There's certainly room for interest rates to go down, says Evercore ISI's Julian Emanuel

Core Viewpoint - The ongoing deployment of AI technology is expected to drive revenue growth across various industries, with optimism for continued momentum into 2026 due to significant capital expenditures from companies with strong cash flows and earnings [3][4]. Group 1: AI and Market Dynamics - Companies are increasingly discussing how AI is contributing to revenue, marking a shift from previous trends [3]. - Unlike the late 1990s, the current market shows a broader participation in stock price increases, not just concentrated in tech [4]. - The majority of capital expenditures are being made by companies with substantial cash reserves, which is a positive indicator for market stability [3]. Group 2: Earnings Growth and Market Projections - The consensus for earnings growth is projected at around 13%, which may be overly optimistic; a more realistic expectation is high single-digit growth for the next year [6]. - Corporate America is adapting to challenges such as tariffs and is leveraging AI to maintain elevated profit margins, which supports higher stock prices [6]. Group 3: Interest Rates and Inflation - There is an expectation of two more interest rate cuts this year and potentially two to three next year, which could support market growth [8][9]. - Current inflation is closer to 3%, suggesting that the Federal Reserve may need to adjust its rate path gradually [9][10]. - The direction of inflation is critical, with expectations that it will continue to decrease after a period of adjustment related to tariffs and policies [11].