Here’s how they are looking at artificial intelligence, interest rates and economic pressures.
4 min
The S&P 500 just completed one of its best three-year runs ever, rising around 80% from the start of 2023 through New Year’s Eve. Wall Street thinks the party is just getting started.
Few expect the good times to keep rolling indefinitely, but you would be hard-pressed to find a major bank predicting anything except more gains in 2026.
Yet worries abound about the stretched valuations of artificial-intelligence companies, the path of interest rates and the outlook in Washington, D.C.
So we asked five investors where they’re putting their money:
Count Alex Chaloff among the investors concerned about a reckoning with the huge gains in AI stocks.
The chief investment officer at Bernstein Private Wealth Management fielded questions from clients on the topic all last year.
After several years of huge returns, he is advocating a more surgical approach to picking stocks.
“On one hand, they’re thrilled with the returns. On the other, they’re scared of what the next chapter is, because I’ve been telling them: It’s 1990-something,” Chaloff said, referring to the final years of the dot-com bubble.
“Our view is that we still have room to run, but there will be an end to this.”
Chaloff isn’t selling out of AI, but he is happy to help concerned clients seeking protection against declines in the whole index or a handful of individual big tech stocks.
One tool he is using is buffered exchange-traded funds, which seek to smooth out market swings. Those offer “some upside exposure with either defined or variable protection, and a great level of visibility, transparency and liquidity,” he said.
Bernstein is also working on an “AI loser” list, screening specifically for companies with high debt loads and low free-cash flow—those that have gotten AI hype, but might lack the fundamentals to survive an arms race.
He also holds an upbeat outlook for U.S. growth, especially if the Supreme Court ends up striking down President Trump’s tariffs: “I think that possibility is being overlooked a bit. It could reduce inflationary pressures, allow more rate cuts and accelerate the economy.”
Tech bulls point out a key difference between now and the dot-com bubble: Today’s most-valuable companies, such as Nvidia, Microsoft and Alphabet, are some of the most profitable in history. And those profits are growing fast.
Saira Malik , who oversees $1.4 trillion as chief investment officer at Nuveen, thinks there is more upside ahead to the technology and AI trade, and she plans to add to some of her favorite holdings in 2026. It all comes down to profits.
The Magnificent Seven tech companies plus chip maker Broadcom —a group Malik is now referring to as the “Great Eight”—are forecast to grow earnings by 24% this year, well over double the forecast for the S&P 500 as a whole.
“We think the earnings growth and future growth justifies the premium valuations in tech, which will continue to dominate and lead the S&P 500 higher,” Malik said.
Tech stocks’ years long dominant run has made a handful of the biggest companies a larger share of the S&P 500 index than ever, making some investors fret over concentration risk. Malik shrugs those concerns off.
“I don’t necessarily say the market has to broaden out for it to be healthy. We’ve been living in this world of tech dominance for basically a decade straight…as long as the earnings power is there, the stocks will follow,” she said.
Outside of stocks, Nuveen expects municipal bonds and private equity both to bounce back in 2026.
Heavy supply of new muni bonds led to them lagging behind taxable bonds last year, a trend that Malik expects to reverse in a “catch-up trade.” Private equity, meanwhile, stands to benefit from lower interest rates and a pickup in deal activity, she has told clients.
Concentration risk isn’t just a stock-market issue, says Jack Ablin , chief investment strategist at Cresset Capital. He worries about the growing share of consumer spending coming from wealthy individuals, which he said puts the economy at risk as well.
“We have a narrowing prosperity on both Wall Street and Main Street, and it probably does create a vulnerability. A minority of the participants are accounting for most of the results,” Ablin said.
Stock owners are feeling a wealth effect that leads to freer spending. That could change quickly during a market downturn, however, leading to a scenario where a drop in the stock market could push the economy into a recession, Ablin said.
Cresset has leaned into value stocks and small-caps recently, expecting that both will benefit from interest-rate cuts and lower financing costs this year.
When it comes to AI, Ablin isn’t ready to pick winners and losers.
“I don’t have a crystal ball. So we buy everything for now, and the winners will ultimately pay for the losers.
Raymond James Chief Investment Officer Larry Adam thinks stocks will have a more modest 2026, projecting around a 4% gain for the S&P 500.
Equity valuations will struggle to move higher than they currently are, meaning those gains will need to come from earnings growth, he said.
“I think the market is vulnerable to some disappointment after going so long with remarkably low volatility,” he said.
Raymond James is adding to bets on the industrials and consumer discretionary sectors this year. Industrials look like an indirect AI play, since they act as suppliers to utility companies and others helping build out AI infrastructure.
Consumer discretionary stands to benefit from a pickup in consumer spending, Adam reckons, with major tax refunds from the One Big Beautiful Bill Act set to hit pockets this spring.
Is there an AI bubble? Rob Arnott says yes, though the Research Affiliates founder and chairman cautions that it isn’t easy to profit on that idea.
“Shorting a bubble is a very fast way to go bankrupt. Bubbles can last longer and go further that you can imagine,” he said.
Like many on Wall Street, Arnott is convinced that AI is the “real deal” and a technological revolution is coming.
But he also warned that technological revolutions take time to play out—and said it is far too early to know which companies will emerge from the pack. During the dot-com boom, he said, Lucent and Nokia numbered among the world’s most-valuable companies.
“Dating back to the industrial revolution, every time you see major disruption there are winners and losers. A lot of losers,” he said. “The disrupters get disrupted.”
Arnott is now running a strategy that automatically trims exposure to stocks if their valuations soar quickly. “Just like averaging in is a time-honoured way to build a position in something cheap, averaging out is a great way to reduce exposure to what’s frothy and expensive,” he said.
With the profits taken from trimming exposure to fast-growing names, Arnott is putting money into areas that look cheaper and less loved, such as international and value stocks, to boost diversification.
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Strong family financial planning can help reduce taxes and support younger generations. From intrafamily loans and asset gifts to inheritance disclaimers, strategic cooperation can create meaningful financial benefits—when families have the trust and structure to make it work.
4 min
Happy is the family whose members—parents, grandparents and grown children—trust each other enough to cooperate on shared goals, especially financial ones. When that is truly the case, Uncle Sam’s tax rules can help as well.
This matters especially now that mortgage rates are above 7%, and many families are looking for ways to help younger members. If the elders have resources and are confident younger ones can cooperate, a family loan could make homeownership possible while providing the elders with a useful income stream.
Other strategies can actually lower taxes, such as when funding 529 plans or Roth IRAs, or when someone inherits a traditional IRA with required withdrawals larger than they will need.
Here are three strategies useful for functional families.
It is perfectly legal for families to lend money to a relative for a down payment or even a private mortgage.
But it is important not to cut corners, says Ryan McKeown, a CPA with Modern Wealth Enhancement in Minnesota. If the loan is for a down payment, be honest with the mortgage provider and have a formal agreement. The lender owes tax on the interest payments received.
If the loan is for a private mortgage, both sides should have legal representation with a formal written agreement, including payment terms. The lender owes tax on the interest, and the borrower often can deduct it if he or she itemizes.
To avoid IRS trouble, the interest rate shouldn’t be lower than the agency’s Applicable Federal Rate at the time of the loan. Currently that is about 5% for loans longer than nine years; about 4.5% for loans three to nine years; and about 4% for loans three years or less. Currently, traditional mortgage rates are generally above 7%.
In addition, the lender could use the $19,000 annual gift-tax exemption (described below) to forgive some or all of the interest or principal annually. If both lenders and borrowers are married, that is up to $76,000 a year. There is no tax for the borrower on such forgiveness, because it is from a gift.
If you’re going this route, McKeown advises against having a fixed plan to forgive the debt. Instead, do it in one-off letters specifying the amount—and keep careful records. Otherwise the IRS might try to treat the loan as a taxable gift.
Powerful tax-saving moves for families often use gift-tax provisions. Under current law, anyone can give anyone else up to $19,000 of assets annually, free of gift tax. That means a married couple with three grandchildren could give them a total of $114,000 in 2026.
The gifts can be cash or other assets, like stock. For noncash gifts, the cost basis—which is the starting point for measuring taxable gain after a sale—“carries over” to the recipient. So if someone buys $1,000 of stock and gives it away when it is worth $5,000, the recipient’s cost basis is $1,000. If the recipient later sells the shares for $8,000, the taxable gain is $7,000.
Here’s an example showing how gifts could save a family taxes. Grandma is a widow of modest means, while her child and spouse have prospered. The couple has two children, and they want to contribute $5,000 to a 529 college-savings plan for each—but they need to sell stock to do it. Their tax rate on the sale would be 18.8%, and they would need to sell about $11,000 of stock.
However, Grandma’s federal tax rate on the stock sale is 0%. If the couple gives $10,000 of shares to Grandma, she could sell them, pay no tax, and fund the grandchildren’s 529 plans. This saves about $1,000 of tax.
These moves are legal, and they could be used in other ways, such as to help a young person fund a Roth IRA.
But trust among family members is essential: Under the law, givers can’t put conditions on a gift. Grandma could use her stock proceeds to take a cruise, but she makes 529 contributions instead.
Mark Sellner, a retired tax attorney and CPA living in Sarasota, Fla., uses this strategy. His children sell stock he gives them and fund 529 plans for his grandchildren.
The family’s tax savings aren’t huge, but he likes other benefits. The sales by his children don’t boost his adjusted gross income, which in turn could raise his Medicare Irmaa premiums or his 3.8% surtax on net investment income.
Sellner doesn’t worry about his children using the funds for another purpose.
“There can’t be any strings attached to gifts. Of course, it is up to us to decide whether to make them in the future,” he says.
Two caveats: The “kiddie tax” applies to most children under age 24, and it is levied at the parents’ rate on investment income above $2,700 in 2026. Consider this before making gifts to a young person.
Investors who give away stock also forgo the step-up, an important provision that exempts assets held at death from capital-gains tax.
Sellner knows he’s losing a step-up, but says, “The children could use a little more now. Why should they wait 20 years to get it?”
A disclaimer is a highly useful strategy in which one heir renounces an inheritance in favor of another heir. Assuming family members cooperate, this can save taxes.
Here’s one example. Dad died and had a large traditional IRA that he left to Mom. She has enough assets and income to cover her expenses, and she lives in a state with a stiff estate tax. The inherited IRA would put her estate over the threshold.
Also surviving are three young-adult children. If Mom disclaims all or part of Dad’s IRA within nine months of his death, that amount could go directly to the children. They will have 10 years to empty the account, and the family as a whole will likely save estate and income taxes.
Disclaimers have many key details, especially regarding beneficiary documents. Although heirs have great freedom in choosing what assets to disclaim, the rules about who gets disclaimed property are rigid. It is best if the original owner names tiers of heirs so that if one disclaims, the next recipient is clear.
