The technology sector has dominated the market narrative for much of the past decade. However, 2026 is about to change. The technology sector has been decimated, driven by valuation pressures, leverage, and macroeconomic uncertainty.
Meanwhile, the energy, industrials, and materials sectors emerged as some of the best-performing sectors from technology in 2026, benefiting from rising commodity prices, infrastructure spending, ongoing wars, and expanding global economic cycles. The Technology Select Sector SPDR ETF ( XLK ) is down 2.43% year-to-date (YTD), while the Energy, Industrials, and Materials sectors have broadly outperformed.
Let’s explore ways investors might choose to allocate $10k to the best-performing sectors of 2026.
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At the start of 2026, the energy sector was the best-performing group in the S&P 500 Index ($SPX), outperforming the technology sector, thanks to rising oil prices, geopolitical changes, and shifts in commodity-linked assets. Energy stocks, as tracked by the Energy Select Sector SPDR ETF ( XLE ), have gained 25.37% YTD.
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The best energy stocks to buy now include the following.
Worth $632.6 billion, Exxon Mobil (XOM) is one of the most profitable energy companies in the world. The company benefits from integrated operations spanning upstream exploration, refining, and petrochemicals. Exxon continues to pay dividends and share buybacks to shareholders, thanks to strong free cash flow and prudent spending. It yields 2.7% and is a dividend aristocrat, with a 42-year track record of dividend growth. Rising crude oil prices and new production projects have bolstered its long-term outlook.
Overall, analysts rate XOM stock a “moderate buy”. Exxon stock is up 24.44% so far this year and has an average target price of $143.89. But the highest price target of $183 suggests a potential upside of 22% over the next 12 months.
Valued at $376.7 billion, Chevron ( CVX ) is a vertical oil and gas company. It also delivered strong operating performance, supported by high-margin production assets and expanding LNG exposure. With a cash balance of $6.3 billion and a debt-to-equity ratio of 0.21, the company’s balance sheet remains one of the strongest in the industry. This has allowed it to maintain consistent dividend growth for 37 consecutive years while investing in new energy opportunities.
On Wall Street, Chevron has a “moderate buy” rating. CVX stock is up 22% so far this year and is trading just above its average target price. Its high price target is $212 points for a potential profit of 13.9%.
The industrial sector has seen significant gains in 2026. As economic growth expands beyond digital services and software, companies involved in manufacturing, construction equipment, transportation, and defense production are in increasing demand. The Industrial Select Sector SPDR ETF ( XLI ), which provides broad industrial exposure, is up 13.57% so far this year, outperforming both technicals and the overall market.
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Let’s look at the best industrial stocks to buy now.
Worth $336 billion, Caterpillar ( CAT ) is one of the largest manufacturers of construction and mining equipment in the world. The company’s machines are widely used in infrastructure projects, mining operations, and large-scale construction developments. As governments increase spending on roads, energy infrastructure, and urban development, Caterpillar is benefiting from increased demand for equipment. With strong equipment sales and a backlog of $51 billion, Caterpillar generates strong cash flow and has maintained 31 consecutive years of dividend growth.
On Wall Street, Caterpillar stock has a “moderate buy” rating. CAT stock has risen 75% over the past six months and 28.41% YTD, exceeding its average target price. But its high price target of $878 points to a 20% upside.
Valued at $167.3 billion and best known for its agricultural machinery, Deere ( DE ) is also experiencing strong demand as agricultural modernization accelerates globally. The company has invested heavily in automated, precision farming, and data-driven agricultural technologies, positioning it at the intersection of agricultural and industrial innovation. Deere is also a dividend stock, offering a leading yield of 1.03%.
On Wall Street, Deere’s stock is rated “moderate buy.” DE stock is up 32.24% so far this year but is trading 6.2% below its average target price of $653.30. In addition, this high price target $793 points to a potential profit of 28.8%.
The materials sector is another sector where investors are seeing strong momentum this year. Companies involved in mining, metals, chemicals and construction materials benefit from rising commodity prices and increased demand associated with industrial development. The Materials Select Sector SPDR ETF ( XLB ) provides broad exposure to the largest materials companies within the S&P 500. It’s up 14.9% so far this year, outperforming technology.
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Two material stocks that outperform technical stocks are:
At $128.9 billion, Newmont ( NEM ) is the largest gold company in the world. Gold prices often rise during times of economic uncertainty, war or inflation, prompting gold miners to seek defensive investments. By 2025, strong gold sales have enabled the company to generate large free cash flow to return to shareholders. And, Newmont pays dividends based on gold prices, allowing investors to directly benefit from bullion markets.
On Wall Street, Newmont is rated “Strong Buy.” NEM stock is up 19.78% YTD but is trading 14.52% below its average target price of $136.56. Furthermore, the high price target of $177 implies a potential gain of 48.43%.
At $119.56 billion, Rio Tinto ( RIO ) is one of the world’s leading diversified mining companies, producing key resources such as iron ore, copper, aluminum, and other industrial metals. Demand for these commodities remains strong, supported by infrastructure spending, electrification trends, and the growth of renewable energy. Copper, in particular, is vital to electric vehicles and modern power grid systems. Strong production growth in copper, bauxite, and iron ore will boost revenue to $57.6 billion by 2025. RIO also offers an attractively high dividend yield of 5.3%, higher than the materials sector average.
On Wall Street, RIO is rated “Moderate Buy”. RIO stock is up 20.84% so far this year and trades outside its average target price of $91.83. Its high price target $122 points to a potential profit of 26.7%.
Over the past few years, mega-cap tech giants, particularly the “Magnificent Seven,” have powered the rally in the S&P 500, delivering extraordinary returns and attracting large swaths of investors. However, the market rarely remains tailored to just one sector. And 2026 is shaping up to be a year where energy, industrials and materials stocks outperform technology. Rising commodity prices, infrastructure investment, ongoing wars, and global economic expansion all create favorable conditions for companies in these sectors.
If you have $10,000 to invest today, a simple diversification approach might allocate 40% to energy, 35% to industrials, and 25% to materials. However, the exact allocation may vary based on individual risk appetite, time horizon, and investment strategy.
As of the date of publication, Sushree Mohanty had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
