Opportunity Amid Early Turbulence

2026 Q1

As we move through early 2026, our outlook remains constructive but increasingly selective. While we believe the S&P 500 can deliver low double-digit returns over the full year, we also expect periods of early-year turbulence as markets reconcile elevated valuations, uneven consumption trends, and a shifting monetary and geopolitical backdrop. Many of the themes we highlighted last quarter around a repricing of risk and reality are not behind us. They are evolving.

Valuation Discipline and Market Psychology

The primary tension we see in early 2026 centers on valuation discipline, particularly within select areas of the technology sector. Palantir has become emblematic of this debate. The company continues to execute exceptionally well operationally, yet trades at valuation levels that leave little margin for error. Research coverage reflects this divide. CFRA maintains a constructive stance, emphasizing strong revenue growth, margin expansion, and improving free cash flow generation. Morningstar, by contrast, views the shares as meaningfully overvalued, arguing that even optimistic long-term growth assumptions require substantial multiple compression to justify current prices.

At the time of writing, Palantir was trading at approximately 417 times trailing earnings. This distinction between trailing valuation metrics and forward earnings expectations is critical. A trailing price-to-earnings ratio measures how much investors are paying today for each dollar of earnings generated over the prior twelve months. At levels such as these, it is clear that the stock’s valuation is driven overwhelmingly by expectations of future earnings rather than current profitability.

Supporters of Palantir point to forward earnings estimates, which assume rapid revenue scaling and sustained margin expansion over the coming years. Under those assumptions, valuation multiples compress meaningfully as earnings grow into today’s price. However, forward-based valuation frameworks introduce a different category of risk. They require near-flawless execution, continued customer adoption, favorable competitive dynamics, and a stable macro environment. Any deviation, whether from slower contract growth, pricing pressure, or a broader market re-rating, can lead to sharp multiple compression even if the business itself continues to grow.

This contrast becomes more pronounced when Palantir is compared with established technology leaders such as Amazon, Alphabet, Apple, Meta, Microsoft, and Nvidia. These firms trade at materially lower multiples, generally ranging from the high 20s to mid-40s, because a greater share of their valuation is supported by current earnings and free cash flow rather than future expectations alone. Even Nvidia, the central beneficiary of the AI infrastructure buildout, trades at a fraction of Palantir’s trailing multiple.

Intel provides a useful counterpoint from the opposite end of the valuation spectrum. Unlike high-multiple growth names, Intel enters 2026 priced for skepticism rather than exuberance. Its valuation reflects competitive pressures, execution risk surrounding its foundry strategy, and a longer timeline for returns on capital-intensive investments. At the same time, research points to improving fundamentals, including stabilizing revenues, early signs of margin recovery, rising free cash flow, and meaningful strategic support through U.S. government incentives and external partnerships. In Intel’s case, the market is demanding proof before re-rating the stock, rather than pricing perfection in advance.

At Samra Wealth Management, portfolios are built on research-driven conviction, grounded in both fundamental research and technical analysis. Markets, however, are ultimately shaped by investor behavior. Periods of heightened retail participationand momentum-driven trading can push prices well beyond fundamental anchors, often quickly and emotionally. Our concern in 2026 is not missing opportunity because we failed to invest wisely, but the pressure to abandon discipline in order to keep pace with momentum-driven valuation expansion.

We have seen this dynamic before. Episodes such as GameStop rewarded timing and crowd behavior rather than research and valuation. While such moves can generate short-term excitement, they are inconsistent with our mandate. Our objective is not to chase episodic outperformance or speculative rollercoasters, but to deliver consistent, repeatable outcomes while managing downside risk across full market cycles. Valuation alone is not a timing tool, but when expectations become tightly compressed into price, it remains one of the most important inputs for risk management.

Labor Markets, AI, and the Next Structural Shift

Recent labor market data highlights a subtle but meaningful transition underway. According to ADP, the U.S. private sector added a net 41,000 jobs in December, below expectations and following a net loss in November. Hiring was concentrated among mid-sized firms, while small businesses, often the most sensitive to tariffs, financing conditions, and regulatory pressure; have sharply slowed their pace of hiring since April. Large businesses added very few jobs on balance, underscoring a shift toward more cautious labor demand.

Job growth remains concentrated in services, particularly education, healthcare, and leisure and hospitality. By contrast, employment declined in information and professional services, while manufacturing continued to shed jobs. This composition matters. It suggests that employment growth is increasingly skewed toward sectors less exposed to automation today, while white-collar and industrial roles face growing efficiency pressure.

Concerns around artificial intelligence have historically focused on job losses. That concern is understandable, but incomplete. We recently met with Pramod Attarde, Chief AI Innovation Officer at ApexDeFi Labs, following his AI in Business panel in Dubai at the Global Entrepreneur Conclave. One takeaway was clear: AI-driven automation is no longer theoretical. Cities such as Jersey City, New Jersey are already deploying drones and robotics for grocery and food delivery, embedding automation into everyday logistics with little fanfare.

We believe 2026 will be remembered as a transition year. With Tesla’s humanoid robot, Optimus, already in production, adoption is likely to begin in environments where labor shortages, safety considerations, and repetitive tasks intersect. Warehouses, distribution centers, grocery store back rooms, and night-shift operations are logical early adopters. While widespread public-facing use may take time, behind-the-scenes deployment is likely to accelerate.

As with every prior industrial transformation, this shift will create opportunity while displacing certain roles. History shows that those who embraced the internet, social media, and AI early benefited disproportionately. While past industrialrevolutions improved working conditions, it is also worth acknowledging that few people grow up aspiring to perform physically repetitive or low-mobility labor indefinitely. Automation may reduce certain job categories, but it also reallocates human capital toward higher-value work, entrepreneurship, and new forms of economic participation.

AI Infrastructure and the Real Economy

Importantly, valuation concerns do not imply that the U.S. technology sector is in a systemic bubble. Across major research institutions, there is broad agreement that today’s environment differs materially from the late-1990s cycle. Market leaders generate substantial free cash flow, maintain strong balance sheets, and return capital to shareholders.

Bank of America reinforces this view, noting that equity performance remains closely tied to earnings growth rather than speculative price expansion. Hyperscalers are reinvesting heavily in AI infrastructure and data centers, but capital expenditures represent a far smaller share of operating cash flow than during the telecom boom of the early 2000s. What was once criticized as excess ultimately laid the foundation for the modern internet economy.

The large-scale buildout of AI compute infrastructure; including data centers, power networks, and embodied AI systems such as humanoid robotics, is poised to underpin productivity gains and new business formation for decades. In that sense, today’s investment cycle more closely resembles the Federal-Aid Highway Act of 1956 than speculative overreach.

Energy Markets, Venezuela, and Supply Risk

Energy markets remain another area where surface narratives obscure deeper structural risk. Securing and rehabilitating Venezuela’s oil infrastructure would likely require three to five years at a minimum, and more realistically closer to a decade. The capital required would be substantial, as extraction, refining, transportation, and distribution systems have deteriorated significantly.

While Venezuela officially reports approximately 303 billion barrels of proven oil reserves, among the largest globally.  This figure has been widely debated. Until 2007, Venezuela’s self-reported reserves stood near 100 billion barrels. The subsequent increase followed a reclassification of heavy oil fields under PDVSA, despite production remaining largely flat. This has led analysts to question the reliability of self-reported reserve data.

Geopolitically, oil is no longer the sole strategic lever. Energy revenues account for roughly a quarter of Russia’s federal revenue base, underscoring their importance but also their limits. As Jack Mallers has noted, Venezuela representsa unique convergence point where Chinese supply chain influence, Iranian manufacturing capability, and Russian military presence overlap. From this perspective, oil becomes secondary to broader objectives around supply chain control, military influence, and strategic positioning close to U.S. borders. For markets, the implication is straightforward. If Venezuelan reserves prove overstated or remain economically inaccessible, expectations for future supply could be mispriced. In that scenario, energy markets could face renewed supply constraints, leading to upward pressure on WTI prices.

At Samra Wealth Management, we maintained an elevated allocation to the energy sector throughout 2025 and increased exposure in September as a hedge against broader market volatility. While energy underperformed for much of the year, this positioning provided portfolio resilience. Should global supply assumptions unwind, particularly around Venezuela, energy could re-emerge as a source of asymmetric upside rather than simply a defensive allocation.

Positioning Forward

Adaptability remains central. We are neither retreating from growth nor chasing momentum. Instead, we continue to emphasize valuation discipline, diversification, and downside-aware portfolio construction. If early-year volatility materializes, we are positioned defensively. If markets continue higher, our exposure to technology, infrastructure, and energy ensures participation.

As we enter a lower interest rate environment: still historically normal, and by recent standards arguably elevated, we expect technology to remain a primary beneficiary, particularly as lower discount rates continue to support long-duration cash flow assets. At the same time, easing monetary policy has broader implications. Lower interest rates tend to pressure the U.S. dollar, which can create opportunity to selectively rebalance or liquidate foreign assets and convert proceeds back into U.S. dollars at favorable exchange levels. This dynamic reinforces the importance of global awareness even within U.S.-centric portfolios.

The path through 2026 is unlikely to be linear. But for long-term investors, periods of uncertainty often sow the seeds of future opportunity. At Samra Wealth Management, our mandate remains unchanged: to navigate complexity with clarity, discipline, and alignment with your long-term financial objectives.

Disclosures:

This material is provided as a courtesy and for educational purposes only. This does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed. All economic and performance data is historical and not indicative of future results.

All views/opinions expressed herein are solely those of the author and do not reflect the views/opinions held by Advisory Services Network, LLC.

Investing involves risk including loss of principal.

Investment advisory services offered through Samra Wealth Management, a Member of Advisory Services Network, LLC

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