Stephanie Link on 2026 Market Outlook: Earnings, Margins, and Stock Picks

2026 Economic Outlook

• 🚀 The economy is expected to see an acceleration in 2026, driven by resilient consumer spending and AI momentum.
• 💡 New fiscal policies, including a significant bill, are anticipated to benefit both consumers and corporations.
• 📈 Bank lending is showing strong acceleration, with 10 consecutive weeks of loan growth, which will help fuel the economy.
• 📉 The Federal Reserve's continued interest rate cuts are expected to have a positive, albeit lagged, impact on the economy.

Earnings and Market Growth Expectations

• 📊 Earnings grew 14% last year, and are projected to grow 10-12% this year with mid-single-digit revenue growth.
• 💰 Strong profit margins are expected to continue, supported by ongoing share buybacks.
• 🎯 While the S&P 500 has seen double-digit growth for three consecutive years, an 8-10% growth target is more realistic for the current year.

Individual Stock Opportunities

• 💡 Lagging tech stocks like Meta are attractive due to their current valuations and strong growth prospects.
• 🚂 Economically sensitive companies, such as Union Pacific (rails), are recommended for their potential to outperform.
• 🤖 Exposure to automation is advised, with companies like Rockwell Automation representing early-stage opportunities.
• 💳 Consumer-focused companies like Capital One and Estee Lauder, as well as animal health leader Zoetis, are highlighted for potential upside.

Meta's Investment Case

• 📈 Meta is trading at 23 times earnings with projected 20% earnings growth and 26% revenue growth.
• 💰 Aggressive spending on AI is expected to lead to better tools, new customer applications, and messaging improvements.
• 💸 A cost-cutting program in Reality Labs and a substantial $31 billion buyback program are also positive factors.
• 🎯 The company has the potential to reach $38 a share in earnings power by 2027, with recent performance showing increased impression growth and time spent on the platform.