In a market climate dominated by continuous change, uncertainty, trade tensions, and geopolitical headwinds, behavioral finance can help investors make smart decisions.
Volatile markets often test investors’ discipline, reinforcing the importance of a rational, long-term investment approach. The first ten months of 2026 have seen sharp market fluctuations, driven by uncertainity over U.S. policy shifting views on which company will ultimately benefit from the artificial intelligence investment cycle. While such conditions can challenge even seasoned investors, they also show why patience, fundamental conviction, and disciplined capital allocation continue to matter. Market sentiment and valuation cycles may fluctuate considerably, but sustainable earnings growth, strong cash generation and lasting competitive advantages are what drive long-term shareholder returns. Ultimately, successful investing means having the discipline to look beyond short-term market noise and stay focused on underlying business value.
Market overview
Over the past six months, global financial markets have faced an increasingly challenging economic and geopolitical environment, marked by persistent inflation, high energy prices, shifting expectations on monetary policy and substantial volatility across asset classes. Despite repeated corrections, global equities held up well, supported by strong corporate earnings and sustained investment in artificial intelligence infrastructure. However, the sharp rise in developed-market sovereign bond yields, particularly towards the end of the period, pointed toward growing tensions between the AI investment theme and the vast sum needed to fund the Ai infrastructure behind it.
At the economic level, the gap between the regions widened. The U.S. economy stayed relatively resilient, supported by heavy technology investment and a more favourable energy positions, although early signs of a softer labour-market weakness pointed towards a gradual slowdown . Europe remained more exposed to high energy costs and weak industrial demand, while emerging markets faced additional pressure from a stronger U.S. dollar and tighter global liquidity. Inflation persisted, made worse by disruptions to energy supplies and international shipping through the Strait of Hormuz and Bab el-Mandeb. In response, major central banks adopted increasingly hawkish policy stances, while rising sovereign yields tightened financial conditions further.
The artificial intelligence investment cycle continued to dominate equity markets. Strong earnings momentum and large hyperscaler capital expenditure commitments initially supported technology, semiconductor and networking infrastructure companies. Investor appetite extended beyond AI too. The largest IPO in history was oversubscribed by more than 5 times as individual investors piled in for a piece of SpaceX.
The period also exposed a widening gap between company fundamentals and short-term market sentiment. Retail leverage and concentrated thematic positioning amplified market movements, pushing valuations well out of line. Semiconductor companies and AI infrastructure suppliers rallied hard initially once it became clearthat the hyperscalers’ capex splurge will continue into 2027. Later, they experienced an aggressive derating giving back a lot of their initial gains despite generally resilient operating performance, as concerns grew over the availability of the required funding for such investment plans. In October, investors rotated back towards energy, healthcare and other value-oriented sectors, while emerging markets underperformed amid weakness in South Korean technology stocks.
Looking ahead, high government bond yields, persistent inflation, geopolitical uncertainty and stretched valuations remain key risks. Even so, recent market corrections offer opportunities to selectively increase exposure to high-quality, cash-generative businesses that stand to benefit from durable structural growth trends. Valuation discipline, diversification and portfolio flexibility remain central to navigating an increasingly complex investment environment.
How our Spring 2026 Top Picks performed
Between May and October 2026 global equities performed strongly driven mainly by exceptional corporate earnings growth which was fuelled by both AI adoption and inflationary pressures. Most of this has been achieved by mid-year, after which the markets followed a period of range-bound trading as investors started to question the sustainability of current earnings growth projections.
Taiwan Semiconductor Manufacturing Company, our highest conviction holding, highlights the importance of fundamental discipline and long-term view. Despite exceptional financial performance and its central role in the global AI infrastructure investment cycle, the stock has been affected by heightened emerging-market volatility, made worse by excessive retail leverage and speculative positioning. The resulting disconnect between strong underlying fundamentals, attractive valuation metrics and deteriorating investor sentiment has constrained its share price appreciation to +7.6%. Nevertheless, including dividends, TSMC has slightly outperformed global equities during the period.
Our second recommendation, Meta Platforms, was volatile over the period as investors continued to assess the implications of its aggressive capital expenditure program, particularly its impact on the company’s historically low-debt balance sheet and strong cash flow generation. On the other hand, the launch and rapid adoption of its personal AI agent, Muse, raised expectations that these substantial investments could translate into meaningful monetisation opportunities, positioning Metaamong the potential long-term beneficiaries of the AI revolution. Nevertheless, the stock was caught up in the broader derating of AI-related equities towards the end of the period, resulting in a relatively modest +5.5% share price return.
Among our AI infrastructure picks, Arista Networks delivered strong operational and financial performance, exceeding market expectations and benefiting from continued investment in data-centre networking infrastructure. These robust fundamentals initially drove a substantial rise in share price, supporting our investment case. However, the sharp turn in sentiment towards AI-related equities towards the end of the period triggered a significant valuation correction, wiping out its earlier relative outperformance. As a result, the stock concluded the period with a modest +2.6% price return.
Booking Holdings, which we selected after February’s sharp software-sector selloff, delivered operational and financial results broadly in line with our internal forecasts. Howeve, unlike many other companies affected by the initial correction, the stock has yet to experience a meaningful recovery. Concerns that AI could disrupt its business model have so far proved largely unfounded, but weak consumer sentiment and high energy prices have continued to weigh on investor confidence and travel-sector valuations. As a result, despite resilient underlying fundamentals, the stock generated a total return of -7.0% over the period.
Finally, GE Vernova, until recently one of the main beneficiaries of the AI infrastructure investment theme, experienced a significant valuation correction as investors reassessed its high earnings expectations. Our investment report anticipated continued positive momentum into year-end, supported by strong financial results and favorable industry fundamentals. However, growing concerns over how the AI infrastructure build-out will be financed increasingly overshadowed the company’s robust operating performance. As a result, despite supportive fundamentals, GE Vernova recorded a price return of -16.8% over the period.
Highlight on 5 thriving companies
Despite turbulent market conditions, some companies are making the most of the new opportunities and thriving, making them potentially compelling investment options to put on your watchlist. This article puts the spotlight on 5 such companies, derived through the below structured 3-step analysis:
- Sectoral screening: A sector-specific screening model is employed, incorporating a range of financial and operational metrics to assess the long-term viability of companies. Firms exhibiting consistently positive trends across these metrics are shortlisted for deeper evaluation.
- Financial modelling & common-size analysis: Detailed financial models are developed for selected companies to incorporate historical performance data and include a comprehensive common-size analysis to facilitate cross-sectional and time-series comparisons.
- One-year price target estimation: A one-year price target is determined using a Discounted Cash Flow (DCF) approach. The initial Weighted Average Cost of Capital used to discount projected free cash flows is tailored for each company. It reflects factors such as the firm’s business model, geographical distribution of sales, functional currency risk-free rate and outstanding leverage profile. DCF models’ assumptions are regularly benchmarked against the most recent earnings releases from companies.
Amphenol Corp
Amphenol Corporation continues to strengthen its position as a leading global provider of high-performance interconnect, sensor and power solutions, benefiting from its critical role in the rapidly expanding AI infrastructure ecosystem. Despite operating in a competitive environment characterised by elevated customer expectations, evolving technological requirements and growing concerns over the sustainability of AI-related capital expenditure, the business continues to show exceptional operational momentum. Revenue growth is driven by accelerating demand for high-speed connectivity, advanced networking architectures and power distribution solutions across hyperscale data centres, as well as by its diversified exposure to aerospace, defence, automotive and industrial markets. Its decentralised operating model, disciplined acquisition strategy and strong cash generation reinforce its competitive advantages and capacity to sustain profitable growth.
Following recent share price volatility, as the market derated the AI infrastructure investment cycle, we believe the stock now offers an increasingly compelling risk-reward proposition. Its mission-critical products, strong customer relationships and growing content per data-centre deployment provide considerable earnings visibility, while continued hyperscaler investment commitments should support further positive earnings revisions. We expect the recent valuation pressures to prove largely temporary, with resilient operating performance and steady demand for advanced connectivity solutions providing catalysts for renewed share price appreciation.
| Country | United States |
|---|---|
| Industry | Technology Hardware |
| Price on 31 Oct 2026 | $79.3 |
| Price Target (1 year) | $100 |
| Upside | 26.1% |
Broadcom Inc
Broadcom Inc. continues to strengthen its position as a leading provider of mission-critical semiconductor and infrastructure software solutions, benefiting from its strategic exposure to the accelerating AI infrastructure investment cycle. Despite growing investor concerns surrounding the sustainability of hyperscaler capital expenditure, the company’s fundamental growth drivers remain firmly intact. Its leadership in custom AI accelerators, high-performance networking silicon and advanced connectivity solutions positions Broadcom as a key beneficiary of the transition towards increasingly sophisticated AI computing architectures. Its highly profitable infrastructure software franchise, built around VMware, provides recurring revenue streams, substantial operating leverage and strong free cash flow generation, adding to the resilience and diversification of the group’s business model.
Following the recent valuation pressures across AI-related equities, Broadcom offers an attractive entry point, supported by rising demand for custom chips, expanding hyperscaler relationships and continued earnings growth. We believe the market is underestimating the durability of Broadcom’s competitive advantages and its ability to capture an increasing share of AI infrastructure spending.
| Country | United States |
|---|---|
| Industry | Semiconductors |
| Price on 31 Oct 2026 | $326.08 |
| Price Target | $450 |
| Upside | 38.0% |
Schneider Electric
Schneider Electric has become one of the highest-quality beneficiaries of three overlapping investment trends; the global electrification, energy efficiency and AI infrastructure. It is leveraging its leadership in energy management, electrical distribution and industrial automation to meet the fast-rising demand for intelligent power infrastructure. The rapid expansion of hyperscale data centres and AI computing capacity is driving structural demand for advanced power distribution, cooling, grid connectivity and energy management solutions, areas where the company maintains formidable competitive advantages. Its diversified exposure to industrial automation, building electrification and grid modernisation provides additional long-term growth opportunities, broadening its potential market and reducing dependence on individual investment cycles.
Operationally, Schneider Electric combines steady organic growth with attractive profitability, supported by its extensive installed base, expanding software and services revenues and strong pricing capabilities. Its recently announced acquisitions of PTC and Cognite represent a strategic push into industrial software and AI, strengthening its ability to integrate engineering, operational and energy data while expanding recurring revenues and cross-selling opportunities. Although the scale and financing of these transactions introduce execution and balance-sheet risks, we believe their strategic benefits could reinforce Schneider’s competitive positioning and support medium-term margin growth. Together with continued electrification demand and disciplined operational execution, these developments underpin our conviction in the company’s ability to deliver durable earnings growth and attractive shareholder returns.
| Country | France |
|---|---|
| Industry | Electrical Equipment |
| Price on 31 Oct 2026 | €237.5 |
| Price Target | €300 |
| Upside | 26.3% |
Intuit Inc
Intuit remains one of the strongest financial technology franchises, leveraging its leading positions in tax preparation, accounting and small-business financial management through TurboTax, QuickBooks, Credit Karma and Mailchimp. Its deeply embedded customer relationships, extensive proprietary financial datasets and integrated software ecosystem create substantial switching costs and lasting competitive advantages. The company continues to benefit from recurring subscription revenues, attractive operating margins and strong free cash flow generation, while its expanding AI capabilities offer meaningful opportunities to automate financial workflows, enhance customer engagement and accelerate monetization.
Following a significant valuation derating driven by concerns that generative AI could disrupt traditional financial software business models, we believe Intuit offers an increasingly compelling medium-term investment opportunity. These fears appear overstated, given the complexity of tax compliance, the importance of trusted financial data and Intuit’s established distribution advantages. Rather than weakening its competitive position, AI could strengthen its products through intelligent automation and personalised financial services. In our view, resilient earnings growth, continued product innovation and a very promising technical setup provide attractive catalysts for shareholder returns.
| Country | United States |
|---|---|
| Industry | Financial Technology |
| Price on 31 Oct 2026 | $341.09 |
| Price Target | $415 |
| Upside | 21.6% |
JPMorgan Chase & Co
JPMorgan Chase remains one of the highest-quality financial institutions globally, combining unmatched scale, a diversified earnings base and industry-leading positions across consumer banking, corporate lending, investment banking, payments and wealth management. Its large deposit franchise, superior funding capabilities, disciplined risk management and strong capital generation give it a structurally advantaged business model. The bank continues to benefit from its leading market positions, technological investments and ability to capture market share across economic cycles, while its diversified revenue streams provide cushion against fluctuations in any individual business segments.
The Federal Reserve’s renewed hawkish stance and recent initiation of an interest rate hiking cycle, alongside rising government bond yields, create an increasingly favorable environment for JPMorgan’s net interest income and reinvestment yields. While higher rates may eventually weigh on credit demand, funding costs and asset quality, we believe the bank’s strong deposit base, conservative lending standards and solid capital position provide meaningful competitive advantages. Supported by resilient profitability, sustained shareholder distributions and continued market share gains, JPMorgan remains exceptionally well positioned to deliver attractive risk-adjusted returns over the medium term.
| Country | United States |
|---|---|
| Industry | Banking |
| Price on 31 Oct 2026 | $337.04 |
| Price Target | $375 |
| Upside | 11.2% |
This analysis was conducted by Cosmin Alexandru Mizof, Investment Manager at Calamatta Cuschieri.
Navigating investments in 2026
Markets in 2026 and beyond are likely to remain volatile, shaped by regulatory risk over the AI industry, a weak consumer sentiment, hawkish monetary stance, and grinding geopolitical risks. Rather than trying to predict every macro turn, focusing on high-quality companies with solid earnings power, scalable models, and undervalued entry points may be the best path forward.
These five picks represent a strategic mix of resilience, strong cash generation power, and secular growth potential. Investors are still encouraged to do their own research or seek guidance from an expert advisor to set up their ideal investment portfolio.
This equity research document is issued by Calamatta Cuschieri Investment Services Ltd “CCIS”. Newly issued research recommendations and target prices supersede previously published research.
The financial instruments discussed are intended for retail clients however, they may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein. The value of the investment may go down as well as up and may be affected by changes in currency. Where investments are denominated in a currency other than the investor’s base or reporting currency, changes in foreign exchange rates may adversely affect the value and/or returns of the investment. Any performance figures quoted refer to the past and past performance is not a guarantee nor a reliable guide to future performance.
This information is being provided solely for information purposes and should not be deemed or construed as investment advice, tax, legal, or any other ancillary regulatory advice. CCIS does not accept liability for actions, proceedings, costs, demands, expenses, damages, and losses suffered by persons as a result of information, views, or opinions appearing in this document.
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