2026 looks bright for the global market, but investors need to pick the right winners. AI firms must prove they can keep earnings growing, while cyclical sectors such as banks, industrials and base metals appear set to lead the rally.
AI Stocks Must Show Real Earnings Power
Matt Orton, chief market strategist at Raymond James, says the coming earnings season will be a "show‑me" year for artificial‑intelligence companies. Those that can sustain earnings‑per‑share (EPS) growth will thrive, while the rest may stumble.
Turn to Cyclical Sectors for 2026
Orton recommends a tilt toward cyclical stocks, which tend to rise when the economy is expanding. His focus areas include:
- Financials – especially banks in the U.S. and emerging markets.
- Industrials – companies tied to data‑centre construction and manufacturing.
- Base metals – copper, aluminium and platinum, which are benefiting from strong demand.
Banking Highlights in India
In the Indian market, Orton’s top overweight pick is HDFC Bank, with ICICI Bank also looking promising. He suggests adding to these banks before what he expects to be a solid earnings season.
IT Services: A Cautious Re‑Entry
Indian IT services have lagged recently, but sentiment is shifting. Orton is not fully in yet, but he’s willing to “dip his toe” as companies like Tech Mahindra roll out new plans and Infosys benefits from global exposure. The sector remains a "show‑me" market.
Consumer Play – Swiggy
Orton holds a position in food‑delivery platform Swiggy. He likes its low valuation, recent steps to strengthen credit lines, and focus on higher‑value services, seeing it as a cheap way to stay exposed to Indian consumer spending.
Base Metals Signal Global Growth Resilience
Rallies in copper, aluminium and platinum are seen as bullish signs for the world economy. Orton points to a supply‑demand gap for copper, driven by data‑centres, chips and electric vehicles, and notes that miners have under‑invested, keeping prices elevated.
Takeaway: Use Volatility as a Buying Chance
While markets may wobble, Orton advises investors to view dips as opportunities. With AI under pressure, cyclical sectors and base metals provide a solid foundation for upside in 2026.