Investment Themes for 2026 - The primary investment theme for 2026 is "follow the money," focusing on sectors where significant capital will be allocated, particularly in AI infrastructure, aerospace and defense, power solutions, and biotech [2][3]. AI Infrastructure - An estimated $3 to $4 trillion will be spent on AI infrastructure by the end of the decade, covering areas such as data center construction and power solutions [1]. - Comfort Systems (ticker: FIX) is highlighted as a key player in this sector, providing cooling solutions for data centers and warehouses [3]. Aerospace and Defense - Increased military spending globally is expected to benefit defense contractors, with L3Harris identified as a notable company providing missile defense capabilities [1][3]. Power Solutions - Utilities like Duke Energy (ticker: DUK) and NextEra Energy are positioned to benefit from the demand for natural gas and nuclear power solutions [3]. Biotech and Healthcare - The biotech sector is seen as a growth area, especially as large pharmaceutical companies face challenges with drug pricing and patent expirations. Indivior is mentioned as a small-cap biotech company with drugs in the FDA approval pipeline for treating substance abuse disorders [1][3]. Market Dynamics - The influence of the "Mag Seven" tech stocks on the S&P 500 is diminishing, which is viewed positively for market sustainability. Nvidia remains a key player in the AI ecosystem, expanding into autonomous vehicles and robotics [5]. - Concerns exist regarding Tesla's profitability as it transitions from a car company to a robotics company [7]. Volatility and Investment Strategy - Anticipation of increased volatility in 2026 due to various factors, including government funding issues and potential changes in Federal Reserve leadership [8]. - Investors are advised to maintain their risk tolerance and diversify their portfolios, considering defensive sectors like utilities and healthcare during volatile periods [9]. Fixed Income Opportunities - Municipal bonds are highlighted as attractive for high-tax bracket investors due to their tax-free income potential, with expectations for record new issuances in 2026 [10]. Geopolitical Considerations - The situation in Venezuela is noted for its limited short-term impact on the energy market, as the country currently produces less than 1% of global oil output [13]. Valuation Perspectives - Current market valuations are above historical averages, but this does not preclude further market growth. Investors are encouraged to focus on diversified portfolios and growth potential rather than chasing high-priced stocks [14][15].

Core Viewpoint - Vertiv Holdings Co (NYSE:VRT) is gaining attention as a significant player in the AI sector, with Barclays upgrading its stock rating to "Overweight" and increasing the price target to $200, driven by improved earnings outlook and alignment with AI trends [1][4]. Earnings Expectations - The rating change reflects revised earnings expectations for 2026 and 2027, with earnings per share estimates 8% above consensus for 2026 and 12% above for 2027, primarily influenced by revenue assumptions [2]. Revenue Exposure - VRT's revenue is heavily tied to data centers, with 80% of sales coming from this end market. The company's organic sales growth has closely followed U.S. data center physical infrastructure trends, surpassing the multi-industry average in recent years [3]. Analyst Insights - Analysts believe that VRT is positioned for significant gains in 2026, potentially catching up with other Overweight-rated AI companies despite previous underperformance. The stock's recent volatility has created an attractive entry point [4][5]. Competitive Positioning - VRT has underperformed compared to other Overweight-rated AI stocks year-to-date, but its PEG ratio is now at parity with peers, suggesting a potential for performance catch-up in 2026 [5].

Core Viewpoint - Nvidia (NVDA) stock experienced an increase on Tuesday, contrasting with a broader sell-off in many data center infrastructure stocks, as investors consider the 2026 outlook for capital spending on artificial intelligence in light of upcoming tech earnings reports [1] Group 1: Company Performance - Nvidia (NVDA) shares rose on Tuesday, indicating positive investor sentiment amidst a general decline in the sector [1] - Lumentum Holdings (LITE) and Ciena (CIEN) also saw slight increases in their stock prices on the same day [1] Group 2: Market Trends - The overall market for data center infrastructure stocks faced a sell-off, with notable declines in companies such as Arista Networks (ANET), Amphenol (APH), Celestica (CLS), Credo Technology (CRDO), and Vertiv [1] - Investors are focusing on the future capital spending trends related to artificial intelligence, particularly looking ahead to 2026 [1]

CoreWeave, Inc. Overview - CoreWeave, Inc. (NASDAQ:CRWV) has seen its shares increase by 87% since its IPO in March, but has recently faced a decline of 46% since late October [2] - Concerns have arisen regarding delays in data center buildout and the potential for an AI bubble, impacting investor sentiment [2] Analyst Insights - Jim Cramer remains optimistic about CoreWeave, citing its strong relationship with NVIDIA and a solid business model [2] - Citi has resumed coverage on CoreWeave, lowering the price target from $192 to $135 while maintaining a Buy rating [2] - Cramer has highlighted the challenges in the data center sector, particularly the shortage of qualified workers [2][3] Market Sentiment - Cramer described the recent decline in CoreWeave's stock price as "silly," emphasizing the complexities involved in building data centers [3] - There is a belief that while CoreWeave has potential, other AI stocks may offer better returns with lower risk [3]

Group 1 - Tech giant Alphabet has agreed to acquire Intersect, a provider of data center and energy infrastructure solutions, in a deal valued at $4.75 billion [1]

Core Insights - The main challenge in investing in artificial intelligence is not the belief in the technology but identifying which companies will profit from it [2] Group 1: ARTY Overview - iShares Future AI & Tech ETF (ARTY) offers exposure to the entire AI value chain with $1.9 billion in assets and a 0.47% expense ratio [3] - The fund holds 67 companies, with a significant focus on technology at 66.4%, including semiconductors, data center infrastructure, cloud platforms, and AI software [3][4] - Vertiv Holdings is the largest holding at 5.95%, surpassing NVIDIA's 4.3%, indicating the importance of physical infrastructure in AI [3][5] Group 2: Diversification and Holdings - ARTY's diversification is notable, with no single holding exceeding 6%, and the top 10 holdings include major players across various sectors such as chip design, networking equipment, AI platforms, and hyperscalers [4] - The fund's balanced approach captures both infrastructure and software layers of the AI stack, making it a preferable choice over concentrated investments in single companies like NVIDIA [4] Group 3: Performance Metrics - ARTY has delivered a year-to-date return of 28.6% through December 2025, outperforming the S&P 500 by over 12 percentage points [5][7] - The fund's performance also exceeds the Nasdaq-100's return of 20.7%, showcasing its strong alpha generation compared to both the broad market and tech-heavy benchmarks [7]

Core Insights - The global competition in AI development is increasingly reliant on power and cooling infrastructure, positioning companies like Vertiv Holdings as key beneficiaries of this trend [2][3] Company Overview - Vertiv Holdings provides essential continuity, power, and thermal management for data centers, crucial for the operation of AI cloud service providers [5] - The company is linked to the adoption of high-density GPUs, making it a vital player in the AI compute demand landscape [5] Market Position - Vertiv is expected to benefit throughout the entire AI lifecycle, from model training to widespread AI inference, necessitating a vast network of data centers reliant on its power and cooling systems [6] - The demand for efficient, liquid-cooled infrastructure is increasing, giving Vertiv a more defensive profile compared to chip manufacturers [7] Financial Performance - Vertiv's revenues have grown at an average annual rate of 21.4% over the past three years, with a 29% increase in the last twelve months, reaching $9.7 billion [8] - The company has a substantial backlog of approximately $9.5 billion, which has expanded by 30% year-over-year, indicating strong revenue visibility [9] Valuation Metrics - With a market capitalization of around $61 billion, Vertiv is viewed as a critical enabler of AI infrastructure rather than a conventional industrial supplier [10] - The stock is trading at approximately 38x consensus FY'25 earnings and 31x FY'26 earnings, reflecting investor confidence in sustained demand for AI infrastructure [10] Industry Challenges - AI racks consume significantly more power than conventional servers, with consumption ranging from 50 to over 100 kilowatts, necessitating Vertiv's Uninterruptible Power Supplies (UPS) and Power Distribution Units (PDUs) [12] - The high power consumption generates substantial heat, making traditional cooling methods ineffective, which Vertiv addresses through its liquid cooling solutions [12]

Core Viewpoint - Vertiv Holdings Co. experienced a nearly 10% stock price drop due to market reactions to external factors, particularly Oracle's earnings report and an analyst downgrade, rather than a decline in its business fundamentals [3][4][8] Group 1: Market Reaction - The decline in Vertiv's stock was linked to Oracle's revenue miss, which raised concerns about the demand for AI infrastructure, leading to sympathy selling in related stocks, including Vertiv [4][6] - The market's reaction was characterized by headline fear regarding the timeline for AI monetization, which may have resulted in an overreaction to Vertiv's stock price drop [5][6] Group 2: Business Fundamentals - Despite the stock price decline, Vertiv's underlying business fundamentals remain strong, with a significant backlog of $9.5 billion and a 60% surge in organic orders [8] - Oracle's increase in capital expenditure guidance for fiscal year 2026 to $50 billion, up $15 billion from prior guidance, signals rising infrastructure demand, which is expected to benefit Vertiv's business in cooling and power distribution [7][8] Group 3: Investment Opportunity - The current sell-off in Vertiv's stock may present an attractive entry point for investors willing to look beyond immediate market noise, as the company's fundamental demand drivers are still robust [5][8]

Core Insights - Three stocks are highlighted with strong momentum characteristics and a buy rank, including Customers Bancorp, Isabella Bank Corporation, and Vertiv Holdings Co [1][2][3] Group 1: Customers Bancorp, Inc. (CUBI) - Customers Bancorp has a Zacks Rank 1 and a nearly 8% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [1] - The shares of Customers Bank gained 9.9% over the last three months, outperforming the S&P 500's advance of 3.6% [1] - The company has a Momentum Score of A [1] Group 2: Isabella Bank Corporation (ISBA) - Isabella Bank Corporation also holds a Zacks Rank 1 with a 7.5% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [2] - The shares of Isabella Bank surged 49.9% over the last three months, significantly outperforming the S&P 500's advance of 3.6% [2] - The company possesses a Momentum Score of B [2] Group 3: Vertiv Holdings Co (VRT) - Vertiv Holdings Co has a Zacks Rank 1 and a 7% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [3] - The shares of Vertiv gained 18.1% over the last three months, again outperforming the S&P 500's advance of 3.6% [3] - The company has a Momentum Score of B [3]

Core Viewpoint - Data center infrastructure stocks experienced a decline over the past week, indicating potential volatility in the sector [1] Group 1: Market Impact - The recent surge in space data is expected to have a significant impact on companies such as Nebius, Iren, and CoreWeave, suggesting a shift in market dynamics [1] Group 2: Earnings Review - Oracle's earnings report will be reviewed, providing insights into the company's performance and its implications for the data center infrastructure market [1]