Alicia Levine

Raised year-end S&P 500 target to 8,000. Sees upside risk driven by strong earnings from AI capex beneficiaries (45 companies growing 70% on average) and healthy 15% growth in the rest of the market. Believes the market is looking through temporary inflation and geopolitical issues like the Strait of Hormuz blockade. The risk of a blow-off in tech is a market structure risk, not fundamental.

Lazar forecasts a 12% jump in CapEx for 2026, driven by a "manufacturing renaissance" and heavy truck orders. Levine notes a rotation into "dirty businesses" (making things) as capital flows to the physical world. The AI trade is broadening from digital to physical. You cannot build data centers, factories, or energy infrastructure without materials and industrial machinery. This sector benefits from the "goods producing" jobs multiplier. LONG. Cyclicals are the beneficiaries of the "No Landing" / 4% GDP growth scenario. If the Fed keeps rates higher for longer due to strong growth, financing costs for heavy industry could bite.

Large-cap tech has been terrible since November of last year, underperforming the S&P 500, the Russell, and emerging markets. This group is now unloved and cheap relative to history, and that underperformance should revert as earnings power reasserts itself.

Banks are doing terrific and are a forward leading indicator of the economy; strong bank performance implies no recession and supports owning financials.

AI is changing everything and making it easier for bad actors to execute data breaches and other cyberattacks. This creates an obvious and growing demand tailwind for cybersecurity solutions.

Lazar forecasts a 12% jump in CapEx for 2026, driven by a "manufacturing renaissance" and heavy truck orders. Levine notes a rotation into "dirty businesses" (making things) as capital flows to the physical world. The AI trade is broadening from digital to physical. You cannot build data centers, factories, or energy infrastructure without materials and industrial machinery. This sector benefits from the "goods producing" jobs multiplier. LONG. Cyclicals are the beneficiaries of the "No Landing" / 4% GDP growth scenario. If the Fed keeps rates higher for longer due to strong growth, financing costs for heavy industry could bite.