Seasonal patterns can often create powerful turning points.

The early part of this year has felt like one of those moments. After a strong finish to 2025, the market began the year with a classic risk-off rotation: capital flowed out of high-growth technology names into more defensive sectors such as consumer staples and utilities.

The shaky start to the year has been amplified by persistent inflation, a pause at the Fed, private credit concerns, and the US-Iran war. Many investors questioned whether the AI-driven bull market had run its course.

Yet as we look ahead to the second quarter, there’s reason to believe the pause is temporary. A spring rally appears increasingly likely, with technology poised to retake the lead once again.

Positive Seasonality Sets the Stage for Upside

The historical case for seasonal strength is compelling. According to the Stock Trader’s Almanac, the month of April ranks as the 2^nd-best performing month for the S&P 500 (SPY Quick QuoteSPY - Free Report) dating back to 1950. April’s bullish track record could help reignite the market from a broader perspective.

And that old “Sell in May and Go Away” adage? It hasn’t really held much significance, especially over the last decade. We can see that S&P 500 returns have been overwhelmingly positive during the month, rising 90% of the time over the past 10 years with an average gain of 1.4%:

Image Source: Zacks Investment Research

And over that same timeframe, stocks moved higher 90% of the time from May through October, which the Almanac designates as the “worst six-month period.” In our experience, these patterns are not bulletproof, but they reflect a natural rhythm: tax refunds begin flowing, corporate guidance improves, and investor sentiment often brightens after the winter doldrums.

This year’s setup aligns particularly well with that historical template. Early 2026 tax refunds are running significantly higher than last year—averaging around 10-11% larger in the initial waves—putting meaningful extra cash into consumer pockets at a time when many households have been cautious.

This liquidity tends to find its way into discretionary spending, retail, and technology purchases, often accelerating in April. When combined with the Almanac’s documented spring strength, the seasonal tailwind feels tangible rather than theoretical.

AI Productivity: From Task-Level Wins to Broader Impact

In the context of the spring rally outlook, one of the most encouraging developments is the gradual but increasingly visible transition of artificial intelligence from hype to tangible productivity gains.

It’s particularly reassuring to see early evidence moving beyond pilot projects and anecdotal reports into measurable business outcomes. The micro-level data—combined with firm-level surveys and forward-looking projections—suggest we are in the early stages of a meaningful productivity inflection that could support renewed momentum in technology stocks.

At the task and individual-worker level, the gains are already striking and well-documented. Controlled studies consistently show time savings and output improvements ranging from 14% to 55% depending on the role.

For instance, customer-service agents using generative AI tools resolve 14% more issues per hour on average, with even larger benefits for newer employees. Software developers with access to tools like GitHub Copilot complete tasks up to 55% faster in some experiments, while management consultants at firms like BCG report 25-40% faster work with higher-quality results.

These aren't theoretical; they come from randomized trials and real-world deployments across thousands of workers. The pattern is clear: AI excels at augmenting routine or repetitive cognitive work, freeing humans for higher-value judgment, creativity, and relationship-building.

Firm-level surveys reinforce this picture and begin to bridge the gap to broader impact. McKinsey’s 2025 Global AI Survey found that 66% of organizations report productivity and efficiency gains from AI use cases, particularly in software engineering, manufacturing, and IT functions.

These productivity gains matter profoundly for the investment case. As AI moves from experimental pilots to scaled deployment—especially in knowledge work, software development, customer operations, and R&D—it should drive higher corporate earnings, expanded margins, and renewed justification for the valuations of major technology companies.

Bottom Line

The current breather in tech stocks may simply reflect the lag between massive infrastructure investment and the full realization of workflow transformation. Once Q1 2026 earnings more clearly demonstrate these gains translating into revenue and profit acceleration, investor sentiment is likely to shift back toward growth-oriented names.

The spring seasonal window, combined with tax-refund liquidity and moderating interest rates, could provide the perfect backdrop for this productivity story to gain broader recognition. The current pause in technology may ultimately prove to be the setup for the next leg higher as AI’s real-world impact becomes impossible to ignore.