2026 US Stock Market Outlook: Where to Find Investing Opportunities
Morningstar••business
Key Points:
- As of December 31, 2025, the US equity market was trading at a 4% discount to Morningstar’s composite fair value estimates, with small-cap stocks especially attractive at a 15% discount, while growth stocks trade at a 10% discount due to increased fair value estimates.
- Technology and communication sectors saw significant valuation changes, with technology now trading at an 11% discount driven by AI-related growth expectations, while real estate and energy sectors remain undervalued, offering opportunities in defensive real estate and oilfield services.
- Consumer defensive, financials, and industrial sectors appear overvalued or at risk, with select stocks like Walmart and major banks rated lower due to concerns about future growth and economic conditions.
