By Jeff Speight
Everyone’s talking about AI. It dominates financial headlines, is the topic of choice at cocktail parties, and your nephew probably told you over the holidays about some AI stock that’s “going to the moon.” No doubt, AI deserves adoration as it has evolved into today’s most compelling investment theme, with its beneficiaries dominating market performance. But our long history of managing portfolios has taught us that when everyone’s looking in one direction, the real opportunities are often somewhere else entirely.
AI is clearly important. But if you’re building a portfolio for the next decade, you need strong themes that are less crowded and backed by predictable and enduring trends.
While we can’t cover them all, we thought we’d share a few compelling investment themes we are bullish on early in 2026.
Defense Spending: The Most Predictable Megatrend Nobody Wants to Talk About
There’s a reason defense stocks don’t get the same breathless coverage as tech darlings. They’re not as flashy. There are no viral product launches, no charismatic founders dressed in black espousing how their company will change the world. There are just contracts, procurement cycles, and geopolitical reality.
And that reality is stark. We live in a dangerous world that grows more complex by the day. Peace through strength may be the only viable path forward. According to United Nations projections, global military spending is expected to grow to as much as $6.6 trillion by 2035. That’s a greater than 8% annual growth rate from 2024’s $2.7 trillion over the next decade.
While the US is a major force behind the elevated spending, we are no longer the only one taking the threats we face seriously. With a war raging on their doorstep, our European NATO allies recently agreed to a 5% of GDP defense spending target by 2035, up from roughly 2% today. That’s not about predicting the next conflict; it’s a generational commitment.
Consider the U.S. Golden Dome initiative. This modern missile defense system is designed to protect the homeland from ballistic, hypersonic, and cruise missiles. Congress allocated $25 billion as an initial down payment earlier in 2025, with the Missile Defense Agency recently opening bidding on a 10-year, $151 billion contract for the program. The full system could cost well over $1 trillion, depending on scope. That’s a single program that will require satellite constellations, space-based interceptors, advanced sensors, and more.
The companies winning contracts today will be delivering on them through 2035 and beyond.
Demographics: The Tide You Can Actually Time
According to the United Nations, by 2054, one in six people globally will be 65 or older, up from one in ten today. This isn’t a projection based on economic models. It’s arithmetic, and the implications are massive.
Healthcare is the obvious play, but the opportunity extends beyond pharmaceuticals, with demand for senior living facilities and home healthcare services expected to explode. Medical technology for prolonging life, remote monitoring, telehealth platforms, and medication management systems are all necessities.
The housing market will also be completely reshaped. Single family rentals are booming as millennials face a widening affordability gap, with both home prices and mortgage rates up considerably since 2022. On the other hand, boomers will inevitably trade the homestead for condos, retirement communities, and assisted living facilities.
Energy Transition: Not the Story You Think
We aren’t pitching you wind farms or solar panels because they’re “green.” We are highlighting energy transition because the economics have fundamentally shifted, and the infrastructure buildout required to power today’s economy is one of the largest capital deployment opportunities in modern history.
The power grid can’t handle what’s coming. Data centers are projected to drive an increase in power demand of 2.5% annually through 2035. Electric vehicles and industrial electrification also require massive grid upgrades and new generation capacity. Obviously, this issue cannot be tackled with windmills and solar panels alone.
The nuclear renaissance is real. Utilities are accelerating development of both traditional nuclear and advanced small modular reactors to meet baseload demand that intermittent renewables can’t satisfy. Formerly decommissioned nuclear power plants are returning to the grid (yes, even parts of Three Mile Island) to bridge the gap, but meeting the burgeoning demand for power is a decades-long issue that is only beginning to be addressed.
The Common Thread
What ties these themes together? They’re all driven by forces that compound over time. They’re backed by structural changes like geopolitical realignment, demographic shifts, and energy system transformation, that won’t reverse in a downturn or election cycle.
They also share reasonable entry points. While AI stocks look very expensive, defense contractors still look reasonably priced despite unprecedented order visibility, healthcare companies trade at depressed levels, and energy infrastructure offers regulated returns and government backing at attractive valuations.
We aren’t suggesting you ignore AI, but the patient investor who seeks to build wealth over decades rather than chasing quarters needs to look beyond the obvious and find the themes where the tailwinds are just as strong, the visibility is just as clear, and the valuations still make sense.
That’s how wealth is built. Not by chasing the hottest story, but by identifying structural shifts early enough to build positions at reasonable prices and let time and compound growth do the heavy lifting.
If you have any questions about portfolio advice and management, give us a call or email us at info@portfolioadvisor.com.
