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The time has come to dissect some of the most interesting potential stock picks for next year. Of course, no stock is guaranteed to rise in value. But based on research, along with what happened this year and what could be in store for a company in 2026, informed decisions can be made. When looking at the S&P 500, here’s one potential share for consideration.
An AI powerhouse
After thinking about it for a long time, my pick for next year is Microsoft (NASDAQ:MSFT). The share price is up 5% in the past year. Again, I stress that there’s technically no such thing as a dead cert, but there are plenty of reasons it’s appealing right now.
For example, AI is likely to be the most prominent theme dominating the markets next year. Microsoft isn’t so much betting on AI, rather it’s baking it into existing profit engines. What I mean by this is that the company is already busy embedding AI into product features. This includes things like having Copilot across Office and Windows applications and pushing the adoption of Azure for enterprise AI workloads.
The bottom line is that if AI adoption continues, Microsoft benefits. Even if AI adoption slows, it’ll still win through the traditional usage of many Microsoft products. Let’s also not forget about the special relationship the company has with OpenAI.
Diversified business mix
Another big appeal of holding Microsoft comes from the broad range of products and clients being serviced. It provides everything from Cloud services to enterprise software. This means it has both revenue diversification and pricing power.
This should pay off in 2026 as investors don’t know exactly where the big tech or AI win will come from. Yet Microsoft has fingers in so many pies that it should be able to capitalise on whichever area takes off. When I compare the business model to those of other S&P 500 companies, it’s a rather unique selling point.
Being patient
Of course, no stock is completely risk-free. For Microsoft, it’s competing in a sector where everyone is trying to get market share. Not only that, given the range of areas it covers, it’s competing against businesses that focus solely on specific niches. That’s tough.
Some might also flag up the valuation as a concern. With a price-to-earnings ratio of 34.02, it’s true that it’s not cheap. However, the S&P 500 average is 30.75. Therefore, it’s around the index average, so it doesn’t worry me that much.
On balance, I understand why calling a stock a no-brainer pick can raise eyebrows. Although nothing is guaranteed, I think the stock could do really well due to the AI ties and diversified revenue mix. On that basis, I’m seriously thinking about adding it to my portfolio and think investors could consider it as well.
