How Wall Street plans to invest for 2026
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Illustration: Aïda Amer/Axios
2026 is going to be the year for the forgotten 493: the overwhelming majority of companies in the S&P 500 that are not the core tech stocks powering this bull market, according to Wall Street forecasts.
Why it matters: This view could lead to a rotation in market leaders next year, as investors seek out AI super users rather than just AI leaders.
What they're saying: "Competitive dynamics in industries will be shaped by who are the quickest adopters of AI," Marc Pinto, head of Americas equities at Janus Henderson Investors, said on the firm's 2026 outlook call.
- Wall Street has "moved into the 'show me' phase, which I think to some degree is healthy," Amy Wu Silverman, head of derivatives strategy at RBC, tells Axios.
- Companies that can prove they are not just using AI to cut costs, but also using it to create new revenue streams, are most likely to benefit.
Between the lines: Health care, consumer discretionary, industrials and financials could catch up to technology next year as investors diversify.
- The market-cap weight of health care is at a 20-year low after three years of underperformance, according to Abby Yoder, U.S. equity strategist at JPMorgan Global Wealth Management. Strong third-quarter earnings indicate further upside.
- Old-economy stocks like Walmart are increasingly viewed as the hot new AI names. The retailer recently announced a deal with OpenAI, and now trades on the tech-heavy Nasdaq.
Zoom out: This is not only about AI beneficiaries. The stimulative effects of interest rate cuts and tax and policy changes from the Trump administration could also benefit these sectors.
- Changes to research and development expensing as a result of the One Big Beautiful Bill Act could benefit health care stocks, for example, by financing more drug discoveries, Janus Henderson's 2026 outlook says.
- Rate cuts combined with the stimulative effects of higher tax refunds to consumers could fuel more spending on goods and services, benefiting consumer discretionary stocks.
Reality check: The success of this rotation still needs a pick-up in fundamentals, not just a shift in sentiment.
- "For a truly sustainable transition in leadership to occur, we think the broader market, excluding the Mag 7, needs to put up better earnings growth trends than the Mag 7," notes Lori Calvasina, head of U.S. equity strategy at RBC, in her 2026 outlook.
- This goal, she adds, looks to be within reach, according to the latest earnings estimates from Bloomberg.
What to watch: Whether all this talk about diversification is just a hedge for strategists who are afraid to be wrong.
