A Fundamental Outlook

Answer: Since this was written on the Sunday of the Big Football Game, I’ll use a few football analogies. Creating a portfolio is like assembling a strong sports team. There are numerous factors to consider whether evaluating players or companies; I believe these include financial strength, earnings potential, valuation, growth opportunities, competitive advantage, management, and red flags.

Earnings reports suggest we’re still on a growth track. Although tech has lagged yeartodate, MAGMAN—a composite of Microsoft, Apple, Google, Meta, Amazon, and Nvidia—posted another solid season. (This is not a recommendation to buy or sell MAGMAN stocks.) Overall market performance is expected to improve based on fundamentals. Here are the key takeaways from Q4 2025 and what they imply for tech.

Strong drive and field domination

MAGMAN’s 2026 earnings remain on track to rise, and all have raised their capitalexpenditure forecasts. Most of that spending targets AI semiconductors, infrastructure, and system buildout. With AI set to create both winners and losers, fundamentals matter more than ever.

AI controls the playbook

AI continues to expand quickly, reshaping industries in different ways. Cloudstorage demand remains strong despite supply limits. Large language models (LLMs) like Gemini are hitting record processing levels, highlighting the speed of AI adoption.

Hyperscalers (major global cloudcomputing providers) have again raised their capex plans, now estimating $641 billion in 2026, a 58% yearoveryear jump. For context, that’s about the market cap of Exxon Mobil. AI benefits are also spreading beyond tech: industrials are reporting supplychain gains, grocers are improving inventory systems, and financial firms are boosting productivity. As adoption widens across corporate and public sectors, investment is likely to accelerate.

Major large language models (LLMs) such as Gemini are hitting record processing levels, showing how quickly AI usage is growing. LLMs learn from large amounts of text so they can answer questions, write, summarize, or even hold conversations. At the same time, hyperscalers, which are exceptionally large cloud computing providers, operate massive global data centers for computing, storage, and networking services at enormous scale have raised their capex estimates again. Spending for this is now projected to reach $641 billion in 2026, a 58% year-over-year increase. For perspective, that’s roughly equivalent to the market cap of Exxon Mobil.

Team effort

A standout theme is that market breadth and performance are expected to broaden and deepen. Improving fundamentals in sectors beyond only tech indicates that other sectors, such as industrials, are now expected to deliver earnings-per-share (EPS) growth of about 10%. A strengthening earnings backdrop, along with corporate commentary spotlighting the resilient consumer in addition to expectations for stronger GDP (Gross Domestic Product) growth in 2026, keeps us optimistic that this broadening can continue and supports our positive long-term view on the wider market.

Emerging markets moving the ball

Emerging markets are extending last year’s momentum, up about 7% yeartodate and outperforming the S&P 500 by roughly 8%—their strongest earlyyear lead since 2001. Earnings growth is a key driver, with 2026 earnings on track to rise 29%, the fastest pace since 2010. Markets like South Korea and Taiwan—heavily weighted toward chipmakers and hardware manufacturers—are up approximately 23% and 10%, supported by improving fundamentals.

Bottom line

As we move through 2026, markets will continue to react to shifting economic data, interestrate policy, and the rapid expansion of technologies such as AI and cloud infrastructure. There will be no shortage of predictions, opinions, and market narratives. Successful investing rarely comes from reacting to every twist in the news cycle. It comes from applying a disciplined framework, evaluating fundamentals, watching for red flags, and investing in companies with real financial strength and a clear path for growth. Whether markets calm or become more volatile in 2026, a steady, fundamentals-based approach will continue to serve investors well. Stay focused and plan accordingly.