Economy & Markets
Q: I’ve recently read articles about how the “Magnificent 7 is dying,” or how “The Mag 7 have lost $1 trillion in value”. You’ve taught us in the past that headlines like these often mean the opposite will happen in the future. Is this time different?
A: We believe it’s highly unlikely that the top seven largest stocks will die. Instead, we believe these companies are reacting to the competitive landscape, with some sprinting ahead and others lagging behind as all jockey forward in the AI race. At our recent 2026 Economic Updates, we discussed the uneven nature of a “rational bubble” breaking down into a series of inflate/deflate/inflate moves as the technology accelerator future progresses. Note that a rational bubble refers to inflated prices that are more supported by earnings as compared to the tech bubble of 1999 where there were much lower earnings and lots of debt.
The chart below shows how the S&P 493, the other stocks often forgotten due to the Mag 7 blastoff in the last decade, are expected to have good earnings growth. Note the trend of the S&P 493 earnings growth versus the Mag 7 earnings growth which is still good, but not great. Big corrections happen in stocks when trends go from great to a bit less great.
The recent correction in Microsoft fell on the heels of earnings and revenues that were on target, but not good enough to overcome investor perception that Azure (Microsoft’s cloud services division) is faltering in the face of massive capital spending. In this case, “faltering” means only achieving 37% growth in Azure versus the 40% that investors felt was warranted given the massive investment being made (and the fact that it’s Microsoft we’re talking about.) Many analysts believe Microsoft is playing the long game, balancing out their growth in various area. A famous Buffett quote comes to mind – “emotion in the short run often drives stocks, reality in the long run.” We believe this same narrative will repeat many times and among many companies in the AI accelerated future.
SFG’s Take: Major stock volatility is a normal event when stocks are priced to perfection. It doesn’t mean any particular company is in danger of flatlining. But it’s good to remember that not all the Mag 7 companies can come out on top over the long term. Broadening diversification within stocks and to other asset classes remains one of our high conviction themes in 2026.
Q: What will power the huge energy needs of artificial intelligence data centers?
A: The energy demands of the future are enormous with AI driving much of the power demand despite recent breakthroughs in the energy efficiency of chip technology.
Natural gas is the backbone of U.S. energy production, supplying 43% of our current needs. Deloitte predicts that the increased price of natural gas in the last year will encourage enough production to meet all the needs of the first AI data centers expansion wave. There are currently over 1,800 natural gas power plants in the U.S. with significant new plants planned to meet growing demands.
Elon Musk and others strongly believe solar will take over from natural gas as the energy source for AI acceleration. Even Darren Woods, the CEO of Exxon, mentioned this potential in a recent interview. This is due to advancing solar collection technology as well as new battery technology expected to become available over the next three-five years.
Trends
- Growth: Natural gas plant construction boomed in the 2010s, replacing coal plants, and more are being built or planned to support power grid stability.
- Flexibility: These plants are crucial for balancing intermittent renewables like wind and solar.
- Wildcards: Significant work on new nuclear technologies could also add to future energy production. Microsoft recently entered into a 20-year power purchase agreement (PPA) with Constellation Energy to restart the Three Mile Island reactor, now called the Crane Clean Energy Center. This project was financed by a $1.6 billion investment by Constellation, supported by a $1 billion Department of Energy loan, and is targeting a 2027 restart.
Most experts would rather rely on traditional Westinghouse nuclear technology even though those plants take 7-10 years to complete. Fortunately, faster track, small reactors that use safer materials are being developed. Microsoft also has a power purchase agreement with Helion, a nuclear fusion company. Fusion is considered safer and cleaner than fission but is still in development with an estimated time to market of 3-5 years.
SFG’s Take: The power needs of AI data centers will be enormous. We don’t see a crisis here as long as capital continues to flow to build the energy sources of the future. SFG has been investing in a number of infrastructure areas identified in the chart above, including energy.
Note the U.S. has adequate energy options to fuel the first few stages of the AI revolution with promising technologies that will support the AI hyper-growth trend.
Q: You have discussed in several January presentations the challenges and opportunities that AI will present to careers and businesses. You’ve quoted many national thought leaders on the need for better “entrepreneurial skills” to survive and thrive in this new environment. Can we get a primer on those skills from your Ninja Entrepreneur book? Do you have other resources that can help our family, and even our college-aged children navigate this new world?
A: We firmly believe that entrepreneurship is the key to success in this new world. But what does entrepreneurship actually mean? Historically, the term has referred to an individual or a small group of individuals who strike out on an original path to create a new business or buy an existing business and assume the risks and potential rewards of ownership. A related term is “intrapreneurship” – that is, being an entrepreneur within a company or organization even if the individual has no direct or indirect ownership.
Why is this skill so important? Because the hallmarks of entrepreneurs is their ability to grow, pivot, and make good decisions, even in times of chaos or uncertainty. Nothing describes this new AI world more perfectly.
The book, Ninja Entrepreneur, is designed for more experienced business owners although it does contain a number of primers for intrapreneurs. The chapter on pivoting and adapting is the #1 most requested topic for SFG training sessions and mentorship. Pivoting and adapting are absolutely critical skills to sharpen in the rapid-fire future that lies ahead.
Note that in the past, major business pivots were made when financial strain, stagnant growth, market changes, competitive pressure or product misalignment became obvious. In the future, however, successful entrepreneurial thinking will better anticipate these scenarios in advance. This will enable faster implementation of new solutions since you and your team have already “played the movie” in your head.
There are a lot of good stories in Ninja where critical decision-making during uncertain times is profiled. Few of these private business owners were born with these skills – they sharpened them in the school of hard knocks – in other words, they “failed forward.”
The good news is the world today has many ways to accelerate your entrepreneurial learning curve without dozens of painful lessons spread over many years. You’ll still make mistakes – they go with striving to be an effective leader.
We’ve observed that those who study the art of entrepreneurship make fewer mistakes and bounce back better from the mistakes they make.
Skills of an intrapreneur are similar to a business owner and include:
- Technical Skills: These include a deep, specific knowledge and strong abilities related to the industry in which the employee operates.
- Leadership and Management Skills: Intrapreneurs must be able to lead teams, manage resources, and make strategic decisions. This includes skills in delegation, motivation, and conflict resolution.
- Financial Management: Understanding financial principles is essential for budgeting, forecasting, and managing cash flow. Intrapreneurs who progress in an organization will be thrown into situations where they need to effectively track income and expenses, create budgets, and make informed investment decisions.
- Problem Solving and Critical Thinking: This is the top area that is already being integrated into K-12 education and higher ed. Good intrapreneurs are prized for their ability to face unexpected challenges and devise effective solutions. Ask more questions – be curious.
- Communication Skills: Effective communication is vital for networking, pitching ideas, and building relationships with customers, investors, and team members. Intrapreneurs need to convey their vision clearly and persuasively.
- Creativity and Innovation: The ability to generate new ideas and innovate is at the heart of intrapreneurship. This involves recognizing market needs and developing unique solutions or products.
How to sharpen these skills:
- Participate “all-in” in company training with a strong curiosity mindset. Encourage leaders to provide more of this training for you and your team.
- In the accelerating techno-industrial revolution, do your own homework – developing entrepreneurial “muscle memory” will be critical to success. Study the great intrapreneurs and entrepreneurs.
- Listening to or reading Loonshots by Safi Bahcall (reviewed in Ninja and offered as a workshop as part of our Super Trend readiness training), The Art of Impossible by Steve Kotler and The 5 Second Rule by Mel Robbins are good places to start to get the juices flowing.
- Listening to podcasts like Stanford’s All Else Equal, Decision Ease or Acquired will help sharpen decision-making skills.
- Reading the stories of entrepreneurs making big decisions with imperfect data in magazines like Inc., Entrepreneur, Wired and Forbes.
- Attending decision-making masterclasses (on-line or in-person) provides valuable insights into the psychology of evaluating choices.
- Seek out decision makers in your own organization or in outside companies and ask for their help to understand how to make better decisions when you have incomplete information or high future uncertainty.
Dennis Stearns, CFP®, ChFC, MS
Dennis is the founder of Stearns Financial Group and is nationally recognized for complex ultra-high net worth financial planning and the effect of Super Trends on clients’ investments, businesses/careers and the economy.
Stearns Financial Group is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.
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