Market Outlook for Second Half of 2026
My outlook for the second half of the year is positive. Recent inflation numbers look good and should help the market in the back half. Strong earnings are pushing stocks higher. This morning's retail sales came in weaker than expected, but the reaction was small - it barely moved the market. I expect conditions to stay favorable through the end of the year.
Last time I recommended Microsoft (MSFT). I said it might post great earnings, it did, and that helped lift the whole market as I expected. Only a month ago Microsoft (MSFT) looked weak and mispriced. Now it looks great. That is the pattern I look for.
Mixed Reactions This Earnings Season
Reactions to earnings have been uneven. Applied Materials (AMAT) posted good numbers but they were not enough to please investors. KLA (KLAC) got a similar poor reaction, while Lam Research (LRCX) moved higher on good numbers. The bar keeps shifting - the target can feel out of reach depending on the day, the headlines, or one analyst's comment. When a report misses what people expected, even on small points, the stock can sell off. But if a company delivers on earnings quarter after quarter, the stock will move much higher over time.
I pick three stocks I think are mispriced. I expect all three to climb about 20% by the end of the year.
Oracle (ORCL)
Oracle (ORCL) trades more than 50% below its 52-week high despite a large AI and cloud opportunity. The stock ran up hard early in the year, then pulled back sharply, and the market turned skeptical. I am not skeptical. Oracle (ORCL) has a multi-billion dollar backlog that gives clear long-term revenue visibility. The company is streamlining operations. I think it will be the ultimate winner in cloud migration. The chart looks strong, and the stock could move quite a bit higher by year-end.
Marvell (MRVL)
Marvell (MRVL) is down about 30 to 33% from its high even though revenue rose 28%. Many of these tech stocks got ahead of themselves, then sold off in big moves that flush people out. Marvell (MRVL) dominates the high-speed optical connections needed for data centers, which will be huge going forward. Earnings come August 27th, the day after Nvidia (NVDA) reports. I expect Marvell (MRVL) to do very well and the stock to jump higher. This setup differs from others: the pullback already happened, so as long as results come close to expectations, which they likely will, the stock should move up nicely.
Reddit (RDDT)
Reddit (RDDT) is moving higher and joining the S&P 500, with trading in the index set to start around August 18th. Reddit (RDDT) also got ahead of itself earlier. I have followed it for a while and I am very bullish. The social media platform has over 50 million daily active visitors, and revenue jumped over 61%. Joining the S&P 500 will force many institutions to buy millions of shares. That mechanical buying has not really started yet, and it should pull a lot of investors back into the stock. I think Reddit (RDDT) is underpriced.
