2026 Economic Outlook: AI's Impact on Markets and Retirement Planning

Key Quotes

"I think when we take a look at what to expect in 2026, a lot of the bull case comes down to what we expect from earnings, and that relates, of course, to the Mag 7, which are expected to deliver something along the lines of what we saw in 2025. But then also, this broadening out story for the broader market. So to the extent that we do see that come to fruition, that can be a benefit of front-loading that contribution. But what I would also add is if you're expecting a year of volatility, which is I think something that we could anticipate with the AI narrative and the moments of doubt that occur with that, taking advantage of the volatility, dollar-cost averaging in, that can also be a viable path. So you have two good choices there."

Martha Norton, Chief Investment Strategist at Empower, explains two potential strategies for retirement contributions in 2026. Norton suggests that if strong earnings and market broadening occur, front-loading contributions could capture gains. Alternatively, she notes that dollar-cost averaging during volatile periods, particularly with the AI narrative, can also be a sound approach.

"This is what I am wrestling with a great deal, and I think there are two major arguments that people are pointing to when they talk about this rotation away from tech, away from AI. They point to valuations and they point to earnings. I think that second argument is a lot stronger than the first argument. When we look at valuations, we're not just looking at them relative sector to one another, we're looking at them relative to their own history. On that count, I would actually argue that some of the Mag 7 have gotten a bit cheaper. When we look outside that subset, if you're looking at consumer staples, if you're looking at utilities, if you're looking at some of these other areas of the market, they're actually pretty pricey."

Martha Norton addresses the debate about a market rotation away from tech and AI. Norton believes that while both valuations and earnings are cited as reasons for rotation, the earnings argument is more compelling. She observes that some of the "Mag 7" tech stocks have become relatively cheaper when compared to their historical valuations, while other sectors like consumer staples and utilities appear more expensive.

"Look, I mean, this is all based on the Ives AI 30, which is our, you know, these are our AI 30, our 30 winners in the AI revolution, all based on our research. Four times a year, we basically switch in and out who I believe is more relevant, less relevant. And, you know, the last six months, getting to a billion, it's been, I think, a validation as investors are trying to find how do you play the AI revolution? And I'm happy that they've had the confidence in us."

Dan Ives, Global Head of Tech Research at Wedbush Securities, discusses his Ives AI 30 ETF. Ives explains that the ETF holds 30 companies identified through his research as leaders in the AI revolution, with portfolio adjustments made quarterly. He views the fund's recent growth to $1 billion as validation of investor interest in playing the AI trend.

"Look, Paul, physical AI, it's really about autonomous robotics. I mean, this is now what I view as the consumer AI revolution starts in terms of physical AI. And I think what you saw with Nvidia, they're laying out an end-to-end platform on autonomous. We've talked about it. It's why we're so bullish on Tesla. You've seen robotaxis in the autonomous sort of vision there. But this is the next stage of AI, but it's all fueled by the godfather of AI, Jensen and Nvidia."

Dan Ives defines "physical AI" as autonomous robotics and the next phase of the AI revolution, particularly for consumers. Ives highlights Nvidia's development of an end-to-end platform for autonomous systems, linking it to the potential of robotaxis and expressing bullishness on companies like Tesla. He credits Jensen Huang and Nvidia for driving this advancement.

"I think it's all about the AI coming to the Apple ecosystem. We've talked about this. This is going to be the year of AI for Apple. I mean, it's about 1.5 billion iPhones in the world, 2.4 billion iOS devices. It's about when you look at this next stage for Apple, it's going to be the most important stage. I think they're going to go into this AI revolution and they monetize that install base. That's going to be front and center, and it's why I continue to be one of our top picks and in my opinion, underestimated in terms of what the error that they're hitting."

Dan Ives predicts that artificial intelligence integration will be a pivotal development for Apple. Ives emphasizes the massive existing user base of iPhones and iOS devices, suggesting that Apple will leverage AI to monetize this installed base. He considers this AI push to be Apple's most significant next stage and a reason he maintains a positive outlook on the company.

"Well, on Venezuela, the President of the United States can take military action without talking to Congress, without telling Congress for some limited period of time. And, you know, the technicalities of the War Powers Act is really boots on the ground troops that are going to be there about 45 days. Then you have to ask permission again for 45 days. Then you need an authorization of military force like we had in Iraq. That's the rule, that's the law. The president seems to find ways of exercising presidential power without following the law, but right now he is within the bounds of presidential power in Venezuela."

Wendy Schiller, Professor of Political Science at Brown University, discusses the President's power regarding military action in Venezuela. Schiller explains that under the War Powers Act, the President can deploy troops for a limited period without immediate Congressional approval, requiring subsequent authorization. She notes that while presidents may find ways to exercise power, current actions in Venezuela are within legal presidential bounds.