CAPITAL MARKETS -OBSERVATIONSAND INSIGHTS
Alger Capital Markets Outlook: Summer 2026
Dan Chung, CFA;
Chief Executive Officer
Chief Investment Officer
Portfolio Manager
As the Federal Reserve contemplates a shift toward a more restrictive monetary policy, investors are asking a familiar question with new stakes: does monetary policy dictate the fate of innovation cycles?
As the Federal Reserve contemplates a shift toward a more restrictive monetary policy, investors are asking a familiar question with new stakes: does monetary policy dictate the fate of innovation cycles?
KEY OBSERVATIONS AND THEMES
I
Bull vs. Bear
Will inflation and a potentially more restrictive monetary policy weigh on economic activity? Or will business investment, driven by AI innovation, onshoring, and tax incentives, drive earnings and stocks higher?
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II
Long-Term Investing
Regardless of how the short-term macroeconomic situation evolves, the long-term outlook of the economy and equity investing is very bright, in our view.
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III
Artificial IntelligenceWe believe AI is the most important technology of our lifetimes, driving productivity, economic growth and investment opportunities. 18
IV
Enduring ThemesSecular investment trends may transcend economic volatility, politics, and central bank actions, producing compelling investment opportunities over the long-term. 25
V
Style WarsPowerful structural forces may keep the long-term trend of growth outperformance intact, in our view. 31
VI
Investing Outside the U.S.In many areas of innovation, leaders exist outside the U.S. and often trade at a discounted valuation to their U.S. peers, potentially offering attractive investment opportunities. 35
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of July 2026. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.
Risk Disclosures: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Foreign securities and Emerging Markets involve special risks including currency fluctuations, inefficient trading, political and economic instability, and increased volatility.
Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors, and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology.
Important Information for US Investors: This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund and ETF shares. Fred Alger & Company, LLC serves as distributor of the Alger mutual funds and ETFs.
