Raymond James CIO Larry Adam highlights the 3 sectors he believes will drive returns through 2026: Technology, Industrials, and Healthcare. From the ongoing AI revolution and global defense spending to the demographic demand powering healthcare innovation, he breaks down why these areas could remain the cornerstones of investor portfolios in the next phase of the bull market.
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1. Technology (XLK)
- The AI boom continues to drive robust revenue and margin expansion across hardware, software, and semiconductor names.
- Sustained earnings growth expected through 2025–26 as enterprise adoption deepens.
- Sector remains the primary engine of market performance, even amid elevated valuations.
2. Industrials (XLI)
- Global defense spending is rising, led by NATO commitments and multi-year modernization programs.
- Infrastructure buildout to support AI and data center expansion continues to create tailwinds.
- Offers durable earnings visibility tied to long-term capital investment cycles.
3. Healthcare (XLV)
- After a period of underperformance, healthcare now trades at the most attractive valuations of any major sector.
- The sector combines defensive dividends (big pharma) with offensive upside (biotech and medtech).
- Aging global demographics and AI-driven drug discovery provide multi-year growth catalysts.
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