks Rank #1 company expanded its partnership with NVIDIA Corporation NVDA, combining Cisco Silicon One networking technology with NVIDIA Spectrum-X to come up with AI-ready data center architectures.
Cisco also launched the Cisco Secure AI Factory with NVIDIA, integrating networking, security, and AI infrastructure solutions to simplify enterprise AI deployment. Earlier, Cisco introduced AI-ready data center innovations, including AI PODs, Unified Nexus Dashboard improvements and Spectrum-X integration.
Cisco Systems raised its 2026 revenue guidance to $62.8-$63.0 billion, driven by solid demand for AI data-center infrastructure and massive cloud-provider orders.
Cisco has a debt-to-equity ratio of 39.6%, which is lower than the Computer-Networking industry’s 44.7%%. The company’s ROE stands at 34.3% compared to the sub-industry’s 27.9%. The company has an expected earnings growth rate of 12.3% for the current year. The Zacks Consensus Estimate for current-year and next-quarter earnings has improved 2.6% and 5.5%, respectively, over the last 60 days.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
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This article originally published on Zacks Investment Research (zacks.com).