2 AI Stocks to Buy in 2026, and 1 to Avoid: A Growth Investor's Guide

The opportunity here is not a fleeting trend but a secular, infrastructure-scale shift. The global AI market is projected to explode from $375.93 billion in 2026 to $2.48 trillion by 2034, a compound annual growth rate of 26.6%. This isn't just software growth; it's becoming a primary engine of the economy. In fact, AI spending accounted for over a third of U.S. economic growth in the first three quarters of 2025, and forecasts see that spending accelerating at 31% annually through 2033.

This massive, top-down growth creates a vast Total Addressable Market. Yet capturing it sustainably requires more than just being in the AI space. The path is capital-intensive, exemplified by the estimated $500 billion in data center capital expenditures that operators are expected to spend in 2026 alone. This is the "AI factory" infrastructure trend, where the real growth is in the compute and data center capacity that powers the models. For a company to be a scalable winner, it must either own a critical piece of this physical infrastructure or possess a software moat that is essential to the AI workflow.

The key for a growth investor is to identify the companies positioned at these inflection points. They are the ones building the factories or providing the indispensable tools that run inside them. The market's explosive growth sets the stage, but only those with defensible, scalable models will be able to ride it all the way to the top.

Stock to Buy #1: AMD (Infrastructure Scalability)

For a growth investor, AMD represents a pure-play bet on the massive, recurring capital expenditure cycle powering AI. The company is not just a supplier; it is a foundational infrastructure builder, and its growth trajectory is perfectly aligned with the secular trend. Advanced Micro Devices expects revenue to grow at a 35% compound annual rate over the next three to five years, a target that directly mirrors the explosive demand for AI compute. This isn't a one-time product cycle but a multi-year buildout of the physical "factories" that run the models.

The market has already priced in this story, with the stock climbing 77% in 2025. A significant portion of those gains followed the landmark deal with OpenAI, which AMD says will generate a cumulative $100 billion in revenue over the next several years. That deal cements AMD's role as a core chip supplier for a leading AI maker and provides a massive, visible revenue stream. More broadly, the company is positioned to benefit from the estimated $500 billion in data center capital expenditures that operators are expected to spend in 2026 alone.

This creates a scalable model with high barriers to entry. AMD's growth is tied to the fundamental need for more compute, a need that McKinsey research suggests could require $7 trillion to meet by 2030. The company's roadmap, including the upcoming MI500 GPU for data centers, ensures it remains a key participant in this long-term cycle. For investors, the setup is clear: AMD is capturing value from the AI infrastructure boom through a combination of strategic deals, a robust product pipeline, and a financial outlook that assumes sustained, high-single-digit growth. It is a scalable beneficiary of the very trend that defines the next decade.

Stock to Buy #2: Atlassian (Software Integration Moat)

While infrastructure plays like AMD capture explosive growth, Atlassian offers a different kind of growth story-one built on integration and stability. The company is not a disruptor but a foundational platform, and that positioning creates a durable moat. As AI reshapes work, Atlassian's leadership in work management tools means it is well positioned to benefit from demand for artificial intelligence. The company is embedding AI directly into its workflow, launching its assistant Rovo to automate tasks and enhance productivity. This isn't about replacing its core products; it's about making them more powerful, which deepens customer stickiness.

The growth profile here is more predictable. Atlassian's moat comes from its entrenched position in DevOps and collaborative software, a niche where switching costs are high. This allows it to capture value from the broader AI adoption wave without facing the same existential threats as pure-play application developers. The market has misread the threat, analysts argue. Instead of AI reducing demand for DevOps tools, productivity improvements realized through AI will increase the number of developers, creating more demand for DevOps software. This is a classic case of a platform company turning a disruptive technology into an engine for its own growth.

Financially, the setup is compelling. Atlassian has a track record of beating expectations, with Wall Street estimates showing it beat the consensus by an average of 16% during the last six quarters. Looking ahead, analysts project its adjusted earnings to grow at 22% annually through fiscal 2027. That kind of stable, earnings-accretive growth, combined with a current valuation of 35 times earnings, offers a growth profile with lower cyclicality risk than infrastructure plays. The stock's recent pullback has created an opportunity, with Morgan Stanley's $320 target implying 130% upside. For a growth investor, Atlassian represents a bet on AI's integration into the enterprise workflow, a path that leverages existing dominance for sustainable expansion.

Stock to Avoid: Adobe (Disruption and Valuation)

For a growth investor, the AI era is a story of winners and losers. While companies like AMD and Atlassian are positioned to scale with the new infrastructure and workflow, Adobe is facing a direct and structural threat to its core business model. The company's application software, once a cash cow, is now under siege from the very technology that is powering the market's growth.

The core issue is competitive erosion. AI is increasing the velocity of content creation while simultaneously lowering price and subscriber growth, according to Oppenheimer analysts. This directly weakens Adobe's competitive position. New entrants from LLM providers like OpenAI and advertising platforms like Meta are offering creative tools that give users alternatives to the specialized, license-based workflow Adobe has long controlled. This isn't a distant risk; it's a current dynamic that has already pulled the stock down more than 5% in a single day following the downgrade.

The financial impact is clear. Adobe's shares have lost more than a fifth of their value over the past 12 months, a stark underperformance that reflects deep market concerns. This decline comes even as the broader AI sector, where spending is forecast to grow at a blistering 31% annually, continues to rally. The disconnect is telling. While infrastructure and data management software are seeing robust demand, application developers are being pressured. This creates a valuation dilemma. With the average price target implying only 26% upside, the stock offers little margin for error against a backdrop of persistent industry headwinds.

The threat extends to Adobe's fundamental pricing model. The traditional seat-based subscription, which provided predictable revenue, is vulnerable. AI tools could enable smaller teams to do more work, reducing the number of licenses a company needs. More broadly, the industry is seeing a shift toward usage-based pricing, a model that favors AI developers and hyperscalers over traditional SaaS providers. For a growth investor, this is a classic case of being caught in the crossfire. Adobe is a high-quality company, but its growth trajectory is being challenged at the same time that AI spending is accelerating elsewhere. In a portfolio focused on capturing the next decade's growth, that makes it a less compelling bet.