Tech stocks and Arm Holdings poised to drive 2026 stock market rally
U.S. stocks are set for a strong year in 2026, with Goldman Sachs analysts predicting gains driven by economic resilience and potential interest rate cuts. Technology shares, in particular, are expected to lead the rally after an early uptick in the Nasdaq-100 Technology Sector index.
The Nasdaq-100 Technology Sector has already climbed 3% this year, outperforming the broader S&P 500. Analysts forecast the S&P 500 to rise by 12% in 2026, with tech firms playing a key role in the growth.
Arm Holdings, a major player in semiconductor design, has faced volatility despite its market position. Its shares dropped 40% from a 52-week high in late October 2025. Yet, analysts remain optimistic, setting a median price target of $180—a potential 67% increase. The company’s intellectual property underpins chips used in smartphones, cars, and data centres. Arm’s data centre royalties doubled year over year in Q2 of fiscal 2026. Its share of the cloud computing market also grew to 20% by the end of fiscal 2025. This expansion aligns with heavy investment from hyperscalers like Microsoft, Google, and NVIDIA, which boosted capital spending by 70% in 2025. Reports from late 2024 and early 2025 highlighted their reliance on Arm’s IP for AI infrastructure, a trend expected to continue in 2026.
The stock market’s upward trajectory in 2026 hinges on tech sector strength, supported by AI spending and economic stability. Arm Holdings, despite recent declines, stands to benefit from ongoing demand for its semiconductor designs and cloud market growth.
