While the S&P 500 index clings to a marginal year-to-date gain of less than 1% for 2026, volatility at the individual stock level has been exceptionally intense.

Microsoft (MSFT) has plunged 18% this year, shedding over $500 billion in market value. Intuit (INTU), the maker of TurboTax, has declined by 37%. In stark contrast, shares of memory chip maker Sandisk have nearly tripled, while Texas Pacific Land, a real estate firm repositioning as a data-center play, has surged 85%.

Investors continue to flock to chipmakers and other companies central to AI infrastructure development. However, large technology companies have lost momentum, and investors concerned about AI disruption are rotating into long-depressed sectors like energy and materials.

According to Barclays data through February 13th, while the S&P 500 has traded within a narrow range of just 2.7% in 2026, the average stock within the index has experienced volatility roughly seven times greater. This ratio marks the highest level since at least 1994, indicating an unusually large divergence in returns among different companies.

This underlying turbulence makes some investors nervous, as periods of high market "dispersion" have sometimes preceded broader market pullbacks. Conversely, it presents opportunities for stock pickers aiming to outperform the benchmark index.

"This is a truly dynamic environment," said Jonathan Cofsky, a technology portfolio manager at Janus Henderson Investors. "AI is evolving so rapidly, with non-linear improvements. It's very difficult for investors to decipher what this means for a wide array of different stocks."

For years, the rapid growth of AI has been a tailwind for the stock market, propelling the S&P 500 to double-digit returns in 2023, 2024, and 2025 following OpenAI's release of ChatGPT in late 2022.

Signs of a shift emerged late last year when investors punished Oracle over concerns about excessive AI spending. However, that pales in comparison to developments this year, as investors increasingly focus on the potential negative repercussions of widespread AI adoption.

The software industry is at the epicenter of these concerns. Shares of software giants like Salesforce and ServiceNow had already declined last year, influenced by the rise of "vibe coding." Their sell-off accelerated in January after new tools from Anthropic and OpenAI were seen by industry insiders as significantly shortening the time required to build complex software.

Although there is little current evidence that AI is harming software company earnings, the pace of change is so swift that investors are choosing to sell first and ask questions later. Fears of AI disruption have now spread from software to sectors like insurance and asset management.

Transportation stocks recently experienced one of their worst days on record, triggered by a former karaoke machine manufacturer boasting about a new AI tool to streamline freight logistics. On another day, a broad market decline appeared to be a reaction to a viral Substack article depicting a dystopian future where AI destroys white-collar knowledge work.

However, these sharp declines remain outliers. For now, steep drops in certain stocks are often matched by significant gains in others, and investors generally maintain an optimistic outlook on overall corporate profits and the broader direction of the U.S. economy.

The current level of stock dispersion worries some, as it evokes memories of past market booms and subsequent busts, most notably the internet bubble of the late 1990s.

Stefano Pascale, an equity derivatives strategist at Barclays, stated that the comparison to the 1990s is relevant because, like then, the economy is undergoing rapid technological change. He noted, "Dispersion is a hallmark of highly innovative periods," as investors attempt to separate winners from losers with limited information.

Nevertheless, he added that this does not necessarily mean the major indexes are poised for significant losses, pointing out that valuations in the 1990s were "much higher" than they are today.

Some investors express confidence in navigating the current market climate.

"I see this as a buying opportunity for software stocks that we haven't seen in several years," said Jamie Cox, Managing Partner at Harris Financial Group. Cox's income-oriented, dividend-focused portfolio has performed strongly this year.

Kieran Osborne, Chief Investment Officer and Partner at Mission Wealth, which manages $14.5 billion, shares a similar view. He believes that "companies that could actually be significant beneficiaries of AI adoption are being incorrectly lumped in with others."

Despite the opportunities, risks and anxiety persist. Alex Chaloff, Chief Investment Officer at Bernstein Private Wealth Management, said his team has been trying to distinguish AI winners from losers since last year.

He noted that client inquiries are becoming more frequent. "We get a lot of questions like, 'I've held this stock for a long time, and it's done well. Is this the end? Should I get out?'" Chaloff said.