The second quarter was a six-year best for U.S. stocks - here are the three sectors poised to lead the next leg higher
With second-quarter corporate earnings looking strong, it pays to invest alongside some well-known - and wealthy - technology leaders.
This is a "FOMO" market, and as much as it bucks conventional wisdom, it really is a market you should not miss.
Another spectacular earnings season is coming up. The best earnings will be in three sectors: energy, information technology and materials.
In energy, recommended names include Okeanis Eco Tankers (ECO), International Seaways $(INSW)$, Teekay Tankers (TNK), HF Sinclair (DINO), Phillips 66 (PSX), Cenovus Energy $(CVE)$ and Suncor Energy $(SU)$.
Information technology includes data center-related and semiconductor stocks such as Nvidia (NVDA), Advanced Micro Devices $(AMD)$, Micron Technology $(MU)$, Seagate Technology $(STX)$, Palantir Technologies (PLTR), AppLovin $(APP)$, Bloom Energy $(BE)$, GE Vernova (GEV), Comfort Systems USA $(FIX)$, Quanta Services $(PWR)$ and Ciena $(CIEN)$.
The materials sector includes two recommended stocks: Carpenter Technology $(CRS)$ and Howmet Aerospace (HWM).
The biggest gains are likely to come from the energy sector.
Remember, the second quarter was the best-performing quarter for both the Nasdaq composite COMP and the S&P 500 SPX in the past six years. Second-quarter earnings expectations are extremely high because economic growth is clearly accelerating. This is a "FOMO" market, and as much as it bucks conventional wisdom, it really is a market you should not miss.
The current market environment justifies the risk - and will reward it.
Analysts estimate that the S&P 500 will post 26.1% annual earnings growth for 2026 and 17.8% for 2027. As big as those numbers are, the portfolios we have structured as separately managed accounts and for clients are geared for 40% forecast annual sales growth and more than 100% forecast earnings growth, according to analyst consensus figures calculated by FactSet. We could rearrange the portfolios differently to tamp down the risk, selecting companies that are not projected to grow so quickly, but the current market environment justifies the risk - and will reward it.
Here are some companies and areas where the earnings growth is likely to be most visible in the upcoming earnings season. Note the prevalence of order backlogs.
The analyst community is expecting Bloom Energy's revenues to surge 102.7% and its earnings to soar 294.1%. GE Vernova is forecast to post 17.9% revenue growth and 69.3% earnings growth. Both Bloom Energy and GE Vernova's order backlogs have soared to $20 billion and $163 billion, respectively. Bloom's backlog is about 10x 2025 sales and GE Vernova's backlog is about 4x 2025 sales. Why the backlog? Both companies enable new data centers to bypass utility grids via their natural gas fuel cells and turbines, respectively.
The order backlog for AI data centers is not expected to be fulfilled for at least three years, so the AI data center boom is expected to persist through 2029; this growth will be seen in some of the numbers released this quarter.
AI infrastructure-related companies are doing even better than many pure AI-related stocks. Examples include Quanta Services, with forecast 27.2% revenue growth and 33.4% earnings growth, and Comfort Systems, where the analyst community expects 36.8% forecast revenue growth and 59.6% earnings growth. Also worth noting is Seagate Technology, with 42.5% forecast revenue growth and 96% earnings growth. And AI leader Nvidia is boasting 96.2% forecast revenue growth and 98% earnings growth.
Of course, top- and bottom-line gains do not always translate into higher share prices. Many of these fundamentally superior stocks are not appreciating as fast as their underlying earnings, so price-to-earnings (PE) ratios are being compressed. As an example, Nvidia is trading at 15.3 times forecast 2027 earnings, while Micron Technology is trading at just 6.5 times forecast 2027 earnings.
Yet the stock market should remain strong because investors will see wave after wave of positive earnings announcements this year. Third-quarter GDP growth will likely accelerate to at least a 5% annual pace due to continued onshoring efforts from U.S. multinationals, booming U.S. energy exports, strong retail sales growth and AI productivity gains.
For the upcoming quarter, I'm suggesting investors "pinch themselves" and take advantage of this earnings nirvana. While billionaires are an object of scorn in the U.S., investors should instead follow the money and invest alongside some well-known technology leaders, including Nvidia's Jensen Huang, Micron's Sanjay Mehrotra, Palantir's Alex Karp, Broadcom's Henry Samueli $(AVGO)$ and Tesla's $(TSLA)$ Elon Musk.
Fundamentally superior stocks are prospering from a stunning earnings environment as well as a booming domestic economy. America remains the economic engine for the world. A strong U.S. dollar DXY suppresses commodity inflation and benefits domestic companies that are thriving from onshoring, the data center boom, rising energy exports and strong retail sales. All of these trends will be evident in second-quarter earnings reports. The truth of the matter is that it is downright un-American not to be optimistic about this upcoming earnings season.
Louis Navellier is founder and chief investment officer of Reno, Nev.-based Navellier & Associates, Inc., a SEC-registered family office that manages more than $1 billion in assets
Disclosures: Navellier & Associates owns Nvidia (NVDA), Advanced Micro Devices (AMD), Okeanis Eco Tankers Corp. (ECO), International Seaways, Inc. (INSW), Tsakos Energy Navigation Limited $(TEN)$, HF Sinclair Corp (DINO), Phillips 66 (PSX), Cenovus Energy Inc. (CVE), Suncor Energy Inc. (SU), Quanta Services, Inc. (PWR), Bloom Energy Corporation Class A (BE), GE Vernova Inc. (GEV), Micron Technology, Inc. (MU), Comfort Systems USA, Inc. (FIX), Seagate Technology Holdings PLC (STX), Ciena Corporation (CIEN), Palantir Technologies Inc. Class A (PLTR), AppLovin Corp. Class A (APP), Howmet Aerospace Inc. (HWM), and Carpenter Technology Corporation (CRS), in managed accounts.
Louis Navellier and his family own Nvidia (NVDA), Advanced Micro Devices (AMD), Okeanis Eco Tankers Corp. (ECO), International Seaways, Inc. (INSW), Tsakos Energy Navigation Limited (TEN), HF Sinclair Corp (DINO), Phillips 66 (PSX), Cenovus Energy Inc. (CVE), Suncor Energy Inc. (SU), Quanta Services, Inc. (PWR), Bloom Energy Corporation Class A (BE), GE Vernova Inc. (GEV), Micron Technology, Inc. (MU), Comfort Systems USA, Inc. (FIX), Seagate Technology Holdings PLC (STX), Ciena Corporation (CIEN), Palantir Technologies Inc. Class A (PLTR), AppLovin Corp. Class A (APP), Howmet Aerospace Inc. (HWM), and Carpenter Technology Corporation (CRS), via a Navellier managed account and Nvidia (NVDA) in a personal account.
-Louis Navellier
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(END) Dow Jones Newswires
July 13, 2026 12:41 ET (16:41 GMT)
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