Two Stocks for a Bullish 2026

The piece argues the conventional wisdom that midterm-election years are inherently bad for stocks is misleading, pointing to robust fundamentals and an accelerating AI-driven rally as the true market drivers for 2026; FactSet data show 83% of S&P 500 companies beat earnings estimates and 76% beat revenue estimates in Q3, with average earnings growth of 13.4% and revenue growth of 8.4%, and analysts expect acceleration next year. Contributors highlight concrete AI demand—Bloomberg’s AI power forecast was raised 36%, Nvidia secured a $2bn design deal, Salesforce’s AI ARR jumped 330%, and fast-growing vendors and infrastructure suppliers (examples cited include Credo and BWX Technologies, the latter having doubled since recommendation) are capturing meaningful contracts—while stock-specific fundamental picks like Robinhood (Q3 revenue $1.27bn; earnings $556m) have delivered strong returns. Strategically, the author and featured analysts recommend staying invested and rotating beyond the Magnificent Seven into AI builders/enablers/appliers and critical infrastructure plays, arguing this secular trend plus supportive macro and government action makes a continued bull market the higher-probability outcome for 2026.

Analysis

The article challenges the heuristic that midterm-election years are inherently bearish and anchors its bullish thesis in Q3 fundamental data: FactSet shows 83% of S&P 500 companies reported positive earnings surprises and 76% reported positive revenue surprises, with a 6.6% average earnings surprise, 2% average revenue surprise, 13.4% average earnings growth and 8.4% average revenue growth — metrics the piece says are the strongest in three to four years and are forecast to accelerate in 2026.

A core driver cited is accelerating AI demand across the stack: Bloomberg raised its AI power forecast by 36%, Nvidia secured a $2 billion design deal, Credo posted 270%+ revenue growth, Salesforce reported a 330% jump in AI ARR, and several security and infrastructure vendors confirmed contract flow; stock-level examples include Robinhood (Q3 revenue $1.27bn; earnings $556m; stock up >30% since recommendation) and BWX Technologies (stock doubled since recommendation).

Strategically, analysts featured argue for rotation beyond the Magnificent Seven into AI builders/enablers/appliers and critical infrastructure plays, supported by the Power Portfolio’s recent outperformance (31.6% in 2025; two-year compound 74%); the article also acknowledges market noise and mixed historical midterm outcomes, implying investors should track forward guidance, contract confirmations and macro signals as the key risk/monitoring set.

Key Decisions for Investors

• Consider maintaining or selectively increasing exposure to fundamentally strong, AI-exposed names and infrastructure suppliers given broad Q3 earnings strength and accelerating AI demand, but scale positions incrementally rather than concentrating,Monitor company-level evidence of durable AI revenue (contract announcements, ARR growth, hardware orders) and upcoming earnings guidance as primary triggers to add to positions,Reduce concentration in the Magnificent Seven over time by reallocating into identified AI builders/enablers/appliers and critical infrastructure stocks highlighted in the article,Establish clear risk-management rules (position sizing limits or stop levels) to protect against reversal if AI demand indicators or macro conditions deteriorate