VAP January Newsletter

January 2026 Market Review: The Golden Age of the Digital Revolution Begins

How AI deployment, semiconductor dominance, and a broad economic expansion are reshaping portfolios and the American economy

TL;DR

• The ValueAligned Model Portfolio returned 2.2% in January 2026 vs. 1.4% for the S&P 500, driven by semiconductor and healthcare holdings ( ASML Q4 Results, TSMC Earnings).
• ASML posted record Q4 bookings of €13.2 billion, including €7.4 billion in EUV orders, with a year-end backlog of €38.8 billion ( CNBC).
• Novo Nordisk’s oral Wegovy pill—the first oral GLP-1 for weight loss—launched nationwide after FDA approval on December 22, 2025 ( Novo Nordisk).
• Gold hit $5,000 per ounce in January 2026. Over 46 years, $800 invested in gold in 1980 grew to ~$5,000. That same $800 in the S&P 500 grew to ~$150,000 ( CNN).
• Cycle theorists describe the current stage as the “Golden Age” of the Digital Revolution—a deployment phase in which technology delivers broad economic gains —a pattern repeated over 250 years of industrial history ( Carlota Perez).
• Apple pledged $600 billion for U.S. manufacturing. Project Stargate plans $500 billion in AI infrastructure. Total announced investments approach $8.8 trillion ( Apple Newsroom, OpenAI Stargate).

David L. Berkowitz, Chief Investment Officer and Financial Advisor

Nearly 40 years of experience — from trading and research at a $250 million hedge fund in the early 1990s, to two decades as a portfolio manager, to teaching thousands of executives and employees how to create shareholder value through EVA and value-based management. Now helping individuals and families become shareholders through disciplined investing, concentrated portfolios, and direct stock ownership.

January Portfolio Update: Outperforming the S&P 500

Our goal hasn’t changed: grow your wealth 15% to 25% per year. At that pace, capital doubles every three to five years.

The ValueAligned Portfolio delivered a 2.2% return in January 2026, outperforming the S&P 500’s 1.4% gain. The portfolio’s emphasis on semiconductor technology, healthcare, and diversified industrial exposure benefited from January’s rotation away from pure software toward hardware, semiconductors, and cyclical value.

Top holdings (roughly 62.5% of total weight) generated a weighted average year-to-date return of 3.84%, while the remaining 37.5% delivered 1.85%. Concentration remained balanced, with General Motors (6.12%), AutoZone (5.08%), Eli Lilly (5.05%), AMD (5.02%), and Alphabet (4.59%) accounting for 26.86% of total assets.

January 2026 Performance Snapshot

Top Performers: January 2026

ASML Holding NV (ASML): +33.0%

ASML dominated the portfolio in January, delivering a 32.73% gain and extending its one-year return to 93.08%. The Dutch semiconductor equipment maker exited 2025 with clear re-acceleration. Q4 2025 net bookings hit €13.2 billion—an all-time record—including €7.4 billion in EUV orders ( ASML Press Release). The year-end backlog reached €38.8 billion, exceeding the lower limit of 2026 revenue guidance.

Full-year 2025 revenue of €32.7 billion (approximately $38.8 billion) increased 16% year over year, with gross margins of 52.8% and earnings per share of €24.73 ( CNBC). Management raised the 2026 revenue forecast to €34–39 billion, with the midpoint exceeding analysts’ consensus of €35.1 billion. CFO Roger Dassen called Q4 2025 a record quarter for new orders.

ASML manufactures photolithography systems essential to creating the most advanced chips globally and holds a near-monopoly in extreme ultraviolet (EUV) lithography. No other company produces sub-7nm chips at scale without ASML equipment. The company announced a new €12 billion share buyback program through 2028 ( Seeking Alpha Transcript).

Novo Nordisk A/S (NVO): +16.03%

Novo Nordisk surged 16.03% in January, driven by the nationwide launch of its Wegovy oral GLP-1 obesity pill. The FDA approved the pill on December 22, 2025—the first oral GLP-1 medicine for weight loss ( Novo Nordisk Press Release). In the OASIS 4 clinical trial, the Wegovy pill demonstrated an average weight loss of approximately 16.6% in patients who remained on treatment, compared with 2.7% on placebo ( Fierce Pharma).

CEO Mike Doustdar expressed optimism that the oral formulation will broaden the market significantly, as many patients prefer not to use injections. Novo Nordisk reports Q4 2025 earnings on February 4, 2026.

Taiwan Semiconductor Manufacturing (TSM): +10.34%

TSMC advanced 10.34% in January, with one-year returns reaching 58.81%. On January 15, 2026, the world’s largest contract chipmaker reported Q4 2025 revenue of $33.7 billion—slightly ahead of guidance—with gross margin climbing to 62.3% ( TSMC Earnings). Management guided to approximately 30% revenue growth in USD terms, with capital expenditure of $52–56 billion ( Futurum Research).

TSMC is rapidly expanding 2nm production and maintains approximately 60% market share in the global foundry industry. Advanced technologies (7nm and below) accounted for 77% of wafer revenue in Q4, with 3nm alone at 28%. AI accelerator revenue approached high-teens percent of total 2025 revenue, forecast to grow at a mid-to-high 30s percent CAGR through 2029.

Software Sector Under Pressure

Salesforce.com Inc. (CRM): -19.86%

Salesforce dropped 20.17% in January as investors reassessed AI-disruption risks across enterprise software. Fundamentals remained solid—fiscal Q3 2026 results showed record revenue, and the Agentforce platform surpassed 3.2 trillion tokens. But the January selloff reflects mounting concerns that generative AI represents more disruption risk than opportunity for traditional CRM, ERP, and analytics software. The company returned $4.2 billion to shareholders in Q3 FY26 through $3.8 billion in share repurchases and $395 million in dividends. Salesforce reports Q4 fiscal 2026 results on February 24, 2026.

Roper Technologies Inc. (ROP): -16.60%

Roper declined 17.52% in January after disappointing forward guidance despite solid Q4 operational results. Q4 2025 EPS of $5.21 beat consensus of $5.14, and revenue rose 9.7% year-over-year to $2.06 billion. But Q1 2026 EPS guidance of $4.95–$5.00 came in well below the $5.19 consensus estimate. Royal Bank of Canada downgraded shares from outperform to sector perform.

The Golden Age of the Fifth Techno-Economic Revolution

Five large-scale technological revolutions have shaped modern economic history. The current one—the Digital Revolution—began in the early 1970s with the integrated circuit. It gave us personal computers, the internet, smartphones, and now artificial intelligence.

Every revolution follows a two-part pattern. First comes the installation phase: creative destruction, speculative excess, and a market crash. The Dot-Com bust ended that chapter for digital. Then comes the deployment phase: creative construction, broad adoption, and real economic expansion. That’s where we stand now.

Economist Carlota Perez has documented this recurring pattern across 250 years of industrial history ( Technological Revolutions and Financial Capital). Each 50–60-year cycle moves from irruption to frenzy to a turning point, then into synergy and maturity. Cycle theorists call the synergy stage the “Golden Age.” The technology has gained wide acceptance. Customer demand—not venture capital—drives innovation. The gains shift from a handful of builders to the broader economy. This is not a prediction. It’s a pattern.

The BRAIN Revolution Is Starting Early

The Digital Revolution laid the foundation for the next cycle: BRAIN—Biotechnology, Robotics, Artificial Intelligence, and Nanotechnology. What makes this moment unusual is the timing. The speculative phase of the BRAIN revolution is beginning even as the Golden Age of the Digital Revolution is concluding. That overlap creates compounding growth potential across sectors—a rare techno-economic conjunction.

Generational Cycles Reinforce the Pattern

Neil Howe and William Strauss’s generational theory divides history into 80- to 100-year cycles, each with four “turnings.” The U.S. is near the end of a Fourth Turning—a crisis period that began around 2008. What follows is a First Turning: a post-crisis period of rebuilding, improved public mood, and rising institutional trust. Think of the two decades after World War II. That shift in public consensus will create the institutional framework needed to ride the technological wave already underway.

Market Outlook: The Case for 2026

The case for stocks in 2026 rests on four factors, all pointing in the same direction.

Fundamentals. Fiscal and monetary policy trends are favorable. Productivity is rising. Deregulation is accelerating. Wage growth is solid, and capital spending is picking up. 2026 is expected to be the first year when AI delivers visible benefits across the broader economy.

Seasonality. Midterm election years are typically unfavorable for markets. The current administration and Congress are seeking to shift that dynamic through targeted policy interventions.

Investor Sentiment. Fund managers and advisors have moved to extremely bullish positioning. High sentiment readings can be a contrarian warning. This time, the enthusiasm is grounded in a real technological revolution, which may allow it to sustain longer than typical sentiment cycles would suggest.

Market Signals. Time-tested technical indicators—including the Zweig Breadth Thrust, Corporate Insider Buy/Sell Ratio, and the NAAIM Exposure Index—are all reading bullish. No contradictory signals have appeared.

Despite alignment with consensus, a contrarian but cautiously optimistic stance makes sense. The outlook for 2026 is bullish. The outlook for 2027 warrants caution. Elevated enthusiasm at this stage of the cycle can lead to overheating.

Gold vs. Equities: The Comparison That Matters

Gold surged past $5,000 per ounce on January 26, 2026—driven by geopolitical uncertainty, central bank buying, and a weaker U.S. dollar ( CNN, CBS News). Clients ask about it regularly. Here’s the math.

In January 1980, $800 bought gold near its peak. That investment has grown to approximately $5,000 over 46 years. That same $800 placed in the S&P 500 with reinvested dividends grew to roughly $150,000. The gap is not subtle.

Our estimate: investors buying gold at $5,000 today will likely find themselves behind the inflation curve for the next 20 to 40 years. Gold preserves purchasing power in short bursts. Equities build wealth across generations.

Five Forces Reshaping the American Economy

1. The AI Capital Spending Ramp

Monthly job growth has slowed from 150,000–200,000 new positions to 30,000–50,000. But productivity is surging. Workers produce more with fewer people. Real wages rise faster than prices. A simple AI query uses ten times more computing power than a standard search. Have an AI agent book your vacation? That’s 1,000 times the compute. The buildout required to meet that demand is comparable in scale to the World War II mobilization.

2. Manufacturing Is Coming Home

For thirty years, companies chased the cheapest labor overseas. That trend has reversed. Apple pledged $600 billion for U.S. manufacturing over four years ( Apple Newsroom). Project Stargate plans $500 billion in AI infrastructure ( OpenAI). Business spending on factories, equipment, and technology has reached $4.2 trillion annually—roughly 14% of GDP. Total announced investments approach $8.8 trillion.

3. Regulation Is Getting Cut

Regulations cost American businesses roughly $2 trillion every year. A major push to reduce that burden is underway. Faster approvals mean faster growth. Tariffs encourage domestic manufacturing. Tax incentives reward capital spending. Trade, fiscal, and monetary policy rarely align this cleanly.

4. Smarter Workers

AI and robotics won’t just replace jobs. They’ll increase each worker’s output. Lower birth rates and reduced immigration would usually slow the economy. Technology offsets those headwinds.

5. Innovations We Can’t Yet Imagine

New products, services, and entire industries will emerge from these changes. Some of tomorrow’s most prominent companies don’t exist yet. The beneficiaries span multiple sectors: chipmakers, power infrastructure, component suppliers, and materials firms. This isn’t just a tech story. It’s a broad reindustrialization of the American economy.

The COVID Collapse: A Lesson in Resilience

Starting February 19, 2020, the S&P 500 fell 34% in 33 calendar days. That speed and magnitude hadn’t occurred since 1929. The narrative was uniform: “This time it’s different.”

It was not. Following unprecedented fiscal and monetary stimulus, the market reversed sharply off its lows and broke through to new highs within six months.

From its February 2020 peak to January 2026, the S&P 500 more than doubled to 6,900, compounding at a 15% annual rate. That return includes a 25% decline in 2022. The appropriate response to market panic is the same every time: stay invested. Crises pass. Compounding does not stop.

The 62-Year Scorecard

The youngest Baby Boomers, born in 1964, turn 62 this year. Their lifetime provides a useful frame for evaluating equity ownership.

Over six decades—including multiple wars, recessions, and three occasions when the index lost half its value—equities outpaced inflation by a wide margin. The price index grew 81x. The dividend stream grew 30x. The cost of living grew 10x. The core message has not changed in 62 years: stay invested, ride out the downturns, and let compounding do the work.

Looking Ahead

The forces reshaping America’s economy—AI investment, the manufacturing revival, supportive policy—remain in place. These aren’t short-term trends. There are structural shifts that will unfold over the years. Your portfolio is positioned accordingly.

As always, we’re here to answer questions and keep you informed.

— Berk

Endnotes

1. ASML Q4 2025 Press Release – Official ASML quarterly results showing record bookings and 2026 guidance. https://www.asml.com/en/news/press-releases/2026/q4-2025-financial-results

2. CNBC – ASML Q4 2025 Earnings Report – CNBC analysis of ASML’s record Q4 bookings and revenue guidance. https://www.cnbc.com/2026/01/28/asml-q4-2025-earnings-report.html

3. ASML Q4 2025 Earnings Call Transcript – Seeking Alpha transcript of ASML earnings call with CFO Roger Dassen. https://seekingalpha.com/article/4864277-asml-holding-n-v-asml-q4-2025-earnings-call-transcript

4. TSMC Q4 2025 Quarterly Results – Official TSMC investor relations page for Q4 2025 results. https://investor.tsmc.com/english/quarterly-results/2025/q4

5. Futurum – TSMC Q4 FY 2025 Results – Analyst coverage of TSMC’s 2026 guidance and AI-led growth. https://futurumgroup.com/insights/tsmc-q4-fy-2025-results-and-fy-2026-outlook-signal-ai-led-growth/

6. Novo Nordisk – Wegovy Pill FDA Approval – Official Novo Nordisk announcement of oral Wegovy FDA approval. https://www.novonordisk.com/content/nncorp/global/en/news-and-media/news-and-ir-materials/news-details.html?id=916472

7. Fierce Pharma – Wegovy Pill Approval – Fierce Pharma coverage of first oral GLP-1 for weight loss. https://www.fiercepharma.com/pharma/novo-nordisk-wins-fda-approval-wegovy-pill-introducing-first-oral-glp-1-option-obesity

8. CNN – Gold Breaks $5,000 – CNN reporting on gold reaching $5,000 amid geopolitical uncertainty. https://www.cnn.com/2026/01/25/business/gold-record-trump-global-concerns-intl-hnk

9. CBS News – Gold Record Price – CBS News coverage of gold’s $5,000 milestone in January 2026. https://www.cbsnews.com/news/gold-breaks-5000-per-ounce-record-price-everything-to-know-now/

10. Carlota Perez – Technological Revolutions – Wikipedia overview of Perez’s theory of techno-economic paradigm cycles. https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital

11. Apple Newsroom – $600 Billion U.S. Investment – Apple’s official announcement of $600 billion U.S. manufacturing commitment. https://www.apple.com/newsroom/2025/08/apple-increases-us-commitment-to-600-billion-usd-announces-ambitious-program/

12. OpenAI – Stargate Project – OpenAI’s announcement of the $500 billion AI infrastructure initiative. https://openai.com/index/announcing-the-stargate-project/

13. World Gold Council – January 2026 Commentary – WGC analysis of gold market dynamics and investment demand. https://www.gold.org/goldhub/research/gold-market-commentary-january-2026

14. Morningstar – Gold Surge Analysis – Morningstar fund manager analysis of structural factors driving gold. https://global.morningstar.com/en-nd/markets/gold-price-surges-above-5500-heres-why

Performance Disclosure

The ValueAligned Model Portfolio (VAP) represents hypothetical performance results based on a model portfolio, not actual client accounts. These results are calculated in accordance with Model Portfolio standards and reflect dividend reinvestment. Performance is net of advisory fees (1.25%) and custody fees (0.25%), but does not account for brokerage costs, transaction charges, or taxes. Actual client returns may vary based on these additional expenses.

Model results have inherent limitations. They do not represent actual trading and may not reflect the impact of material economic and market factors. Hypothetical performance is developed with the benefit of hindsight and cannot account for all financial risks that may arise during actual execution.

Past performance does not guarantee future results. Investing involves risk, including potential loss of principal.

David Berkowitz CIO

I’m Berk — Investor, Educator, and Owner. For 40 years I’ve helped families think like owners and invest in great companies. Earlier in my career I was head trader for a $250 million hedge fund, advised Fortune 500 boards and C-level executives and taught 10,000 of their employees at multi-billion-dollar companies, and trained non-financial employees in value-based management.

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