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The Application-Layer Rotation: 3 AI Pure Plays Poised to Win in 2026

Written by Jeffrey Neal Johnson

For the last two years, the stock market has been obsessed with hardware. Investors poured trillions of dollars into the companies building the chips, data centers, and infrastructure required to train artificial intelligence. But as 2025 draws to a close, that easy money trade is maturing. The infrastructure is being built, and now the market is asking a new, critical question: Who is actually using this technology to make money?

This shift is known as the rotation to the Application Layer. It marks the moment when value transfers from the chipmakers to the software companies that solve real-world problems.

As we look toward 2026, the market is separating into two distinct groups. On one side are the Pretenders, companies with vague promises and no revenue. On the other side are the Pure Plays, execution-focused companies that have secured contracts and commercialized their technology. Three distinct leaders have emerged from the pure play pack: Palantir Technologies (NASDAQ: PLTR), SoundHound AI (NASDAQ: SOUN), and BigBear.ai (NYSE: BBAI).

Palantir Technologies: The Operating System for Modern Business

Palantir Technologies has completed one of the most difficult pivots in the software industry.

Once known strictly as a secretive contractor for the CIA and military, Palantir has evolved into the default operating system for the American commercial enterprise.

The company’s flagship product, the Artificial Intelligence Platform (AIP), is more than a simple chatbot. It is a complex software layer that integrates with a company’s data to automate decision-making.

Because it becomes the brain of a corporation, it is incredibly sticky, meaning once a customer signs up, they rarely leave.

Key Financial Catalysts

The data from the third quarter of 2025 confirms this dominance:

• Total Revenue: Reached $1.18 billion, representing a 63% increase year-over-year (YOY).
• Commercial Explosion: U.S. commercial revenue surged by 121%. This growth is driven by Palantir’s unique Bootcamps, where engineers install and demonstrate the software on a client’s actual data in just a few days, bypassing long sales cycles.
• Government Stability: The stock’s floor remains secure. In December, Palantir signed a $448 million ShipOS contract with the U.S. Navy to manage supply chains for the submarine fleet.

The Strategic Moat: The S&P 500 Premium

Despite investors’ concerns about its valuation relative to peers, Palantir has effectively established a new category of “blue-chip” software stocks. This status was cemented by its inclusion in the S&P 500, a move that compels institutional funds to purchase the stock and, consequently, reduces volatility. Furthermore, the retail market appears willing to pay a premium for Palantir, recognizing it as one of the few AI companies achieving high profitability while scaling its operations.

SoundHound AI: The Voice Interface Standard

As AI models become more advanced, typing on a keyboard is becoming obsolete. Voice is the new user interface, and SoundHound AI is winning the race to power it.

While tech giants like Google and Apple (NASDAQ: AAPL) have their own voice assistants, they operate as walled gardens that trap user data.

Major corporations, specifically car manufacturers and restaurant chains, do not want to give their data to Google. 

They want an independent platform. SoundHound provides that independence.

Key Financial Catalysts

SoundHound is entering 2026 with a completely different financial profilethan it had just a year ago:

• Revenue Scale: Following the acquisition of enterprise software company Amelia, SoundHound is projecting full-year 2025 revenue to exceed $150 million.
• Diversification: The business is no longer just about cars. It now has three clear pillars: Automotive (Stellantis, Hyundai), Dining (White Castle, Jersey Mike’s), and Enterprise (Banking/Insurance via Amelia).
• Path to Profit: Management has outlined a credible roadmap to break-even operations in 2026. This transition from cash burn to cash flow is the primary trigger for institutional investment.

The Strategic Moat: Brand Neutrality

SoundHound’s most significant advantage is that it is not a big tech company. When a user speaks to their Jeep or orders a burger at a drive-thru, the brand wants to own that experience. SoundHound allows brands to customize the voice and keep the data. This unique value proposition has resonated with investors, driving a steep increase in Marketbeat watchlist additions over the past 3 months.

BigBear.ai: The Secure Intelligence Specialist

BigBear.ai offers a different type of opportunity. It is a high-risk, high-reward play focused on a harsh reality: the world is geopolitically unstable, and the U.S. military needs secure AI.

Most commercial AI models (such as those used to write emails) are not allowed near classified government secrets. They lack the security clearance.

BigBear.ai has positioned itself as the bridge between cutting-edge AI and the Pentagon.

Key Financial Catalysts

The company spent 2025 executing a strategic pivot, moving away from low-margin staffing work to high-margin software:

• The Ask Sage Acquisition:BigBear.ai has agreed to acquire Ask Sage for $250 million. This acquisition, announced in BigBear.ai’s third-quarter earnings report, is a significant step, adding generative AI capabilities to the government market through the Ask Sage platform.
• Strong Balance Sheet: The company holds approximately $456 million in cash. This liquidity is critical. It allows BigBear.ai to survive the long, bureaucratic delays often associated with government contracts without diluting shares.

The Strategic Moat: Security Clearance

Ask Sage has publicly announced a FedRAMP High authorization, which is a meaningful gate for federal adoption.

These authorizations are difficult and expensive to obtain. They act as a regulatory moat, preventing commercial competitors from bidding on sensitive defense contracts. Retail investors betting on defense modernization have flocked to the stock, driving BigBear.ai’s stock price up by around 34% over the past year.

Contracts Over Concepts: The Separation Is Real

The AI Trade is no longer a monolith. As we enter the new year, the market is ruthless. Companies that rely on hype are seeing their stock prices fade, while companies that execute are breaking out.

Palantir Technologies has secured the enterprise. SoundHound AI has captured the consumer voice interface. BigBear.aihas fortified the defense sector. These three companies have separated themselves from the pack by proving they can translate technical capability into signed contracts and revenue. For investors seeking longevity in their portfolios, these Application Layer leaders represent the smart capital rotation for 2026. READ THIS STORY ONLINE

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The 5 Most Upgraded Stocks from 2025: Double-Digit Upside in 2026

Written by Thomas Hughes

If you want a 2026 watchlist built around Wall Street’s freshest momentum, start with the names on MarketBeat’s Most Upgraded in 2025. Stocks on this list saw the most bullish analyst upgrades over the last year, and many have catalysts that could carry momentum forward into 2026.

The common thread is straightforward: AI-driven growth is improving products, lifting demand for cloud services, and pushing analysts to revisit what these businesses could be valued at in the future. 

That said, “upgrades” are just inputs. The actionable step is pairing upgrade momentum with today’s analyst price targets—especially the spread between consensus and the high end—because that’s where you can see how bullish the Street is willing to get heading into 2026.

Alphabet Is the Most Upgraded Stock: 20% Upside Is the Minimum Target

Alphabet’s (NASDAQ: GOOGL) stock price has been on fire. The company spent 2025 reminding investors it can still set the tone for the broader AI trade.

Critical details include the launch of Gemini 3, viewed as the leading large language model at year’s end; strength in Google Cloud Platform; and new revenue streams tied to proprietary semiconductor technology. 

Alphabet’s news stream catalyzed a robust analyst trend this year, resulting in increased analyst coverage of GOOGL stock, firming sentiment, and an uptrend in the price target.

The consensus 12-month target implies the stock is fairly valued near current levels even after rising sharply over the past year, while the most bullish targets reach $385.

Those targets that are the most bullish equate to 20% upside, sufficient for fresh all-time highs, and are likely to be increased as the year progresses.

Regarding analyst activity in 2025, MarketBeat has tracked 119 bullish updates from 51 analysts. 

CrowdStrike Is Striking a Note With Its AI-Enabled Services

CrowdStrike’s (NASDAQ: CRWD)stock price is trending upward due to its strong results, tied to its AI-enabled platform, aggressive acquisition strategy, and operational excellence. 

The company has had industry-leading growth, client acquisition, and retention, providing a strong tailwind for 2026 results. The 2026 outlook is for another 22% revenue growth and wider margins, and is likely a lowball estimate given the trends and outlook for increased cloud use in 2026. 

MarketBeat tracked 114 bullish analyst revisions from 52 analysts covering CrowdStrike in 2025.

The year-end trend for CRWD stock is increasing coverage, firming sentiment pegged at Moderate Buy, and an uptrend in price targets that is leading this market higher. The consensus forecasts a 15% upside in 2026, while the high-end adds 30%—and will likely be increased early in the period. 

Snowflake Is the 3rd Most-Upgraded Stock Amid Game-Changing Year

Snowflake (NYSE: SNOW) struggled in 2024 and early 2025 amid CEO issues, prompting a leadership change that reinvigorated the business.

The work of the new CEO included a refocus on go-to-market strategies and product innovation to attract and retain clients, as seen in the company’s performance.

The result is that growth was sustained in the high-20% range despite prior concerns, affirming the outlook for a 20% pace to be sustained. 

The Q3 results for the company’s fiscal 2026 included a 37% increase in remaining performance obligations (RPO), suggesting growth in upcoming quarters could top 30%, spurring analysts to take action.

The analyst year-end trends include increased coverage and solid support, with 43 analysts covering the stock, and a 24% upside forecast at the consensus, nearly 47% at the high end of the range. 

Amazon Fires on All Cylinders in 2025

Amazon’s (NASDAQ: AMZN) business is firing on all cylinders in 2025. AWS and other cloud services remain strong and are contributing a larger share of Amazon’s operating income, while the core consumer business continues to perform well.

On the consumer side, growth is running in the low teens, while on the AWS side, it has accelerated into the 20% range.

That is a significant achievement, considering the size of AWS and its data-center-industry-leading position.

MarketBeat tracked 108 bullish updates from 61 analysts who cover AMZN stock.

They rate the stock a Moderate Buy, with coverage on the rise. The consensus price target calls for 27% upside, plus almost 28% more at the high end of the range. 

Meta Platforms’ Uptrend Is Intact

The worst that can be said about Meta Platforms (NASDAQ: META) 2025 performance is that it has increased plans for AI spending in 2026. Those plans catalyzed a late-year stock price correction, but did not alter the stock’s overall trend.

META’s price action has been driven by AI, with Meta Platforms a poster child for its adoption. Its use to date has improved operational quality while boosting traffic, ad views, and revenue per ad, resulting in sustained 20% growth and margin strength.

Analyst coverage of Meta increased in 2025, while sentiment firmed, and the price target rose.

This aligned with the price uptrend in place, leading the market to new highs.

The price target consensus forecasts about 24% upside in 2026, with potential for an additional 45% gain at the high end of price targets.  READ THIS STORY ONLINE

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Why GE Vernova, PG&E and Mastercard Are Income Boosters for 2026

Written by Leo Miller

For three well-known stocks, dividends are on the rise in a very big way. Two companies tied to the U.S. energy ecosystem doubled their quarterly payouts, and a global payments leader delivered a double-digit raise while opening the spigot on buybacks.

Dividend growth—especially double-digit hikes—can be a useful signal that management sees durable cash-generation ahead.

Let’s dive into the key dividend news surrounding GE Vernova (NYSE: GEV), Pacific Gas & Electric (NYSE: PCG), and Mastercard (NYSE: MA). 

GEV: Shares and Dividends Rise 100% in 2025

First up is GE Vernova. This industrial stock has risen by a little more than 100% in 2025 as the company is benefiting greatly from AI data center buildouts.

On Dec. 9, the company updated its multi-year outlook. GE Vernova substantially increased its estimates on revenue, margins, and cash flow, a clear sign of the business’s momentum. Along with this, GE awarded shareholders by doubling its quarterly dividend to 50 cents per share. GEV will pay its next dividend on Feb. 2, 2026, to shareholders of record as of Jan. 5, 2026.

With a share price near $660, GEV’s indicated dividend yield isn’t anything to write home about, coming in at just 0.3%. However, the company is clearly making strong efforts to ensure that dividends continue to be a meaningful part of its return profile.

Notably, GEV also increased its share repurchase authorization to $10 billion. This is equal to around 5.5% of the company’s market capitalization, giving GEV a substantial ability to lower its outstanding share count.

PG&E’s Dividend Quintuples in Two Years

Next up is Pacific Gas & Electric. Also known as PG&E, the utility company is one of the largest providers of electricity and natural gas in California. Destructive wildfires that hit the Los Angeles area early in the year took a big toll on the company’s shares. Within the first two weeks of 2025, the stock was down around 20%. Shares have not recovered since, down 21% for the year.

Despite its weak performance, PG&E just announced a mighty dividend increase. Its quarterly dividend will move up by 100% to 5 cents per share. PG&E will pay its next dividend on Jan. 15, 2026, to shareholders of record as of Dec. 31.

This gives the stock a solid indicated dividend yield of just under 1.3%, greater than the approximate 1.1% yield offered by the S&P 500 Index. 

Notably, in just two years, PG&E has increased its dividend by 400%. In 2024, the company’s quarterly payouts were just 1 cent. This huge increase shows the firm’s commitment to returning capital to shareholders.

MA Boosts Dividends and Buybacks Significantly

Finally, payments giant Mastercard just provided a very strong dividend increase. The stock has delivered a solid 11% return in 2025. This comes as consumer spending has remained strong, in spite of tariffs and economic uneasiness. With one quarter left to report, analystsexpect the company’s revenues to grow by 16% in 2025, which would be the firm’s fastest growth rate since 2022.

On Dec. 9, Mastercard boosted its quarterly dividend by 14% to 87 cents per share. Mastercard will pay its next dividend on Feb. 9, 2026, to shareholders of record on Jan. 9, 2026.

Overall, the stock now has an indicated dividend yield of 0.6%. Although not stratospheric, this figure is relatively in line with the 0.75% yield offered by Mastercard’s top competitor, Visa (NYSE: V).

Mastercard also authorized a new share buyback program worth $14 billion. This adds to the company’s remaining buyback capacity of $4.2 billion. The firm’s total buyback capacity is equal to around 3.5% of its $520 billion market capitalization.

GEV Shores Up Yield With Latest Dividend Boost

Despite putting up very different performances in 2025, all three of these names are rewarding shareholders with substantial dividend increases. Among this group, GE Vernova is a clear standout.

GEV is one of just 14 stocks in the S&P 500 Index that have delivered a return of 100% or more in 2025. By increasing its dividend in proportion to its share price appreciation, GE Vernova is demonstrating its commitment to returning capital. Before this announcement, the stock’s yield stood at only around 0.15%. Now, the figure is approximately equal to its level at the beginning of the year. READ THIS STORY ONLINE

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The Night Owl is a financial newsletter that provides in-depth market analysis on stocks of interest to individual investors. Published by MarketBeat and Early Bird Publishing, The Night Owl is delivered around 9:00 PM Eastern Sunday through Thursday. If you give a hoot about the market, The Night Owl is the newsletter for you.

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