Why I’m Skeptical of U.S. Stocks in 2026
Let me be clear:
This is not an anti-America, pure short sell take.
It’s a valuation and capital cycle take.
U.S. equities currently trade at roughly a 40% premium to the rest of the world. Historically, the U.S. deserves a premium — stronger institutions, deeper capital markets, innovation leadership, and earnings consistency.
But 40% is not a normal premium.
It’s a perfection premium.
And perfection is fragile.
The AI Capex Surge Nobody Is Pricing Properly
Here’s the structural issue that keeps me cautious:
Major technology companies are projected to spend approximately $600 billion in capital expenditures in 2026, up roughly 70% year-over-year, largely tied to artificial intelligence and data center infrastructure.
That’s an extraordinary capital cycle.
The question isn’t whether AI is transformative.
The question is whether the return on invested capital will justify this level of spending — and over what time frame.
Right now, we have:
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Massive capex expansion
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Sector-wide disruption
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Daily repricing of entire industries
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Limited clarity on long-term earnings durability
When capital intensity explodes but ROI visibility drops, multiples compress.
That’s not pessimism. That’s math.
Every Sector Is Being Repriced
What makes this cycle unique is the breadth of uncertainty.
AI isn’t just disrupting one industry.
It’s simultaneously pressuring:
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Software
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Media
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Professional services
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Healthcare diagnostics
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Logistics
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Consumer platforms
When markets don’t know who the durable winners are, they demand lower valuations.
You can believe in the long-term productivity story and still acknowledge short- to medium-term valuation risk.
Those two ideas are not mutually exclusive.
Why Emerging Markets Look Structurally Different
While U.S. equities trade at elevated multiples, many emerging markets trade at discounts — and not because they’re collapsing.
In many cases, companies abroad operate as:
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Monopolies
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Oligopolies
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Dominant domestic franchises
They don’t need to win an AI arms race to maintain their earnings base.
Their competitive advantages are often structural:
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Regulatory barriers
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Domestic market dominance
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Limited competition
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Local pricing power
In an environment of global technological uncertainty, structural insulation matters.
Lower starting valuations + stable competitive positioning = asymmetric setup.
Mexico and Nearshoring Dynamics
One country that stands out structurally is Mexico.
The investment case is straightforward:
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U.S. supply chain realignment
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Nearshoring tailwinds
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Trade integration
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Lower valuation multiples relative to U.S. peers
Mexico benefits from U.S. economic momentum without carrying U.S.-style tech multiples.
That’s a compelling combination.
Reform Optionality Abroad
In parts of Latin America, we’re also seeing reform-driven optimism.
When a country moves from economic dysfunction toward policy stabilization, equity markets don’t need perfection — they just need marginal improvement.
Reform momentum can create convexity when valuations are already depressed.
That dynamic simply doesn’t exist in markets trading at premium multiples.
The Crypto Treasury Distortion
Another area I’m watching closely is companies that hold large digital asset reserves and trade at significant premiums to the value of those holdings.
When an equity trades materially above its underlying asset value, you’re no longer investing in the asset — you’re investing in sentiment.
Premium compression can be brutal.
And historically, premiums rarely persist indefinitely.
This Is a Relative Rotation Call
Let me reiterate:
This is not a prediction of U.S. collapse.
It’s a relative positioning framework.
When:
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U.S. stocks trade at a 40% premium
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Capex surges without proven ROI
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Entire sectors reprice daily
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Emerging markets trade at discounts
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Structural competitive moats exist abroad
Global capital rotates.
It always has.
2025 saw international markets outperform the U.S.
The real question is whether that was an anomaly — or the beginning of a multi-year rebalancing.
My Current View
The valuation cushion in U.S. equities is thin.
AI will likely be transformative long term — but markets price the next 12–24 months, not the next decade.
When capital intensity spikes and outcome visibility declines, I prefer cheaper starting points.
Emerging markets don’t need explosive growth to outperform.
They just need to be less crowded and less expensive.
And right now, that asymmetry exists.
Editorial & Legal Disclaimer
This article reflects personal market commentary based on publicly available information. It is for informational and educational purposes only and does not constitute investment advice, a recommendation to buy or sell securities, or a solicitation of any transaction. Investing involves risk, including the potential loss of principal. Readers should conduct independent research and consult a qualified financial professional before making investment decisions.