Three months ago, markets were frozen by conflict in the Strait of Hormuz. This quarter, they staged a sharp and broad-based rebound. Our Investment Committee Review and Outlook for Q3 2026 tracks a market that didn't just recover from the first quarter's energy shock, it broadened, with large-cap technology posting strong gains while smaller-cap stocks led the charge and participation widened across the size spectrum. Forward earnings estimates also broadened in step, climbing meaningfully from their March 2026 levels. The recovery looks less like a narrow bounce and more like a genuine expansion.
The engine behind it is worth understanding. Artificial intelligence (AI)-related spending continues to power much of the market's advance, and the largest hyperscalers are now funding an enormous infrastructure buildout, increasingly through debt and equity rather than internal cash flow. That doesn't make the trade fragile so much as it makes it worth watching as concentration cuts both ways, and a market leaning this heavily on a single theme rewards attention to how it's financed.
The takeaway from our review is pragmatic: participate in the broadening, stay diversified, and keep a hedge against the fat tails still in play, from a Middle East that is calmer but not fully resolved to an AI buildout still finding its financial footing.
For a deeper dive, we invite you to read the full Investment Committee Review – Outlook Q3 2026.
Important Disclosures & Definitions
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