Bubble, what bubble?
From daily email from Navellier:
December 9, 2025
We've Just Seen the Best Quarter in 3 Years (in Revenues) or 4 Years (Earnings)
Hello Kirk,
I am writing this weekend aboard the forty-fourth Forbes Cruise for Investors, where there is a high level of anxiety about a feared “AI bubble,” but I am doing my best to assure investors that unscrupulous short sellers are merely trying to ruin the market party. In the end, these short sellers will be buried by strong revenues and earnings, positive surprises and guidance – and 2026 is likely to deliver more of the same.
After nearly all (97%, or 484) of the stocks in the S&P 500 have announced third-quarter results, revenues are up 8.2% (a 12-quarter high) and earnings are up 16.5% (a 16-quarter high) with the average earnings surprise a whopping 9.6% (a 16-quarter high), and 2026 revenues and earnings are now forecasted to accelerate, with higher guidance, especially from data center companies with growing order backlogs.
Obviously, some of our great stocks are doing even better. In my research team’s just-completed quarterly back test of Stock Grader and Fundamental models, we found that breadth is shrinking: The Top 10% of stocks are now the place to be. This is much “tighter” than our last back test of second-quarter results, which showed that the Top 25% of Stock Grader and Top 15% of our 8-factor Fundamental model were the best place to be. In other words, the market’s breadth and power narrowed during the third quarter.
We also noticed there was a lot of short covering in “F-rated” (worst) stocks in Stock Grader, and I expect these lowest-rated stocks to sink in the upcoming weeks, causing even greater market divergence.
In my regular column this week, I’ll examine more reasons why I expect a powerful 2026. Since I’m at sea with Forbes, I have no new podcasts, but here’s a link to our most recent Market Buzz on You Tube.
Also this week, Bryan Perry covers the outlook for greater “affordability” in the upcoming mid-term election year. Gary Alexander covers winter storms (which earn the headlines) versus the more normal (but ignored) clear days. Ivan Martchev sees new market highs this week, while Jason Bodner examines the dual personalities of many recent months. In addition, I’ve asked Jamie Dlugosch to pen a guest column this week, as I was very impressed with a podcast he delivered on this subject of daily valuation swings.
Louis Navellier
CEO Navellier & Associates |
