Is the Stock Market Sending a Warning Signal About Artificial Intelligence (AI) Stocks?

By Keithen Drury – Mar 21, 2026 at 8:00PM ESTKey PointsAI stocks have underperformed the market in 2026.Many AI stocks are still growing at a rapid pace.You may be surprised to learn that even with a war in Iran and a so-so economy, the S&P 500 is only down around 5% from its high. The reality is that there's a lot of strength in various sectors across the market, and most companies are doing just fine. However, there's one sector of the market that isn't doing as well as the others in 2026, and it may come as a surprise: artificial intelligence (AI). Although AI gets a ton of publicity and a huge amount of spending, investors haven't shown these stocks nearly as much love as they did during the previous three years. This has caused many impressive AI stocks to sell off, which may be a huge warning sign about the sector as a whole. However, I think investors should get a different signal from this sell-off, and now is the time to act. Image source: Getty Images. AI stocks look like bargains While there isn't an AI index investors can point to, one common exchange-traded fund (ETF) I use to track general AI stock performance is the Global X Artificial Intelligence & Technology ETF. This ETF is down around 9% from its all-time high, so it has fallen considerably more than the S&P 500, but it's still not a level most would find concerning. If you peel back the layers a bit and look at some top investment options, you'll see several popular AI stocks down significantly from their highs. Among them are Nvidia (NVDA 3.17%), Microsoft (MSFT 1.92%), and Palantir Technologies (PLTR 3.21%). These three represent the leaders in three different areas of AI investing. Nvidia is a play on AI infrastructure, Palantir is an AI software company, and Microsoft is a cloud infrastructure and business integration investment. ExpandNASDAQ: MSFTMicrosoftToday's Change(-1.92%) $-7.48Current Price$381.54Key Data PointsMarket Cap$2.8TDay's Range$380.12 - $386.7952wk Range$344.79 - $555.45Volume1.7MAvg Vol34MGross Margin68.59%Dividend Yield0.91% Of these three, Nvidia is faring the best, but Microsoft and Palantir are each having a much worse time. PLTR data by YCharts. But when you dig into the results of each of these businesses, it's clear that AI demand is still there, and each expects huge growth for several years. I think investors are experiencing a bit of AI fatigue and are looking to alternative investments rather than AI. While this may be bad for AI stocks in the short term, over the long term, it's an excellent opportunity for investors to buy AI stocks at a discount. Demand for AI is still expected to expand through 2030, and all three of these stocks could be great picks over that timeframe.Read NextMar 21, 2026 •By Geoffrey SeilerThe Best Stocks to Invest $5,000 in Right NowMar 21, 2026 •By Leo SunCould Nvidia Stock Turn $10,000 Into $1 Million This Decade?Mar 21, 2026 •By Prosper Junior BakinyJensen Huang Just Delivered Incredible News for Nvidia InvestorsMar 21, 2026 •By Danny Vena, CPAPrediction: This Will Be Nvidia's Stock Price by the End of 2026Mar 21, 2026 •By Keithen DruryMeet the 5 "Magnificent Seven" Stocks That Are Brilliant Buys NowMar 20, 2026 •By Geoffrey Seiler3 Bargain Stocks the Market Is Mispricing After the Recent Sell-OffAbout the AuthorKeithen Drury is a contributing Motley Fool technology analyst covering AI, semiconductors, cybersecurity, and SaaS stocks. In addition to The Motley Fool, Keithen is a mechanical engineer and has held roles at Honeywell and smaller industrial companies like Brand Hydraulics and Lincoln Industries. He holds a bachelor’s degree in mechanical engineering from Dordt University.TMFTripleOptionStocks MentionedNvidiaNASDAQ: NVDA$172.90(-3.17%)-$5.66MicrosoftNASDAQ: MSFT$381.54(-1.92%)-$7.48S&P 500 IndexSNPINDEX: ^GSPC$6,506.48(-1.51%)-$100.01Global X Funds - Global X Artificial Intelligence & Technology ETFNASDAQ: AIQ$47.37(-2.93%)-$1.43Palantir TechnologiesNASDAQ: PLTR$150.68(-3.21%)-$5.00*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.