The best stocks for Q1 2026

5 stocks I'm watching

Iskan R.

Jan 08, 2026

∙ Paid

January 2026 is shaping up to be a prime window for stock traders.

After a quiet December, implied volatility is expanding.

And earnings season, the Super Bowl for traders, is officially here.

Get ready!

Let’s dive into my 5 favourite stocks of Q1 2026.

5. Vertiv Holdings Co ($VRT) - Long

Company Profile

Vertiv is the “invisible backbone” of the AI revolution. As a leading “picks-and-shovels” provider, they don’t build the AI itself, they build the cooling systems and power infrastructure that keep AI data centers from overheating. With a massive backlog of orders, they are currently the indispensable leader in thermal management.

Long Trade Rationale

The AI Infrastructure Boom: The market for data centers is growing at an incredible rate (11%–15.6% CAGR). Every new AI chip sold by companies like Nvidia needs a cooling system from a company like Vertiv.
Fundamental Strength: Vertiv isn’t just growing; it’s getting better. Analysts are constantly moving their Revenue and EPS estimates upward as the company beats expectations.
Dominant Market Share: They are currently the “Gold Standard” in the industry, making them the first choice for big tech companies building out massive server farms.

Key Catalysts Watched

New Deal Flow: Any major cooling contracts announced with “Hyperscalers” (like Microsoft, Google, or Meta).
Capital Returns: A potential announcement of a share repurchase program would signal massive confidence from management.
M&A Activity: Looking for strategic acquisitions that could expand its liquid cooling capabilities (to expand its market share).
Debt Management: Watching for continued debt payouts, which would strengthen the balance sheet even further.

Strategy & Entry

I am looking for a Long Option Structure (such as Call Spreads) to leverage this multi-year infrastructure cycle.

My potential entry: $150–$160, Target: $250

4. Aehr Test Systems ($AEHR) - Short

Company Profile

Aehr Test Systems is a “pick-and-shovel” provider specializing in semiconductor test and burn-in solutions.

Their systems “stress-test” chips under extreme heat and voltage to eliminate early-life failures. A critical step for high-stakes AI processors where a single faulty chip can crash a billion-dollar data center cluster.

While Vertiv ($VRT) represents the “Macro” side of AI infrastructure (massive, high-conviction cooling and power for entire facilities), Aehr represents the “Micro” side.

They occupy a high-risk, high-reward niche: testing the individual chips before they ever reach a Vertiv-cooled rack. Their technological moat is wafer-level testing, allowing thousands of chips to be stressed simultaneously to save manufacturers time and millions in potential recall costs.

Short Trade Rationale

It has a high customer concentration.
Currently generating losses and negative FCF.
They cover a small niche with restricted growth potential and risk to demand swings, not all semiconductor makers need wafer-level burn-in for all products.

Key Catalysts Watched

EPS and Revenue Revisions Down
Book-to-bill ratio for the quarter was slightly above 1

Strategy & Entry

$AEHR is the perfect spread trade with $VRT.

Vertiv (VRT) and Aehr Test Systems (AEHR) represent two opposite ends of the “AI infrastructure” trade. While both are technically linked to data centers, their fundamental momentum and market positioning couldn’t be more different right now.

A spread trade (long VRT / short AEHR) allows me to profit from the widening performance gap between these two companies while hedging out general market risk.

You are longing the indispensable infrastructure provider with a monster backlog (VRT) and shorting a niche, money-losing tester (AEHR) that is still trying to prove it belongs in the AI conversation.

My potential entry: ~$20, Target: $12