Five Wall Street Investors Explain How They’re Approaching the Coming Year

The S&P 500 just completed one of its best three-year runs ever, rising around 80% from the start of 2023 through New Year’s Eve. Wall Street thinks the party is just getting started.

Few expect the good times to keep rolling indefinitely, but you would be hard-pressed to find a major bank predicting anything except more gains in 2026.

Yet worries abound about the stretched valuations of artificial-intelligence companies, the path of interest rates and the outlook in Washington, D.C.

So we asked five investors where they’re putting their money:

Alex Chaloff

Count Alex Chaloff among the investors concerned about a reckoning with the huge gains in AI stocks.

The chief investment officer at Bernstein Private Wealth Management fielded questions from clients on the topic all last year.

After several years of huge returns, he is advocating a more surgical approach to picking stocks.

“On one hand, they’re thrilled with the returns. On the other, they’re scared of what the next chapter is, because I’ve been telling them: It’s 1990-something,” Chaloff said, referring to the final years of the dot-com bubble.

“Our view is that we still have room to run, but there will be an end to this.”

Chaloff isn’t selling out of AI, but he is happy to help concerned clients seeking protection against declines in the whole index or a handful of individual big tech stocks.

One tool he is using is buffered exchange-traded funds, which seek to smooth out market swings. Those offer “some upside exposure with either defined or variable protection, and a great level of visibility, transparency and liquidity,” he said.

Bernstein is also working on an “AI loser” list, screening specifically for companies with high debt loads and low free-cash flow—those that have gotten AI hype, but might lack the fundamentals to survive an arms race.

He also holds an upbeat outlook for U.S. growth, especially if the Supreme Court ends up striking down President Trump’s tariffs: “I think that possibility is being overlooked a bit. It could reduce inflationary pressures, allow more rate cuts and accelerate the economy.”

Saira Malik

Tech bulls point out a key difference between now and the dot-com bubble: Today’s most-valuable companies, such as Nvidia, Microsoft and Alphabet, are some of the most profitable in history. And those profits are growing fast.

Saira Malik , who oversees $1.4 trillion as chief investment officer at Nuveen, thinks there is more upside ahead to the technology and AI trade, and she plans to add to some of her favorite holdings in 2026. It all comes down to profits.

The Magnificent Seven tech companies plus chip maker Broadcom —a group Malik is now referring to as the “Great Eight”—are forecast to grow earnings by 24% this year, well over double the forecast for the S&P 500 as a whole.

“We think the earnings growth and future growth justifies the premium valuations in tech, which will continue to dominate and lead the S&P 500 higher,” Malik said.

Tech stocks’ years long dominant run has made a handful of the biggest companies a larger share of the S&P 500 index than ever, making some investors fret over concentration risk. Malik shrugs those concerns off.

“I don’t necessarily say the market has to broaden out for it to be healthy. We’ve been living in this world of tech dominance for basically a decade straight…as long as the earnings power is there, the stocks will follow,” she said.

Outside of stocks, Nuveen expects municipal bonds and private equity both to bounce back in 2026.

Heavy supply of new muni bonds led to them lagging behind taxable bonds last year, a trend that Malik expects to reverse in a “catch-up trade.” Private equity, meanwhile, stands to benefit from lower interest rates and a pickup in deal activity, she has told clients.

Jack Ablin

Concentration risk isn’t just a stock-market issue, says Jack Ablin , chief investment strategist at Cresset Capital. He worries about the growing share of consumer spending coming from wealthy individuals, which he said puts the economy at risk as well.

“We have a narrowing prosperity on both Wall Street and Main Street, and it probably does create a vulnerability. A minority of the participants are accounting for most of the results,” Ablin said.

Stock owners are feeling a wealth effect that leads to freer spending. That could change quickly during a market downturn, however, leading to a scenario where a drop in the stock market could push the economy into a recession, Ablin said.

Cresset has leaned into value stocks and small-caps recently, expecting that both will benefit from interest-rate cuts and lower financing costs this year.

When it comes to AI, Ablin isn’t ready to pick winners and losers.

“I don’t have a crystal ball. So we buy everything for now, and the winners will ultimately pay for the losers.

Larry Adam

Raymond James Chief Investment Officer Larry Adam thinks stocks will have a more modest 2026, projecting around a 4% gain for the S&P 500.

Equity valuations will struggle to move higher than they currently are, meaning those gains will need to come from earnings growth, he said.

“I think the market is vulnerable to some disappointment after going so long with remarkably low volatility,” he said.

Raymond James is adding to bets on the industrials and consumer discretionary sectors this year. Industrials look like an indirect AI play, since they act as suppliers to utility companies and others helping build out AI infrastructure.

Consumer discretionary stands to benefit from a pickup in consumer spending, Adam reckons, with major tax refunds from the One Big Beautiful Bill Act set to hit pockets this spring.

Rob Arnott

Is there an AI bubble? Rob Arnott says yes, though the Research Affiliates founder and chairman cautions that it isn’t easy to profit on that idea.

“Shorting a bubble is a very fast way to go bankrupt. Bubbles can last longer and go further that you can imagine,” he said.

Like many on Wall Street, Arnott is convinced that AI is the “real deal” and a technological revolution is coming.

But he also warned that technological revolutions take time to play out—and said it is far too early to know which companies will emerge from the pack. During the dot-com boom, he said, Lucent and Nokia numbered among the world’s most-valuable companies.

“Dating back to the industrial revolution, every time you see major disruption there are winners and losers. A lot of losers,” he said. “The disrupters get disrupted.”

Arnott is now running a strategy that automatically trims exposure to stocks if their valuations soar quickly. “Just like averaging in is a time-honoured way to build a position in something cheap, averaging out is a great way to reduce exposure to what’s frothy and expensive,” he said.

With the profits taken from trimming exposure to fast-growing names, Arnott is putting money into areas that look cheaper and less loved, such as international and value stocks, to boost diversification.

Former New Hampshire Gov. Chris Sununu delivered a warning to Treasury Secretary Scott Bessent during a recent visit to Washington: Already-high airfares will surge if the war in Iran doesn’t end soon.

Sununu, a Republican who represents some of the biggest airlines as president of the industry group Airlines for America, has for weeks sounded the alarm to Trump administration officials about the economic fallout from high jet fuel prices. The war, Sununu has argued, must come to a close soon, or things will get worse.

Administration officials have gotten the message.

Privately, President Trump’s advisers are increasingly worried that Republicans will pay a political price for the rising fuel costs, according to people familiar with the matter. Many of those advisers are eager to end the war, hoping prices will begin to moderate before November’s midterm elections.

The fallout from the U.S.-Israeli attack in late February has slowed traffic through the Strait of Hormuz, a vital shipping lane, triggering a sharp increase in oil, gasoline and jet-fuel prices.

That means consumers are grappling with high costs ahead of the summer travel season, as they consider vacation plans.

Sixty-three per cent of Americans said they put a great deal or a good amount of blame on Trump for the increase in gas prices, according to a new poll conducted by NPR, PBS and Marist.

More than 8 in 10 Americans said struggles at the gas pump are putting strain on their finances.

Jet-fuel prices roughly doubled in a matter of weeks after the war began, and they have remained high. Airlines have said that will add billions of dollars of additional expenses this year, squeezing profit margins.

U.S. airlines spent more than $5 billion on fuel in March—up 30% from a year earlier, according to government data.

Carriers have been raising ticket prices, hoping to pass the cost along to consumers, and they are culling flights that will no longer make money at higher price levels.

In March, the price of a U.S. domestic round-trip economy ticket rose 21% from a year earlier to $570, according to Airlines Reporting Corp., which tracks travel-agency sales.

So far, airlines have said the higher fares haven’t deterred bookings and they are hoping to recoup more of the fuel-cost increases as the year goes on.

Earlier this week, Trump said the current price of oil is “a very small price to pay for getting rid of a nuclear weapon from people that are really mentally deranged.”

Secretary of State Marco Rubio told reporters that if Iran got a nuclear weapon, the country would have more leverage to keep the strait closed and “make our gas prices like $9 a gallon or $8 a gallon.”

Trump has taken steps in recent days to bring the war to an end. Late Tuesday, the president paused a plan to help guide trapped commercial ships out of the Strait of Hormuz, expressing optimism that a deal could be reached with Iran to end the conflict.

Crude oil prices fell below $100 a barrel on Wednesday, after reports that Iran and the U.S. are working with mediators on a one-page framework to restart negotiations aimed at ending the conflict and opening the strait.

Sununu said Trump administration officials are conscious of the economic fallout from the war: “They get it…and I think that’s why they’re trying to get through the war as fast as they can.”

But he cautioned that it could take months for prices to return to prewar levels.

“Ticket prices won’t go down immediately” after the strait is fully reopened, Sununu said. “You’re looking at elevated ticket prices through the summer and fall because it takes a while for the prices to go down.”

Since the initial U.S.-Israeli attack in late February, Sununu has met in Washington with National Economic Council Director Kevin Hassett, representatives from the Transportation Department and senior White House officials.

A White House official confirmed that Hassett and Sununu have discussed the effect of increased fuel prices on the airline industry. The official said the conversation touched on how the industry can mitigate the impact of high jet fuel prices on consumers.

“The president and his entire energy team anticipated these short-term disruptions to the global energy markets from Operation Epic Fury and had a plan prepared to mitigate these disruptions,” White House spokeswoman Taylor Rogers said, pointing to the administration’s decision to waive a century-old shipping law in a bid to lower the cost of moving oil.

Rogers said the administration is working with industry representatives to “address their concerns, explore potential actions, and inform the president’s policy decisions.”

A Treasury Department spokesman pointed to Bessent’s recent comments on Fox News that the U.S. economy remains strong despite price increases. The spokesman said Treasury officials have met with airline executives, who have reaffirmed strong ticket bookings.

“We’re cognizant that this short-term move up in prices is affecting the American people, but I am also confident, on the other side of this, prices will come down very quickly,” Bessent told Fox News on Monday.

The war has already contributed to one casualty in the industry: Spirit Airlines. Company representatives have said they were forced to close the airline because the sustained surge in jet-fuel prices derailed the company’s plan to emerge from chapter 11 bankruptcy.

The Trump administration and Spirit failed to come to an agreement for the company to receive a financial lifeline of as much as $500 million from the federal government.

Transportation Secretary Sean Duffy has argued that the Iran war wasn’t the cause of Spirit’s demise, pointing to the company’s past financial struggles, as well as the Biden administration’s decision to challenge a merger with JetBlue.

Other budget airlines have also turned to the federal government for help since the U.S.-Israeli attack. A group of budget airlines last month sought $2.5 billion in financial assistance to offset higher fuel costs, and they separately wrote to lawmakers asking for relief from certain ticket taxes.