The 2026 Market Outlook

Themes, key individual names, macro–micro analysis, and much more for the year ahead.

Welcome to the 2026 Market Outlook.

This year was a whirlwind, it feels like we had multiple years packed into one.

2025 was strong but the most defining feature of the past year was the uncomfortable volatility we had at various points throughout.

The year began with the DeepSeek episode where we heard that DeepSeek released a very powerful open source LLM. The big concern was the fact that it was reportedly developed at a fraction of the cost of U.S. hyper scalers. This created questions around AI commoditization and whether or not all of the CapEx was justified. That alone caused a major drawdown across the entire market, specifically AI linked names.

Shortly after, we had the notorious Liberation Day tariff announcements. This led to the steepest correction the market has seen since COVID, and in hindsight it also presented a very similar buying opportunity. The fears of a trade war faded as we saw most of the tariff threats get walked back or delayed. This gave the market confidence that despite the aggressive posturing, Trump did not want to be the face of a severe market crash in the first few months of his presidency.

We also had three rate cuts and for much of the year the Fed remained on pause, leading to a feud between the chair of the Federal Reserve Jerome Powell and the President. One thing became very clear to everyone this year as it pertains to monetary policy, this administration is focused on growth and the labor market vs. inflation. The 2% inflation target seems to be unattainable at this point so the alternative looks to be growing ourselves out of debt.

We had a very concentrated market throughout the year, cap weighted indices continued to significantly outperform equal weight indices by a significant margin. Returns were concentrated in a few groups. One being the mega AI winners such as Nvidia, Micron, AMD, Google, Palantir. etc. and the other being high beta growth names such as Rocket Lab, AST Space Mobile, Iren, Ondas, Nebius, etc. Cyclicals, smaller caps, value names, AI neutral tech names, and most other groups had moments of strength but these short lived moves higher were largely driven by positioning and short term catalysts rather than a genuine shift in leadership. Most moves faded quickly or stalled out as money eventually found it’s way back into the AI and high beta growth stocks.

AI continued to dominate the market. We’re now officially three years into this AI driven bull market and although the perceived winners and losers have evolved, one thing has remained the same. AI is viewed as the future, and if you’re a company who shows they can win in this space, your stock will be rewarded.

Headed into 2026, I see a complex and more consequential environment. I’m viewing 2026 as an alignment of political, technology, monetary, and structural forces. We’re entering a midterm election year which will inevitably alter policy incentives and raise the stakes around economic and market performance. Asset prices matter politically, especially in an environment where a large share of household savings are tied directly to equity markets. Of course this doesn’t guarantee a smooth path higher, but it will influence how aggressively policymakers respond to periods of stress and volatility. We saw this last April, once the market cratered and showed no signs of relief the Trump administration pulled back on their tariff stance. I think this will continue to be the case as we head into midterms, this administration does not want to be viewed as the reason for economic turmoil or lower asset prices as voters head to the voting booth.

Another big unresolved question we have surrounds trade policy and tariffs. The Supreme Court will soon be releasing their decision on whether or not Trump’s tariffs are allowed to stand. If these tariffs are struck down, it could introduce another source of volatility as the Trump administration has been clear that they’re willing to aggressively challenge an unfavorable ruling. What would that mean? A public confrontation between the President and the Supreme Court over major economic policy. This would very likely be viewed as institutional turmoil which would inject a new layer of uncertainty into the market.

We also now have enough economic data, earnings reports, and forward guidance to suggest that the tariff impact has not created the kind of systemic shock many initially feared. In a sense, tariffs have become part of the baseline. Reversing them would very likely not be a clean net gain. Stirring the pot again reintroduces uncertainty. If tariff revenues already collected have to be unwound or repaid, this could very well create new fiscal and policy questions the market now has to question.

The geopolitical backdrop is still relatively complex. U.S. and China relations seem to be very fragile with both sides consistently trying to one up each other through policy, trade, technology restrictions, strategic signaling, and posturing. Even though tensions are not actively escalating, they still have yet to completely de-escalate to the point where either side feels comfortable. We still see the weaponization of rare earths and semiconductors from both sides and I expect this to continue, even if tensions don’t escalate to the point of conflict. This in turn creates a persistent layer of uncertainty as supply chains and technology decisions are becoming increasingly influenced by geopolitics.

We currently have a global economic picture where the entire globe seems to be prioritizing growth and stability vs. inflation. Europe is already moving towards more fiscal support and stimulus as they grapple with a lack of tech innovation and deeply rooted structural challenges, China is starting to lean far more into stimulus and technological innovation to try and offset some of their demographic and other economic related drags. We also see Japan maintaining a pro fiscal stance of their own. If 2026 becomes the year where multiple major economies are simultaneously willing to tolerate higher inflation in exchange for growth, this could serve as a secular tailwind for markets as the AI trade rolls on.

There is a lot to think about in regard to the coming year.

In the remainder of this 2026 Outlook I’ll break down how I’m thinking about the market and indices heading into the new year, my top individual stock ideas, the themes I’m focused on and the specific names within them including thematic baskets you can own or trade, macro and micro analysis, key index levels, crypto, sector and industry breakdowns, international stocks, and more. It’s a big piece, but I think it’s well worth the read. I put my all into this outlook, and I hope you find it useful.

Let’s get into it.

The Indices

As I always do with my weekly outlook articles, let’s zoom out and look at some of the key indices I’m watching. This time, I’m also going to map out potential buy zones and areas of interest in the event we get some volatility.