After three consecutive years of double-digit returns, investors will rightfully be asking about the chances of a “four-peat.” History offers some precedent—domestic equities posted a nine-year winning streak during the technology boom and later registered eight successive years of growth following the Great Financial Crisis of 2009—but the odds of another year of such gains are considerably lower.
The ground beneath markets continues to shift, and 2026 is shaping up as a year where selective positioning matters more than broad participation.
Corporate earnings growth is expected to be a key driver. Consensus expectations are currently for a 13 to 15% rise in profits, which would likely justify higher stock prices, but achieving that in a listless economic environment will require companies to find ways to expand margins—likely through AI-driven efficiencies such as labor substitution and operational improvements.
At the same time, attention is shifting from AI infrastructure spending to the harder question of monetization—judging by Figure 6, the stakes are high.
Figure 6: An Inflection Point for Hyperscaler Spend
Capital expenditures of select companies (USD, billions)
Source(s): Compustat, FactSet, FTSE Russell, NBER, J.P. Morgan Asset Management.
Hyperscalers like Microsoft, Amazon, and Alphabet will need to demonstrate that their massive investments can generate enterprise and consumer revenues at scale. In parts of the ecosystem, that buildout is being funded by vendor financing arrangements, where companies like Nvidia and Oracle extend loans or credit to customers in exchange for equity stakes, effectively financing their own sales. While these arrangements can be fruitful, they also raise skepticism about the organic strength of demand and compounding risk within a small network of interdependent players—see Figure 7.
Figure 7: The Give & Take of AI Deals
Select capital flows among six AI-industry companies
Source(s): The Financial Times, Morgan Stanley Research. Note: Some chip purchases are through intermediaries. Some investments and other arrangements subject to conditions.
The future path of monetary policy will also be important, though further rate cuts may be harder to come by. The U.S. Federal Reserve has room to ease further if needed, but conflicting data is layering complexity into those decisions. President Trump’s appointment of a new chair in May will be closely watched; if bond investors perceive that the Fed has lost its independence or willingness to fight inflation, longer-term yields could rise even as shorter ones fall. The Supreme Court’s decision on the legality of universal tariffs, expected early in the year, could also have meaningful implications for trade flows, revenues, and the trajectory of fiscal deficits.
Several other concrete milestones will punctuate the year. The USMCA joint review in July will have direct implications for international commerce, while U.S. midterm elections in November will shape expectations around policy and regulation. The period leading up to potential shifts in congressional control may invite volatility, though markets typically stabilize once outcomes are known. More broadly, 2026 looks less like a year where rising tides lift all boats and more like an environment where returns will be driven by dispersion across industries, regions, and styles. This is where active management can deliver additional value, as opposed to participating in headline index growth—which, as we know, has been steered north by technology.
Investors have been encouraged to focus on the obvious components of the “AI trade” like chips, data centers, and a handful of megacap companies. While sensible, it is equally important to step back and consider the value chain in its totality: where pressures are building, where bottlenecks may emerge, and how those fault lines can create new opportunities. Let’s revisit the Needs, Means, & Seams framework, discussed previously in our Market Stories section.
Figure 8 suggests that data centers could require roughly one-quarter of existing U.S. electricity as early as 2030, a striking illustration of how much additional energy will be needed to support continued digital growth. The most straightforward response—the means—is to build more generation and transmission infrastructure.
Figure 8: Energy Supply & Demand Constraints
U.S. data center power demand as a share of total through 2024-2030
Figure 8: BlackRock Investment Institute, BloombergNEF, December 2025. Note: Gray bars indicate total range, while lines indicate median forecasts.
But perhaps more interesting prospects lie in the disconnect, where requirements and capacity do not yet align: for example, finding more efficient ways to use existing energy supplies, reduce waste, or reroute demand through smarter systems.
A year like 2026 calls for balance more than bravado. AI monetization, trade frameworks, central bank policy, and fiscal strains pull in competing directions, with knock-on effects spilling into energy systems, credit markets, and supply chains. Rather than anchoring decisions to a single story—whether it is a soft landing, an AI supercycle, or a looming correction—it may be more practical to construct portfolios keyed to dispersion itself.
In that context, the principles remain familiar even if the backdrop is not: diversification across sectors, regions, and styles; a tilt toward quality balance sheets and durable cash flows; and a thoughtful mix of growth, income, and resilience. For long-term investors, the goal is not to forecast every twist in policy or technology, but to stay invested in a way that can absorb surprises, participate in the upside that genuine innovation creates, and take advantage of opportunities along the seams where durable advantages can be found.
Source(s): Bloomberg Finance L.P. As of December 31, 2025.
Fulcrum Equity Management, LLC, doing business as Fulcrum Wealth Management Management, is an investment adviser registered with the SEC. Fulcrum Wealth Management only conducts business in jurisdictions where it is properly notice filed, or is exempted from such filing requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Content should not be viewed as personalized investment advice. All investments and strategies have the potential for profit or loss. Index performance does not represent results obtained by Fulcrum Wealth Management and does not reflect the impact that advisory fees and other expenses will have on the returns. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark. Alternative investments are speculative, may be susceptible to fraud, involve a high level of risk, and may experience significant price volatility. You could lose all or a substantial part of your money, and your interest may be illiquid. They may involve complex tax structures and higher fees.
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Q4 Quarterly Insights: The Path Forward
After three consecutive years of double-digit returns, investors will rightfully be asking about the chances of a “four-peat.” History offers some precedent—domestic equities posted a nine-year winning streak during the technology boom and later registered eight successive years of growth following the Great Financial Crisis of 2009—but the odds of another year of such gains are considerably lower.
The ground beneath markets continues to shift, and 2026 is shaping up as a year where selective positioning matters more than broad participation.
Corporate earnings growth is expected to be a key driver. Consensus expectations are currently for a 13 to 15% rise in profits, which would likely justify higher stock prices, but achieving that in a listless economic environment will require companies to find ways to expand margins—likely through AI-driven efficiencies such as labor substitution and operational improvements.
At the same time, attention is shifting from AI infrastructure spending to the harder question of monetization—judging by Figure 6, the stakes are high.
Figure 6: An Inflection Point for Hyperscaler Spend
Capital expenditures of select companies (USD, billions)
Source(s): Compustat, FactSet, FTSE Russell, NBER, J.P. Morgan Asset Management.
Hyperscalers like Microsoft, Amazon, and Alphabet will need to demonstrate that their massive investments can generate enterprise and consumer revenues at scale. In parts of the ecosystem, that buildout is being funded by vendor financing arrangements, where companies like Nvidia and Oracle extend loans or credit to customers in exchange for equity stakes, effectively financing their own sales. While these arrangements can be fruitful, they also raise skepticism about the organic strength of demand and compounding risk within a small network of interdependent players—see Figure 7.
Figure 7: The Give & Take of AI Deals
Select capital flows among six AI-industry companies
Source(s): The Financial Times, Morgan Stanley Research. Note: Some chip purchases are through intermediaries. Some investments and other arrangements subject to conditions.
The future path of monetary policy will also be important, though further rate cuts may be harder to come by. The U.S. Federal Reserve has room to ease further if needed, but conflicting data is layering complexity into those decisions. President Trump’s appointment of a new chair in May will be closely watched; if bond investors perceive that the Fed has lost its independence or willingness to fight inflation, longer-term yields could rise even as shorter ones fall. The Supreme Court’s decision on the legality of universal tariffs, expected early in the year, could also have meaningful implications for trade flows, revenues, and the trajectory of fiscal deficits.
Several other concrete milestones will punctuate the year. The USMCA joint review in July will have direct implications for international commerce, while U.S. midterm elections in November will shape expectations around policy and regulation. The period leading up to potential shifts in congressional control may invite volatility, though markets typically stabilize once outcomes are known. More broadly, 2026 looks less like a year where rising tides lift all boats and more like an environment where returns will be driven by dispersion across industries, regions, and styles. This is where active management can deliver additional value, as opposed to participating in headline index growth—which, as we know, has been steered north by technology.
Investors have been encouraged to focus on the obvious components of the “AI trade” like chips, data centers, and a handful of megacap companies. While sensible, it is equally important to step back and consider the value chain in its totality: where pressures are building, where bottlenecks may emerge, and how those fault lines can create new opportunities. Let’s revisit the Needs, Means, & Seams framework, discussed previously in our Market Stories section.
Figure 8 suggests that data centers could require roughly one-quarter of existing U.S. electricity as early as 2030, a striking illustration of how much additional energy will be needed to support continued digital growth. The most straightforward response—the means—is to build more generation and transmission infrastructure.
Figure 8: Energy Supply & Demand Constraints
U.S. data center power demand as a share of total through 2024-2030
Figure 8: BlackRock Investment Institute, BloombergNEF, December 2025. Note: Gray bars indicate total range, while lines indicate median forecasts.
But perhaps more interesting prospects lie in the disconnect, where requirements and capacity do not yet align: for example, finding more efficient ways to use existing energy supplies, reduce waste, or reroute demand through smarter systems.
A year like 2026 calls for balance more than bravado. AI monetization, trade frameworks, central bank policy, and fiscal strains pull in competing directions, with knock-on effects spilling into energy systems, credit markets, and supply chains. Rather than anchoring decisions to a single story—whether it is a soft landing, an AI supercycle, or a looming correction—it may be more practical to construct portfolios keyed to dispersion itself.
In that context, the principles remain familiar even if the backdrop is not: diversification across sectors, regions, and styles; a tilt toward quality balance sheets and durable cash flows; and a thoughtful mix of growth, income, and resilience. For long-term investors, the goal is not to forecast every twist in policy or technology, but to stay invested in a way that can absorb surprises, participate in the upside that genuine innovation creates, and take advantage of opportunities along the seams where durable advantages can be found.
Source(s): Bloomberg Finance L.P. As of December 31, 2025.
Fulcrum Equity Management, LLC, doing business as Fulcrum Wealth Management Management, is an investment adviser registered with the SEC. Fulcrum Wealth Management only conducts business in jurisdictions where it is properly notice filed, or is exempted from such filing requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Content should not be viewed as personalized investment advice. All investments and strategies have the potential for profit or loss. Index performance does not represent results obtained by Fulcrum Wealth Management and does not reflect the impact that advisory fees and other expenses will have on the returns. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark. Alternative investments are speculative, may be susceptible to fraud, involve a high level of risk, and may experience significant price volatility. You could lose all or a substantial part of your money, and your interest may be illiquid. They may involve complex tax structures and higher fees.
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