Beta Out, Quality In: Positioning for the Next Market Cycle

Piper Sandler's Kantrowitz expects quality and profitability factors to outperform speculative high-beta and AI-adjacent stocks through 2027.

• Peak momentum call: Michael Kantrowitz says the 15-month reacceleration cycle (mid-2025 to mid-2026) in earnings and macro data has peaked, with S&P forward earnings growth near 35% and long-term growth expectations at 26% (up from 18% a year ago).
• Headwinds building: Higher oil prices, higher interest rates, and a Fed rate hike are tightening forces that take several quarters to show up in earnings, expected to weigh through 2027.

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