As the calendar turns to 2026, seasoned investor and chief investment officer Louis Navellier urges a strategic pivot away from lower-quality equities experiencing a recent surge he terms a “junk rally.” Navellier, the founder of Navellier & Associates, emphasizes the importance of returning to stocks characterized by accelerating earnings and sales growth, which he deems crucial for sustained market leadership throughout the new financial year.
Navellier’s perspective, shared in his latest Navellier Market Buzz video, critiques the fourth-quarter market behavior where previously underperforming stocks temporarily surged, a phenomenon known as mean reversion. He asserts this trend lacks sustainability and foresees a marked reversal in January, with higher-quality companies reclaiming prominence. According to him, the day-one surge in data center-related stocks signals the early return of institutional investment into sectors driven by innovation and demand.
Investors are encouraged to anticipate this “big flip” as a strategic moment to reposition their portfolios toward firms exhibiting robust top-line growth and profitability. Navellier specifically identifies the data center industry and artificial intelligence (AI) implementation as major catalysts expected to underpin corporate earnings in the coming period.
A cornerstone of Navellier’s outlook remains Nvidia Corporation (NASDAQ: NVDA), which he holds as the largest position within his portfolio. He anticipates Nvidia will report a significant sales increase of 66.7% alongside a 71% growth in earnings, boosted by anticipated demand for its next-generation chips, including increased sales to China.
Complementing Nvidia is Palantir Technologies Inc. (NASDAQ: PLTR), which Navellier highlights for its government contract work involving AI applications. He forecasts a 64.1% rise in Palantir’s earnings, underscoring its role as a prominent AI implementer in public sector projects.
Further beneficiaries of the data center expansion, according to Navellier, include Seagate Technology Holdings PLC (NASDAQ: STX) and Celestica Inc. (NYSE: CLS). He projects earnings growth of 37.6% for Seagate and an even more robust 58.1% for Celestica, reflecting their strategic positioning within technology supply chains.
Navellier’s confidence in these picks is contrasted by his broader macroeconomic outlook, in which he identifies deflation—not inflation—as the primary risk to the economy in 2026. He cites multiple indicators supporting this stance, including declining rental prices, falling condominium values, and relatively low energy costs. Amid these trends, Navellier contends that the Federal Reserve’s prior rate policies are outdated, likening the regulator’s view to looking ‘‘in the rearview mirror.’’ He advocates for at least a 100 basis point easing in interest rates to stave off a more pronounced economic downturn.
Market performance at the close of 2025 reflected overall positive momentum, with key benchmarks logging solid gains. The S&P 500 increased by 16.65%, the Nasdaq Composite advanced 20.54%, and the Dow Jones Industrial Average grew by 13.38%. Pre-market data on the first trading day of 2026 showed continued modest advances, with the SPDR S&P 500 ETF Trust (NYSE: SPY) rising 0.24% to $684.82 and the Invesco QQQ Trust ETF (NASDAQ: QQQ) up 0.52% to $616.29.
These data points frame the context for Navellier’s guidance: a focus on companies with durable earnings growth and positioning within technological domains primed for expansion. Navigating the shift away from the transient fourth-quarter rallies toward fundamentally sound investments, particularly in AI and data center sectors, defines his strategic approach for investors entering the new year.
Key Points
Risks and Uncertainties
Navellier’s perspective, shared in his latest Navellier Market Buzz video, critiques the fourth-quarter market behavior where previously underperforming stocks temporarily surged, a phenomenon known as mean reversion. He asserts this trend lacks sustainability and foresees a marked reversal in January, with higher-quality companies reclaiming prominence. According to him, the day-one surge in data center-related stocks signals the early return of institutional investment into sectors driven by innovation and demand.
Investors are encouraged to anticipate this “big flip” as a strategic moment to reposition their portfolios toward firms exhibiting robust top-line growth and profitability. Navellier specifically identifies the data center industry and artificial intelligence (AI) implementation as major catalysts expected to underpin corporate earnings in the coming period.
A cornerstone of Navellier’s outlook remains Nvidia Corporation (NASDAQ: NVDA), which he holds as the largest position within his portfolio. He anticipates Nvidia will report a significant sales increase of 66.7% alongside a 71% growth in earnings, boosted by anticipated demand for its next-generation chips, including increased sales to China.
Complementing Nvidia is Palantir Technologies Inc. (NASDAQ: PLTR), which Navellier highlights for its government contract work involving AI applications. He forecasts a 64.1% rise in Palantir’s earnings, underscoring its role as a prominent AI implementer in public sector projects.
Further beneficiaries of the data center expansion, according to Navellier, include Seagate Technology Holdings PLC (NASDAQ: STX) and Celestica Inc. (NYSE: CLS). He projects earnings growth of 37.6% for Seagate and an even more robust 58.1% for Celestica, reflecting their strategic positioning within technology supply chains.
Navellier’s confidence in these picks is contrasted by his broader macroeconomic outlook, in which he identifies deflation—not inflation—as the primary risk to the economy in 2026. He cites multiple indicators supporting this stance, including declining rental prices, falling condominium values, and relatively low energy costs. Amid these trends, Navellier contends that the Federal Reserve’s prior rate policies are outdated, likening the regulator’s view to looking ‘‘in the rearview mirror.’’ He advocates for at least a 100 basis point easing in interest rates to stave off a more pronounced economic downturn.
Market performance at the close of 2025 reflected overall positive momentum, with key benchmarks logging solid gains. The S&P 500 increased by 16.65%, the Nasdaq Composite advanced 20.54%, and the Dow Jones Industrial Average grew by 13.38%. Pre-market data on the first trading day of 2026 showed continued modest advances, with the SPDR S&P 500 ETF Trust (NYSE: SPY) rising 0.24% to $684.82 and the Invesco QQQ Trust ETF (NASDAQ: QQQ) up 0.52% to $616.29.
These data points frame the context for Navellier’s guidance: a focus on companies with durable earnings growth and positioning within technological domains primed for expansion. Navigating the shift away from the transient fourth-quarter rallies toward fundamentally sound investments, particularly in AI and data center sectors, defines his strategic approach for investors entering the new year.
Key Points
- Navellier warns against following the late 2025 rally in lower-quality, underperforming stocks, labeling it unsustainable.
- He predicts a significant market rotation in January favoring quality firms with accelerating sales and earnings growth.
- Data center demand and AI implementation are identified as core drivers for corporate earnings growth in 2026.
- Nvidia, Palantir, Seagate, and Celestica are highlighted as top stock picks poised to benefit from these trends.
Risks and Uncertainties
- The recent surge in low-quality stocks may reverse abruptly, potentially impacting investors who chase this “junk rally.”
- Forecast earnings growth for technology companies, including Nvidia and Palantir, depend on continued demand, including international sales such as to China, which carry geopolitical and market risks.
- Deflationary pressures cited by Navellier could persist and deepen, affecting broader economic conditions and investor returns.
- Monetary policy remains uncertain, with suggested Federal Reserve rate cuts necessary to prevent deeper slowdown; mis-timing or policy missteps could create volatility.