· @Zach Coggins
This commentary draws on themes and data from Horizon Investments' "Straight from Scott: Mid-Quarter Commentary" (Q4 2026), written by Horizon Chief Investment Officer Scott Ladner and published November 12, 2026. We've added our own perspective for Milestone clients.
Where things stand
The first half of the fourth quarter has been bumpy, and most of the turbulence traces back to one question: how should investors value the enormous amount of money being spent to build out artificial intelligence? We agree with Horizon's Scott Ladner that this is a pricing debate, not a sign that the technology or the economy is breaking down.
Below we walk through what we think is driving the swings, why we believe the underlying picture remains healthy, and how we are thinking about your portfolio.
Spending is still rising, just not as fast
A lot of headlines blur an important distinction. The total dollars going into data centers, computer chips, power and related infrastructure are still expected to be meaningfully higher in 2027 than in 2026. The buildout is not ending.
What is changing is the pace of growth. Forecasts cited by Horizon Investments suggest AI-related spending roughly doubled from 2025 to 2026, while the increase into 2027 may be closer to 30%. Those estimates will keep moving, but the direction is broadly agreed on.
Think of a car that is still speeding up, just pressing the gas a little less hard. For markets that had priced in ever-faster acceleration, that slowdown can feel like braking, even though the vehicle is still moving forward. We see this as a normal stage of any large investment cycle.
Investors now want proof
For the past couple of years, large technology companies were often rewarded simply for announcing bigger investment plans. That pattern has reversed. In several recent earnings reports, news of additional spending was met with skepticism instead of enthusiasm.
Investors are now asking harder questions: What return will this next dollar earn? How long until it pays off? What does it cost to borrow the money? We think those are healthy questions to ask about investments of this size.
The bond market is drawing sharp lines here. A highly profitable company funding projects from its own cash is in a very different position than a heavily indebted operator that depends on continued access to credit. We see that distinction as sensible risk pricing, not a judgment that AI itself has failed. Because there is no perfect historical comparison for a buildout this large and this fast, we expect prices to keep swinging as investors work through it.
Why we think the foundation is solid
Corporate profit margins remain strong, and not just in technology. When stock prices are measured against what companies are actually earning, valuations look more reasonable than a quick glance at index levels might suggest.
Productivity is also encouraging. As Horizon points out, U.S. labor productivity has grown at roughly double its 2010s pace since 2023. Not all of that is due to AI, but it is the kind of early evidence we would expect to see as a new technology spreads through the economy, and it can support company profits over time.
None of this makes stocks risk-free. Companies that take on too much debt or invest in poor projects can still lose money. But strong earnings and rising productivity give us more confidence that today's volatility reflects repricing, not a breakdown in fundamentals.
On interest rates, we think the reason behind them matters more than the level. Higher rates driven by real economic growth are very different from higher rates driven by inflation or government debt worries, and we are watching that closely.
How we're approaching your portfolio
We don't make long-term decisions based on a few weeks of market movement. Here is what guides us right now:
- Stay diversified. Spreading investments across asset classes and sectors helps limit the impact of any single area, including technology, on your overall plan.
- Favor quality. We pay attention to companies' balance sheets and how they fund growth, since that distinction is mattering more to markets.
- Expect volatility. Large investment cycles tend to come with sharp price swings. Those swings can also create rebalancing opportunities.
- Keep your plan in front. Your allocation is built around your goals, time horizon and comfort with risk, not around the headlines of the month.
If your circumstances have changed, or if recent swings have you uneasy, please reach out. A conversation is always better than a guess.
The bottom line
We believe the fundamentals, including corporate profits, productivity and consumer strength, remain sturdy. Markets are learning how to value a historic buildout, and that process is messy. We don't want to confuse short-term volatility with a verdict on the economy or the technology.
Thank you for your continued trust.
Zach Coggins, CRPC® and David Grookett, CLU, ChFC Milestone Wealth Advisors
Portions of this commentary are adapted from material by Horizon Investments, LLC, a separate SEC-registered investment adviser, and are used with attribution. Views credited to Horizon are Horizon's own; all other opinions are those of Milestone Wealth Advisors. All opinions are as of the date of publication and are subject to change without notice. This material is for informational purposes only and is not a recommendation to buy or sell any security. Forward-looking statements and forecasts, including those attributed to third parties, are not guaranteed. Diversification does not ensure a profit or protect against loss. All investing involves risk, including possible loss of principal. Past performance is not indicative of future results.