Turning Bullish on Tech as the AI Supercycle Continues With a Strong Bullish Setup, and 3 Stocks to Capture Extra Alpha

The stock market pulled back from recent highs as JPMorgan led bank earnings highlighted lingering uncertainty despite an otherwise resilient economic backdrop. While growth remains solid, investors reacted cautiously to financial sector commentary, choosing to wait for clearer signals from earnings season. However, the bigger picture for technology looks increasingly constructive. TSMC's latest outlook reinforced confidence that the AI supercycle is not only intact but likely to accelerate into 2026 and beyond. That guidance stands in sharp contrast to short term market hesitation and suggests recent weakness may be more of a reset than a reversal. While investors remain cautious ahead of major tech earnings to reassess fundamentals and AI monetization, technical structures remain supportive and point toward a longer runway. With sentiment stabilizing and capital expenditure commitments staying aggressive, the setup favors renewed upside, particularly for select AI driven leaders.

Early week weakness was largely driven by pressure in the financial sector after JPMorgan's results failed to excite, compounded by renewed concerns over political threats to cap credit card interest rates. That narrative briefly weighed on broader sentiment. Yet a closer look shows notable dispersion beneath the surface. Investment banking focused firms such as Morgan Stanley and Goldman Sachs delivered more resilient results, which were rewarded by equity markets. This divergence matters because it underscores that earnings are not broadly deteriorating, but rather being selectively repriced.

More importantly, TSMC's strong guidance for the first quarter and its projection of more than 30% revenue growth into 2026 reaffirmed that AI related capital spending remains a top priority for global technology leaders. The company's elevated capital expenditure plans signal sustained demand across advanced nodes, which directly benefits the broader semiconductor and infrastructure ecosystem. That message has the power to restore confidence across the entire tech complex.

From a technical perspective, both the S&P 500 and Nasdaq 100 experienced a brief pullback followed by a quick rebound over the past two sessions, forming another "higher low" structure. This pattern suggests bullish momentum remains intact even as markets digest earnings headlines. Indexes are now trading just below recent highs and key resistance levels, yet price action indicates consolidation rather than distribution. With geopolitical tensions easing, particularly surrounding U.S. and Iran dynamics, risk appetite has room to recover. Technology is well positioned to lead the next leg higher as confidence gradually rebuilds. Given the favorable macro backdrop and limited downside risk, maintaining a bullish bias remains justified.

Crypto strength provides another supportive signal. Bitcoin has finally broken free from the consolidation that dominated price action since November, validating a broader bullish trend. Earlier this week, the recovery confirmed a higher low formation, and the subsequent rally established a higher high, strengthening the technical case. As long as Bitcoin holds above the 90,000 level, bullish control remains intact. Because digital assets and technology stocks tend to share the same risk sensitive profile, renewed momentum in Bitcoin often coincides with improved sentiment toward growth equities. With macro conditions supportive and liquidity expectations steady, near term upside appears to outweigh downside risk. Against this backdrop, technology exposure becomes increasingly attractive as AI returns to center stage. Within that context, three stocks stand out for their technical positioning and asymmetric upside potential.

Broadcom appears undervalued as a key ASIC supplier to both Google and OpenAI. The success of Gemini suggests that custom ASIC chips can deliver stronger inference performance at a lower cost compared with Nvidia's general purpose GPUs, making adoption more attractive across the technology sector. Supported by TSMC's solid earnings and aggressive capacity expansion, Broadcom's demand could accelerate alongside Nvidia, particularly as enterprises seek customized solutions tailored to specific workloads. From a technical perspective, the stock remains in consolidation while continuing to form a clear higher low structure, indicating that a breakout scenario is increasingly likely. The options market also reflects growing bullish conviction, with more than 2,000 contracts open across the $350, $355, $360, and $365 strikes, along with additional out of the money calls expiring next Friday, signaling aggressive upside positioning.

Microsoft has been under near term pressure, yet its core fundamentals remain firmly intact. Azure's cloud business continues to show strong momentum, driven by deep integration with OpenAI as well as Claude, which should support sustained enterprise adoption. Microsoft's ownership of roughly 27% of OpenAI reinforces a strategic exclusivity that may last longer than the market currently assumes, especially as Apple opted for Gemini instead of ChatGPT. That partnership advantage is often underestimated. Technically, Microsoft is showing an unusually oversold condition, with RSI dropping to 17, the lowest reading since November 21, a level that historically preceded a sharp rebound. At the same time, the options chain reveals notable bullish positioning, with more than 4,000 open contracts across the $475, $480, $482.5, and $485 call strikes, highlighting strong upside expectations. Given this setup, upcoming earnings should not be underestimated, as artificial intelligence could once again act as the primary catalyst for renewed strength.

Adobe has been widely viewed as a casualty of the AI arms race, with concerns that generative tools could disrupt its creative software dominance. Yet this narrative overlooks Adobe's ability to embed AI directly into professional workflows. While pure AIGC tools cater to entry level users, they struggle to meet the demands of professionals, an area where Adobe retains a significant edge. The stock now trades near levels last seen during the 2022 macro selloff, with RSI plunging to 10, its most oversold reading since last April. History suggests such extremes often precede powerful rebounds. As management shifts more decisively toward AI integration, the risk reward profile becomes increasingly compelling from both a technical and fundamental perspective.

Taken together, the AI supercycle remains firmly in place. With technical patterns holding, crypto confirming risk appetite, and select names offering asymmetric setups, the path forward favors renewed bullish positioning in technology.