Bank of America Says These Overlooked AI Stocks Could Be the Next Winners

While semiconductor companies, AI hardware makers, and the Magnificent Seven have dominated the artificial intelligence rally, Bank of America believes the next phase of AI-driven gains could come from less obvious sectors.

The AI boom has fueled a powerful rally in global equity markets throughout 2026, helping Wall Street reach record highs despite geopolitical tensions in the Middle East. Although the market has recently seen profit-taking due to concerns about elevated valuations and the rapid pace of AI-related gains, the long-term investment theme remains intact.

Chipmakers have been among the biggest beneficiaries. The Philadelphia Semiconductor Index, a widely followed benchmark for chip stocks, recorded an 18-session winning streak earlier this year and remains up nearly 65% in 2026, highlighting strong investor demand for AI infrastructure.

However, Bank of America said investors may now find better value outside the crowded technology trade. The brokerage pointed to energy and materials companies, particularly those supplying capacity for AI-related infrastructure, as sectors that have experienced meaningful earnings upgrades without seeing comparable stock price appreciation.

According to the bank, long-only fund managers have remained significantly underweight energy by roughly 31% over the past three months, while materials have also been underweighted by about 6%. That positioning suggests these sectors could attract renewed investor interest if AI-related spending continues to expand.

Bank of America also noted that companies capable of generating inflation-protected income remain relatively inexpensive despite ongoing concerns about sticky inflation and negative real cash yields.

Rather than chasing semiconductor and technology hardware stocks that have already posted gains of roughly 69% and 65%, respectively, the brokerage recommends looking at businesses benefiting indirectly from AI adoption. These include firms improving workflow automation, accelerating product development cycles, and reducing back-office costs through artificial intelligence.

As AI investment broadens beyond chipmakers and mega-cap technology companies, Bank of America believes these overlooked industries could offer attractive opportunities for investors seeking value and long-term growth potential in the evolving AI market.