A handful of stocks stand to benefit from the anticipated surge in artificial intelligence spending next year, according to Barclays. Barclays analysts view the U.S. as being in the middle of its biggest capex cycle in many decades, which they noted has, in turn, fueled stock market performance over the past three years. AI stocks have driven between 75% and 80% of the S & P 500’s earnings and total performance, Barclays said. The firm expects that easing financial conditions and a more favorable regulatory environment in 2026 will also push equity valuations higher. Federal Reserve interest rate cuts often coincide with recessions, but cuts in non-recessionary environment typically favor cyclical sectors and growth stocks, analysts said. With these favorable conditions in store, Barclays Research analysts highlighted a dozen overweight-rated stocks that its analysts view as best-positioned to capitalize on higher-than-expected AI spending next year. The stocks have an average market cap of about $785 billion. “When thinking about the critical drivers of risk assets and the economy at large heading into 2026, AI stands head and shoulders above the rest. With AI capex numbers projected to be in the trillions, it’s hard to discount the impact it has already had and the impact it is going to have in the future for companies and investors around the globe,” analyst Andrew Ferremi wrote in a Thursday note to clients. To be sure, Ferremi acknowledged that “with the strong wealth gains helped by AI, it leaves the US in particular vulnerable if the AI narrative runs out of steam.” Take a look at some of Barclays’ stock picks below: Microsoft and Nvidia were the two “Magnificent Seven” stocks Barclays analysts believe will get a boost from their AI spending. The firm’s price targets on Microsoft and Nvidia suggests 31% and 55% potential upside for their stock prices, respectively, as of Dec. 16. That’s more bullish than the consensus, as analysts polled by LSEG have price targets on the stocks that imply Microsoft shares can gain almost 28% and Nvidia can jump 38% from their latest levels. The Barclays analyst is notably bullish on Nvidia shares, writing in a Nov. 19 note to clients that “the company has long-term sustainable growth led by a large lead in GPUs for AI in [data centers], with further Edge opportunities (autos, robots, etc.) and a competitive moat around a large portion of the market.” Nvidia shares are up more than 36% this year, outperforming the broader market. Still, the stock has cooled since the start of November and has experienced some short-term pullbacks on AI bubble fears, as well as concerns about ramping chip competition and slower sequential growth. Microsoft shares, meanwhile, have added roughly 15% year to date, slightly lagging the S & P 500. In recent weeks, the stock has been pressured by the broader AI spending fears that have rocked the market. In its last earnings report , Microsoft said spending would accelerate this fiscal year. However, Barclays analyst Raimo Lenschow anticipates its AI-enabled businesses will show growth and become more profitable. “It seems that AI momentum continues to pick up, and there were many different use cases that were presented and showed proper value creation. To us, this showed that the AI evolution is real and will likely continue at a high speed as the benefits for successful projects were very visible,” Lenschow said in a Nov. 20 note. Other stocks that made the cut include financial giant JPMorgan Chase and used car seller Carvana . The firm finds JPMorgan’s competitive positioning attractive and believes that its greatest sources of potential earnings upside will be from higher loan growth and capital markets.
