If your portfolio still looks like it did in December 2024, with heavy US mega-cap tech, light on everything else, you are fighting the last war. The market is rotating beneath your feet, and the moves happening right now aren't short-term corrections.

I've identified seven trades that you should look into for 2026. Some are already working. Others are just getting started. All of them deserve your attention.

This is the big one. After a decade of US dominance so overwhelming that most investors (and financial advisors) gave up on international entirely, the tide has turned.

In 2025, VXUS surged 32.4% while VTI returned 17.1%. And 2026 is extending the trend. International developed markets are up roughly 9% year-to-date versus the S&P 500's ~2%.

Several factors are converging simultaneously to make this happen and I would highlight three as the primary drivers.

First, the dollar weakened about 9% against major currencies in 2025 after years of strength, and that currency tailwind matters enormously for international returns priced in dollars.

Second, European banks, recapitalized and profitable after years of restructuring, are starting to expand lending again, which could lift the entire continent.

Third, Germany just passed a fiscal package worth an estimated $1.3 trillion in total spend on defense, infrastructure, and green energy over the next decade. That's a complete reversal of the austerity mindset that held Europe back for years.

The valuation gap is still wide. International developed markets trade around 17x forward earnings versus 22x for the US. Nobel laureate Robert Shiller has argued that international stocks could continue outperforming given these valuation differentials.

How to play it: VEA (Vanguard FTSE Developed Markets), EWG (Germany-specific for the fiscal expansion story), DXJ (Japan hedged). I would immediately bump up your international allocation if you're currently underweight or don’t have any international exposure. This is not going to be like the last 15-20 years where you see an initial rotation and then international equities collapse again. This is the real thing.

This isn't really a trade as much as it is a decade-long investment theme. And it's accelerating faster than almost anyone predicted.

Global military expenditure hit $2.72 trillion in 2025, per SIPRI data. But that number is headed to $3.6 trillion by 2030, a 33% increase from 2024 levels. The US proposed a staggering $1.5 trillion defense budget for fiscal year 2027. NATO allies are targeting 3-5% of GDP for defense, up from the old 2% standard that most countries weren't even meeting. Germany's Zeitenwende program has matured from rhetoric into real procurement contracts worth €60 billion.

Everything has changed in terms of the geopolitical picture. The post-Cold War peace dividend is officially over. You've got simultaneous pressure from Eastern Europe, the Indo-Pacific, and the Middle East. And the nature of defense spending itself is shifting away from traditional hardware toward AI-enabled systems, autonomous drones, electronic warfare, and software-defined defense platforms.

The top five US defense contractors now carry combined order backlogs exceeding $750 billion. Northrop Grumman is up 51% since mid-2025. Rheinmetall and BAE Systems are winning massive European contracts as the EU pushes for strategic autonomy.

How to play it: SHLD (Global Defense Tech ETF), ITA (iShares US Aerospace & Defense), PPA (Invesco Aerospace & Defense), EUAD (Select STOXX Europe Aerospace & Defense) for transatlantic exposure. Individual names: NOC, LMT, RTX on the US side; Rheinmetall and BAE Systems in Europe. As I mentioned this is a 5-10 year hold, not a trade.

I’ve written at length about this rotation but it bears repeating and may be the most significant investment story here in the US this year. The Russell 2000 posted a 14-day winning streak in early January 2026, the longest since 1996. Small caps are up roughly 8% year-to-date versus the S&P 500's ~2%.

It starts with interest rates. The Fed has cut to the 3.50-3.75% range, and that matters disproportionately for small caps because approximately 50% of Russell 2000 debt is floating-rate. Every rate cut directly reduces their interest expense. The fiscal stimulus from the One Big Beautiful Bill Act is also flowing disproportionately to domestic small businesses, and will boost small caps with infrastructure spending, reshoring incentives, and defense procurement.

But the earnings story is what really gets my attention. Small-cap earnings growth is projected at 30-35% for 2026, compared to around 22% for the Magnificent Seven. After years of underperformance creating compressed valuations, the Russell 2000 trades at a meaningful discount to its historical average relative to the S&P 500. That's a favorable setup.

The sectors leading within small-caps tell you something too. Regional banks are up 25% as the yield curve steepens. Small-cap industrials and energy names are benefiting from domestic manufacturing tailwinds. We are seeing real improvement in the earnings power of smaller companies that seems to have legs as we push further into the year.

How to play it:

IJR for concentrated allocation to small caps with earnings, my personal favorite pick for this trade. IWM for Russell 2000 broad exposure, AVUV Avantis US Small Cap Value for quality tilt.

You can also allocate to individual regional banks if you want to get specific.

This is my most contrarian take and it actually isn’t one of the most prominent trades shaping the market right now. But I think it will be.

While everyone obsesses over Nvidia's data center dominance and Microsoft's enterprise AI push, Apple is quietly building the most defensible position in consumer AI. And the market hasn't fully priced it in because Apple hasn’t been as aggressive as it’s peers in AI capex. I would argue they don’t really need to be.

Apple's Q1 2026 revenue came in at $143.8 billion, a 16% year-over-year increase. The company's market cap is approaching $4 trillion. But the real story is the iPhone 17 launch with Apple Intelligence baked into iOS 26, including the rebuilt Siri 2.0.

I get it. Siri in it’s current form is basically useless. You can’t even ask it a follow up question and it doesn’t take into account any context or background from prior conversations that would improve the quality of it’s response. But Siri 2.0 will be an entirely different animal. Siri 2.0 will develop into an agentic AI powerhouse for Apple, and will be among the most widely used consumer AI tools across the globe.

Think about what Apple actually controls. Over 1.2 billion active iPhones. The most premium consumer hardware ecosystem on the planet. And now, on-device AI processing that doesn't send your data to cloud servers. In a world increasingly worried about AI privacy, Apple's on-device approach could be a massive differentiator.

The bull case is simple. Every major AI service from Google's Gemini, OpenAI's ChatGPT, whatever comes next, has to go through Apple to reach half the premium smartphone market. Apple becomes the toll booth, taking a cut of every AI subscription while building its own competing capabilities. This is the App Store playbook all over again.

I'll be honest about the risks. There's a real debate about whether Apple is behind Google and Microsoft in cloud AI capabilities. And the recent executive departures of their COO, AI chief, and design VP all leaving will obviously create genuine uncertainty. Could go either way on execution, but I’d bet on Apple doing what they always do. Waiting, assessing, and then letting everyone come to them.

How to play it: AAPL directly if you believe in the consumer AI gatekeeper thesis. Watch the iPhone 17 adoption cycle closely, because if Apple Intelligence drives a meaningful upgrade supercycle, the stock has no choice but to re-rate higher.

The semiconductor supercycle isn't slowing down. In fact, it's entering a new phase.

Bank of America projects global semiconductor sales will hit $1 trillion in 2026. That would mean 30% year-over-year growth. But what's really interesting is where the growth is concentrated. Memory is exploding. High-bandwidth memory (HBM) revenue is projected to reach $54.6 billion in 2026, a 58% increase. DRAM revenues are expected to climb 51%, NAND 45%.

Memory specifically is taking off because AI training and inference require massive amounts of high-speed memory, and supply is genuinely constrained. We're looking at potential 50% price spikes by mid-year as demand outstrips production capacity. Micron just raised capital expenditures to $20 billion, which is a 45% increase, while Samsung is boosting HBM capacity by 50%. They're investing this aggressively because they can see the demand.

And the power angle is insane. OpenAI alone reportedly needs 30.5 gigawatts of power capacity. To put this in context, that's roughly 75% of peak US nuclear capacity. Every data center requires chips, memory, cooling, and enormous amounts of electricity. This cascades through the entire supply chain.

How to play it: Nvidia (NVDA) and Broadcom (AVGO) for AI compute. Micron (MU) for the memory supercycle specifically. Lam Research (LRCX) and KLA (KLAC) for semiconductor equipment. For broader exposure you can consider SMH (VanEck Semiconductor ETF). And don't sleep on the power infrastructure angle - in my view Constellation Energy (CEG) and Vistra (VST) are the picks there.

The Great Sector Rotation is real, and it's not done.

Materials (XLB) and Energy (XLE) are leading early 2026 after lagging badly in 2025. Energy stocks are up roughly 21% year-to-date, with names like Chevron and SLB driving the move. Industrials (XLI) are extending a strong 2025 run into the new year.

Multiple tailwinds are converging to drive this trend. The domestic manufacturing renaissance is real from reshoring, to the the CHIPS Act buildout, and infrastructure spending. It all requires physical stuff. Steel, copper, industrial gases, heavy equipment. You can't build a semiconductor fab or a data center with software.

Copper deserves special attention. AI data centers are copper-intensive for electrical wiring and cooling systems. The energy transition requires massive copper inputs for EVs, solar, and grid infrastructure. And copper supply hasn't kept pace with demand because miners underinvested for years. Rio Tinto, Freeport-McMoRan, and Nucor (which attracted Warren Buffett's Berkshire Hathaway in 2025) are positioned for this.

Natural gas is another angle most growth investors are ignoring. Data center power demand is driving midstream energy growth, and the companies moving gas to power plants are printing money.

How to play it: XLE and XLI for broad sector exposure. FCX (Freeport-McMoRan) for copper. NUE (Nucor) for domestic steel. Individual energy names: CVX, SLB, or TRGP for midstream. Overweight materials allocation makes sense in the current environment.

Financials are quietly having a great year, and the setup keeps improving.

The combination of a steeper yield curve, moderating (but not collapsing) interest rates, and strong loan demand is exactly what banks need. Goldman Sachs and Morgan Stanley posted strong Q4 2025 earnings. Regional banks, which I mentioned in the small-cap section, are benefiting even more as net interest margins expand.

The European bank story is actually more compelling on a risk-reward basis. Barclays, Santander, and SocGen are trading at significant valuation discounts to US peers while delivering better dividend yields and improving fundamentals. The ECB rate cuts are creating a favorable environment for European bank earnings.

One risk to watch here is the proposed credit card interest rate caps in the US could create headwinds for consumer lending margins. Not a done deal, but worth monitoring.

How to play it: XLF for broad US financial exposure, KRE for regional bank concentration. EUFN for European banks if you want that cheaper valuation angle. Individual names like Morgan Stanley, JP Morgan, and Goldman Sachs remain the gold standards domestically.

Step back and look at these seven trades together, and we can start to connect the pattern. Every single one represents a broadening of market returns beyond the narrow mega-cap tech concentration that defined 2023-2024. International over US. Small over large. Cyclicals over growth. Physical infrastructure over pure software. Defense over consumer discretionary.

This doesn't mean sell all your tech. Microsoft and Nvidia aren't going anywhere. But the market is telling you VERY loudly that the winners' circle is expanding and shifting. The portfolios that outperform in 2026 won't be the ones concentrated in seven tech stocks.

Could I be wrong? On any individual trade, yes. But on the broader direction of rotation? The weight of evidence is pretty overwhelming. Position accordingly.

The Earnout Investor provides analysis and research but DOES NOT provide individual financial advice. Jamie Dejter may have a position in some of the stocks mentioned. All content is for informational purposes only. The Earnout Investor is not a registered investment, legal, or tax advisor, or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.