The Great Market Rotation of 2026: AltIndex Data Reveals the New Winners

February 17, 2:11 pm

For years, the NASDAQ was the undisputed "safe haven" for investors seeking growth. But as we move through February 2026, the script has flipped. The NASDAQ Composite is down ~2.9% year-to-date as a massive market rotation is underway. Investors are no longer buying "the future" - they are buying the infrastructure and the "Real Economy."

Winners and losers

At AltIndex, we pulled 3-month sector performance across thousands of stocks. The results look like a textbook rotation: capital is moving away from crowded, AI-adjacent “growth baskets” and into areas where fundamentals feel more tangible right now. And the disparity between the winners and losers of the last quarter is staggering.

Sector	3-Month Performance	Key Narrative
Airlines	+36.0%	Capacity rationalization & travel resilience.
Semiconductors	+31.7%	The "Hardware First" AI mandate.
Steel & Metals	+26.9%	Raw material "supercycle" for AI data centers.
Engineering & Construction	+26.5%	Re-industrialization and infrastructure spend.
Aerospace & Defense	+20.4%	Space tech and national security priorities.
Marketing & Advertising	-17.4%	Agency budgets cut by in-house AI automation.
Application Software	-19.8%	The "SaaSpocalypse" & AI seat-pricing reset.
Data Warehousing	-22.3%	Budget cannibalization by AI infrastructure.

The "AI Gut-Check" and the SaaSpocalypse

The biggest story of early 2026 is the Application Software crash. For a decade, "Software was eating the world," but now, AI is eating the software budget.

Investors have hit a "gut-check" moment, questioning whether traditional SaaS (Software-as-a-Service) companies can actually monetize AI. The data is brutal: 82% of all Application Software stocks have fallen in the last three months.

• Atlassian (TEAM): Down 43%
• Figma (FIG): Down 38%
• Domo (DOMO): Down 63%

The market is realizing that seat-based licensing - the bread and butter of SaaS - is under threat. If an AI agent can do the work of five people, the company needs five fewer software seats. This structural shift has turned former tech darlings into value traps overnight.

From "Code" to "Chrome and Chips"

While software bleeds, the physical layer of the tech stack is exploding. The AI trade hasn't died; it has simply moved down the stack to the "pickaxes."

• Ichor Systems (ICHR): A staggering +229% as they provide the essential fluid delivery systems for chip manufacturing.
• ACM Research (ACMR): Up +107% on the back of relentless semiconductor tool demand.

The AI score for ICHR has steadly increased in the last 3 months

Simultaneously, the Aerospace and Defense sector has pivoted into a high-growth arena, fueled by the accelerating "New Space" race. This shift is best exemplified by small-cap innovators like Sidus Space (SIDU), which has surged +200%, and Satellogic (SATL), gaining +106%. These parabolic moves underscore a renewed investor appetite for risk, as the market prioritizes tangible orbital assets and national security infrastructure over traditional software plays.

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The Surprise MVP: Airlines

Perhaps the most shocking trend of the last three months is the total resurgence of the Airline sector (+36%). After a volatile 2025, the industry has reached a "Goldilocks" zone. With the Spirit Airlines bankruptcy clearing out excess low-fare capacity, major carriers are seeing record margins.

• Southwest (LUV): +71.1%
• Alaska Air (ALK): +45.9%
• United Airlines (UAL): +26.7%

The AltIndex Outlook

The NASDAQ is currently in a corrective phase, having pulled back roughly 5% from its late-January highs. As long as the 10-year Treasury yield flirts with the 5% mark, high-multiple software will remain under pressure. But Airlines, Semiconductors, Space companies show that there are still opportunities in the market.

To stay ahead, look at the following alternative data insights to find the new opportunities in the market:

• AI Stock Scores: Our proprietary 0-100 scores use machine learning to weigh alternative data points. Currently, AltIndex scores for hardware and infrastructure firms remain high, while many software darlings have seen their "Social Sentiment" and "Business Growth" scores plummet.
• Job Posting Trends: We track real-time hiring data to see which companies are actually expanding. The +229% gain in Ichor Systems (ICHR) was preceded by a significant spike in job openings - a signal our users saw in early November.
• App Analytics & Web Traffic: Our data correctly identified the drop for Domo. The company has seen a 18% decrease in web traffic in the last 12 months according to our estimates.
• Employee Satisfaction & Sentiment: In the software sector, we monitor internal sentiment and business outlook. The current dip in Atlassian aligns with the drop in business outlook amongst the company's employees.

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