Midyear Check-In: 5 Stocks Poised for a 2026 Comeback

The first half of 2026 presented a dynamic, albeit at times volatile, landscape for the stock market. Several of our portfolio holdings, which had languished at their 2025 lows, experienced significant recoveries. Conversely, a few others succumbed to persistent headwinds, prompting a strategic divestment. Despite geopolitical tensions, including fluctuations related to the Iran conflict, a resurgence in inflation, and prevailing concerns surrounding AI’s disruptive potential, the S&P 500 managed an impressive climb of approximately 9.5% year-to-date. As of Tuesday’s market close, the benchmark index had touched 24 all-time highs in 2026. The Nasdaq Composite, showing robust performance with nearly a 13% gain year-to-date, secured 20 record highs of its own. Within our diversified portfolio of 35 stocks, a notable 18 surpassed the S&P 500’s year-to-date performance. Companies like Intel, which surged an astonishing 278%, Arm Holdings, up nearly 224%, and Corning, with a remarkable gain of almost 192%, experienced parabolic ascents. On the other hand, eight stocks concluded the first half in negative territory. Two recent spinoffs, Honeywell Aerospace and FedEx Freight, were excluded from performance calculations due to their nascent status in the market.

Back in December, we identified five key companies—Palo Alto Networks, Eaton, Starbucks, Nike, and Amazon—as prime candidates poised for a strong rebound in 2026. Here’s our midyear performance review, based on Tuesday’s closing prices:

### Winners:

**Palo Alto Networks: Up 85.1%**
What initially acted as a drag on this cybersecurity leader ultimately propelled its ascent throughout 2026. Earlier in the year, shares of Palo Alto Networks and fellow portfolio holding CrowdStrike faced significant pressure due to anxieties that AI technologies might disrupt the enterprise software landscape. Our long-held conviction was that cybersecurity stocks were unfairly punished alongside the broader tech sector. The introduction of Anthropic’s “Mythos” AI, boasting an advanced capability to identify system vulnerabilities, revitalized enthusiasm for cybersecurity solutions, leading to a powerful resurgence in stock prices. We judiciously booked profits on Palo Alto Networks at its record highs on Tuesday. Furthermore, concerns surrounding potentially overvalued acquisitions, such as that of CyberArk, which had weighed on Palo Alto’s valuation late last year, proved to be unfounded. Palo Alto’s most recent earnings report showcased a robust 27% year-over-year increase in CyberArk’s annual recurring revenue, underscoring the strategic value of the acquisition. (Palo Alto Networks shares continued their upward trajectory on Wednesday, reaching an intraday all-time high.)

**Eaton: Up 33.8%**
Investors have finally begun to fully recognize Eaton’s burgeoning role as a significant beneficiary of the AI revolution. This industrial powerhouse is strategically positioned to capitalize on the escalating hyperscaler investments by providing essential electrical solutions that underpin the massive infrastructure required for AI data centers. Despite substantial growth in data center orders last year, the stock had remained relatively flat. We are pleased to see it finally achieving the recognition it deserves. Another compelling play in the data center power infrastructure space is GE Vernova, which manufactures natural gas turbines capable of generating critical off-grid energy. GE Vernova’s stock has experienced a substantial surge of nearly 80% year-to-date.

**Starbucks: Up 21.4%**
Shares of the global coffee giant have effectively erased the losses incurred in 2025, driven by the steady progress of CEO Brian Niccol’s comprehensive turnaround plan. The company has successfully enhanced the in-store customer experience, demonstrably increased foot traffic, and reignited comparable-store sales growth. While the recovery has been a gradual process, our continued belief in Starbucks is anchored by Niccol’s proven track record. His prior tenure as CEO at Chipotle, where he orchestrated a remarkable transformation, speaks volumes about his strategic acumen and operational excellence.

### Laggards:

**Nike: Down 35.6%**
The performance of this iconic athletic brand has been so disappointing that we made the decision to exit our position on Wednesday. We have held reservations about Nike’s trajectory for some time, but a lackluster earnings report released Tuesday evening served as the final catalyst for our divestment. The company continues to grapple with significant challenges in its crucial China market, a persistent issue that has eluded effective resolution. Realizing a 40% loss on an investment is never an easy decision. However, pragmatism dictates cutting our losses and redeploying capital into more promising opportunities rather than waiting for an uncertain catalyst. (Nike shares experienced an initial dip shortly after Wednesday’s opening bell but subsequently reversed course and traded higher during the session.)

**Amazon: Up 3.3%**
While Amazon concluded the first half of the year in positive territory, with modest gains registered on Wednesday, its performance has lagged behind the broader S&P 500’s year-to-date advance. The stock has encountered periodic pullbacks, mirroring the sentiment among other hyperscale technology companies, driven by concerns regarding the company’s ability to generate a sufficient return on investment from its substantial AI expenditures. Nevertheless, the sheer dominance of Amazon’s cloud computing business remains undeniable, solidifying its position as a market juggernaut. Furthermore, the company’s in-house developed custom silicon solutions are demonstrating remarkable strength and innovation.