Earnings estimates at 15% for 2026, third year in a row up double digits: BD8's Doran
Speakers
Barbara Doran
— CEO and Chief Investment Officer, BD8 Capital Partners
John
— CFO
Summary
Barbara Doran, CEO and CIO of BD8 Capital Partners, tells CNBC's The Exchange that the Magnificent Seven should be the main support for the U.S. market in 2026, with earnings growth offsetting high valuations and keeping the S&P 500 on solid footing. She favors international diversification into Europe, where defense fiscal stimulus should continue, and emerging markets, which offer better earnings growth. She also warns that growth names will see periodic volatility and references past Amazon and Meta selloffs as buying opportunities. The show intro notes bitcoin is back above $90,000 after a down 2025.
- Barbara Doran says Mag 7 earnings and revenue growth are the biggest support for the market in 2026, not the Fed.
- She expects earnings growth to help the S&P 500 hold up despite a high market P/E.
- She favors overseas diversification because international markets outperformed and are less dependent on the same mega-cap U.S. stocks.
- Europe is supported by fiscal stimulus from defense spending that she says will not end in 6 to 9 months.
- Emerging markets offer better earnings growth, helped by a weaker dollar and stabilized China-U.S. relations.
- She cautions growth names will face periodic volatility but investors tend to return to them.
- The show intro notes bitcoin traded above $90,000 after closing 2025 lower.
Ideas
Mag 7 support S&P 500 in 2026
The biggest support for the U.S. market in 2026 will come from the Magnificent Seven, not the Fed unless the labor market weakens sharply. These mega-cap tech names have sold off and are cheaper than at the start of 2025, yet they continue to have solid earnings and revenue growth. They represent about 30% of the S&P 500 but more than 40% of profits, so they do not need large earnings or stock increases to maintain their weights. Investors may periodically rotate away but tend to come back because the growth is real.
Earnings growth supports S&P 500 in 2026
Even though the market P/E is high, she expects earnings to continue to come up and support the market in 2026. She frames this as a reason the market can hold up despite elevated valuations.
Diversify overseas as international markets outperform
She favors international diversification because both developed and emerging markets outperformed the U.S. in 2025 and are less dependent on the same mega-cap U.S. stocks. She says investors can diversify overseas into markets with different drivers and better relative earnings growth.
Europe supported by defense fiscal stimulus
Europe is an attractive diversification destination because fiscal stimulus from defense spending is not a short-term story and will not be over in 6 to 9 months. That spending should continue to provide support for European markets.
Emerging markets offer better earnings growth
Emerging markets are attractive because other EM countries have better earnings growth than the U.S., the dollar was down just under 10% last year, and the China-U.S. relationship appears to have stabilized. She notes the dollar's path depends on interest rates and Taiwan remains a wildcard, but the relative earnings growth supports EM diversification.
