Doc Eifrig: 'I'm very, very nervous right now'... AI is 'chips and electricity'... A game plan for 2026... Six free stock ideas... Magnificent Seven earnings are on deck... They've been carrying the market...
Don't miss it...
A few minutes after our open Investment Committee meeting finished streaming earlier today, we received the note below from Stansberry Alliance member Jacqueline in Atlanta.
She highlighted why you should check it out...
Just want to say how much I enjoyed the discussion by your panel of "smart guys" – as Doc called them. As an Alliance member, I already have access to The Total Portfolio, but I loved these live discussions when you had them during COVID and would like to see more of them.
For example, at the beginning of the AI discussion Gabe Marshank said, "AI is [simply made of] chips and electricity." Obviously, we don't just buy a handful of chips from Nvidia, throw them into a turbine like clothes in a washing machine and out pops intelligence, but when looking through the noise of AI-related investing options, Gabe's one-liner is good to keep in mind.
Do we need purple paint? No. Do we need streamers? No. Do we need fancy offices on Fifth Avenue? No. Do we need cheap land and a sympathetic local authority where we can build our newest facility? Yes. Do we need SMRs? Yes. Sometimes it is good to build a simple framework for asking complex questions, and I feel like today's event helped do that.
The media has one goal – scare the poop out of viewers so they keep coming back for more. (I guess we're a nation of masochists.) Getting real information about finance, the economy or even politics is ironically nearly impossible in today's "info" saturated world. Hearing your team hash out their thoughts about investing, not even always agreeing completely, was good information gathering for me today.
As we explained yesterday, our Investment Committee – which is made up of Dr. David "Doc" Eifrig, Whitney Tilson, Brett Eversole, Alan Gula, and our Director of Research and Publisher Matt Weinschenk – regularly convenes to bat around their top investing ideas, opportunities, and concerns in the type of meeting that we typically keep behind closed doors.
But the team and special guest Gabe Marshank opened today's discussion to all readers as they talked about putting together a game plan for The Total Portfolio in 2026.
Among other points, we heard varying levels of concern for today's bull market...
Early in the event, Doc said something that stuck with me (Corey McLaughlin)...
I would argue we're probably at the most extreme that I've ever seen in any market since I've been alive... I'm very, very nervous right now.
Doc pointed to the benchmark S&P 500 Index's price-to-sales ratio, which shows major U.S. stocks are richly valued today, unlike much of the past century. Only the dot-com peak is comparable.
Doc was a resident in medical school back then, which followed his time working on Wall Street. He remembers a lot of doctors talking to him about Cisco Systems (CSCO) stock at the time. He has similar thoughts today, with the AI boom pushing stock prices higher...
S&P 500 price-to-sales [ratio] in '99, that bubble peak, was something around 2.25.
In 2021, it got as high as 3. And now I think we're at 3.3. And I mean, that's just unheard of for my mind.
I know that there's a group of stocks in there that have incredible price-to-sales, but as a whole, the group of 500, it captures some of these extremes. When you see the amount of spending and the promises [with AI].
The discussion went into much more detail from there. Alan, for instance, shared other metrics he uses to look at the market's valuation. As Doc acknowledged, you have to look deeper than one data point to get a good handle on what's going on with the market, and you can still find worthwhile investments in this environment.
I urge you to watch or read the whole discussion. As a group, Doc, Whitney, Brett, Alan, Gabe, and Matt shared six free stock ideas for 2026, along with insight you can't find anywhere else. You can watch a replay or read a transcript of the event at your convenience right here. You'll also learn about The Total Portfolio, which outperformed its conventional "stock/bond" benchmark in 2025 while taking on less risk.
Speaking of companies making big promises...
The most important earnings of the season are just about here.
Tomorrow, after market close, we'll get quarterly updates from three "Magnificent Seven" companies – with Meta Platforms (META), Microsoft (MSFT), and Tesla (TSLA) all reporting.
Given the Mag Seven's heavy weighting in the markets, this week serves as an inflection point for stocks.
Altogether, the Magnificent Seven – the three mentioned above, plus Amazon (AMZN), Apple (AAPL), Alphabet (GOOGL), and Nvidia (NVDA) – make up 31% of the cap-weighted S&P 500 Index.
We've covered this top-heavy concentration (and the good and bad that comes with that) a lot in previous Digests. But there's a reason for it... These companies are growing much faster than the rest of the market.
According to FactSet's weekly Earnings Insight report, Mag Seven members are expected to be three of the top five contributors to S&P 500 earnings growth in the fourth quarter of 2025, which this earnings season covers.
And when you look at the entire S&P 500's growth rate, these stocks seem even more important for earnings growth. From FactSet...
In aggregate, the "Magnificent 7" companies are expected to report year-over-year earnings growth of 20.3% for the fourth quarter. Excluding these seven companies, the blended (combines actual and estimated results) earnings growth rate for the fourth quarter for the remaining 493 companies in the S&P 500 would be 4.1%.
With FactSet estimating S&P 500 earnings growth of 8.2% for the fourth quarter, that means the "rest" of the companies are only growing their earnings at half the rate of the total index.
The Mag Seven's earnings outperformance looks even more drastic on a chart. We've updated a chart we shared one quarter ago with last quarter's results and projections for the fourth quarter...
As we've written before, the Mag Seven's leadership position is all well and good for the broad market when the stocks are moving higher. But this small group of stocks will also lead the markets lower in downturns. We saw that last spring when the Mag Seven went into a bear market before the rest of the market turned lower amid tariff volatility.
The fundamental story...
It's all about AI.
Under the hood for these companies, investors will be looking for clues on how massive AI investments are panning out.
You see, as a group, the Mag Seven have pledged hundreds of billions of dollars in AI infrastructure spending this year.
They're all investing heavily to win the "race" on AI. (As Whitney wrote in his free daily e-letter on January 12, Alphabet's AI is starting to take the lead.)
And in recent quarters, we've seen the AI spending estimates ramp up. From the October 30 Digest where we last reported on Microsoft and Meta's earnings...
Microsoft's capex came in at $34.9 billion in the company's fiscal first quarter, above the $30 billion level that Chief Financial Officer Amy Hood forecast in July. And on the company's earnings call, Hood said that capex growth would accelerate in 2026 from 2025, after previously saying capex growth would slow. (Microsoft's capex jumped 45% in the 2025 fiscal year.)
As for Meta, the company said that capex growth "will be notably larger in 2026 than 2025." And in 2025, it's already spending more than it thought. Meta now forecasts capex in a range of $70 billion to $72 billion, higher than its previous outlook of $66 billion to $72 billion.
But investors have been getting more cautious about the heavy spending. We've seen the market punish companies like Microsoft, Meta, and Oracle (ORCL) in recent quarters after they upped their spending outlooks. More from the October 30 Digest...
The market did not like Microsoft and Meta's guidance about accelerating capex – especially with no clear road to profitability in sight from all this AI-related spending. Shares of both were lower today, with Microsoft losing nearly 3% and Meta down by roughly 11%.
We expect more of the same this week. Companies that are upping AI spending without a perceived payoff will be punished. But the companies that can convince investors that their AI investments are paying off will be seen as the short-term "winners." If there are enough of them, the AI-powered bull market could keep chugging.
New 52-week highs (as of 1/26/26): ABB (ABBNY), Agnico Eagle Mines (AEM), First Majestic Silver (AG), Amgen (AMGN), Valterra Platinum (ANGPY), ASML (ASML), Barrick Mining (B), BHP (BHP), Alpha Architect 1-3 Month Box Fund (BOXX), WisdomTree Japan SmallCap Dividend Fund (DFJ), iShares MSCI Emerging Markets ex China Fund (EMXC), Equinox Gold (EQX), Ero Copper (ERO), iShares MSCI Germany Fund (EWG), iShares MSCI Spain Fund (EWP), Cambria Emerging Shareholder Yield Fund (EYLD), Freeport-McMoRan (FCX), SPDR Euro STOXX 50 Fund (FEZ), Franco-Nevada (FNV), Freehold Royalties (FRU.TO), Cambria Foreign Shareholder Yield Fund (FYLD), VanEck Gold Miners Fund (GDX), Gilead Sciences (GILD), SPDR Gold Shares (GLD), Kinross Gold (KGC), Newmont (NEM), Novartis (NVS), New York Times (NYT), OR Royalties (OR), Ormat Technologies (ORA), Pan American Silver (PAAS), Sprott Physical Gold Trust (PHYS), Sprott Physical Silver Trust (PSLV), Invesco Oil & Gas Services Fund (PXJ), Roche (RHHBY), Sprott (SII), Skeena Resources (SKE), iShares Silver Trust (SLV), SSR Mining (SSRM), Torex Gold Resources (TORXF), UGI (UGI), ProShares Ultra Gold (UGL), Vanguard FTSE Europe Fund (VGK), Telefônica Brasil (VIV), Wheaton Precious Metals (WPM), State Street Energy Select Sector SPDR Fund (XLE), and Zoom Communications (ZM).
In today's mailbag, a question about our annual Report Card... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"What about the report card for the rest of the services? Thanks a lot." – Subscriber Rick G.
Corey McLaughlin comment: Rick, grades for the rest of our advisories are coming in the next parts of Matt's Report Card. Part II is slated to run this Friday, with another to follow. So, if you didn't see a grade and evaluation of a publication you were looking for in Part I, keep reading. We will cover them all over the next few weeks.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
January 27, 2026
