We have ‘two more rate cuts coming,’ says Wharton’s Jeremy Siegel

Watch on YouTube ↗  |  January 23, 2026 at 16:21  |  4:58  |  CNBC
Speakers
Jeremy Siegel — Professor of Finance, Wharton School

Summary

Jeremy Siegel, professor emeritus at Wharton and chief economist at WisdomTree, says the broadening of the U.S. stock market beyond mega-cap growth has legs. He favors value stocks and small-cap stocks, expects two more Fed rate cuts, and sees the next phase of AI as benefiting companies that use AI to cut costs and improve margins. He also discusses the labor-market impact of AI and strong consumer tailwinds from tax cuts.

  • Siegel says market broadening is durable after prior false starts.
  • Stronger economy and rate cuts favor value and small-cap stocks.
  • He expects two more Fed rate cuts, with short rates helping small caps more than large caps.
  • Value stocks around 15x P/E can deliver good returns with modest growth.
  • AI adoption by firms is still low; AI users may cut costs and improve margins.
  • Low-P/E companies with AI-driven margin gains could outperform.
  • He sees job openings strong and unemployment under 4.5%, though AI's labor impact is uncertain.
  • Tax cuts and fiscal support should power consumer spending.
Ideas
Jeremy Siegel Professor of Finance, Wharton School 1:20
Value stocks can outperform on AI adoption
The market broadening has legs, with a stronger economy favoring value over mega-cap growth. Value stocks selling around 15x P/E do not need much growth to produce good returns, and the coming year of the AI user can help more companies cut costs and improve margins; low multiples provide upside leverage to those improvements.
Value stocks HIGH
Jeremy Siegel Professor of Finance, Wharton School 1:20
Rate cuts favor small-cap stocks
He expects two more Fed rate cuts. Short-term rates matter more for smaller stocks than for large caps, so even if the 10-year yield does not fall much, lower short rates should help the small-cap sector. A stronger economy and tax cuts that support consumer spending are additional tailwinds.
IWM HIGH
Jeremy Siegel Professor of Finance, Wharton School 3:12
AI users can drive margin outperformance
This is the year of the AI user, not just AI supply. Only about 15-20% of firms have substantially incorporated AI to lower costs, leaving many companies able to cut costs and improve margins. Low-P/E companies with this AI-driven margin leverage could be the outperformers.
AI-SECTOR HIGH
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This CNBC video, published January 23, 2026, features Jeremy Siegel discussing Value stocks, IWM, AI-SECTOR. 3 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Jeremy Siegel  · Tickers: Value stocks, IWM, AI-SECTOR