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3 themes for the second half of 2026

Jun 30, 2026 | Blog

If you’ve been watching the news and wondering about your portfolio, you’re not alone. But according to our strategic partners, Capital Group, here’s what the noise might be drowning out…

“Thus far in 2026, stock markets have reached a series of new highs amid wars in the Middle East and Ukraine, fluctuating oil prices and elevated inflation. Why have stock markets shown such strength? It largely comes down to a simple yet critical factor: Corporate earnings are on a tear.

The artificial intelligence juggernaut accounts for much of the good news. Aggressive spending by technology companies has translated into revenue and earnings growth for companies across sectors. But there’s much more to the story than AI growth. Banks are capitalizing on higher interest rates, innovative therapies are driving sales growth in healthcare, and higher crude oil prices are pumping up energy companies. Looking forward, consensus earnings estimates reflect continued strength, particularly in emerging markets, where they are expected to soar 49.2% by year’s end.

1. The AI freight train shows no signs of slowing
In the race for AI supremacy, five hyperscalers – Amazon, Alphabet, Meta, Microsoft and Oracle – have committed to investing $650 billion this year on data centers, a historic level of spending that doesn’t appear to be slowing. “These investments are being led by some of the most profitable companies the world has seen,” says equity portfolio manager Mark Casey. “As long as the technology keeps advancing, I expect they’ll continue to invest.”

2. Look beyond U.S. borders for magnificence
Think the AI story is the exclusive domain of U.S. tech giants? Think again. Just as the Magnificent Seven have led U.S. markets, seven companies that play a key role in the AI revolution are also dominating emerging markets. TSMC, Samsung Electronics and SK hynix are common names, but lesser-known companies MediaTek and Delta Electronics are also asserting leadership. Tencent and Alibaba have access to the largest market in the world by operating in China.

3. The physical economy is flexing its muscles
While AI may be the biggest driver of stock markets – after all, NVIDIA’s market capitalization alone has grown larger than three S&P 500 Index sectors – ignoring companies in the physical economy could be a mistake.

KEY TAKEAWAYS
Earnings growth, not sentiment, is driving markets.
The multiyear AI investment cycle is fueling growth across sectors, especially the “physical economy.”
Non-U.S. markets offer attractive valuations and strong earnings potential relative to the U.S.”

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As headlines unfold it’s important to stay invested and confident. Have questions about how this applies to your financial plan? Schedule a complimentary consultation. We’d be happy to walk through it with you.

And as always, your weekly market update is here.

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