Market Call – August 12, 2026 - Stan Wong
Stan Wong, Portfolio Manager at Scotia Wealth Management
Focus: North American large caps and ETFs
Top Picks: Amazon, Caterpillar, Global X U.S. Electrification ETF
MARKET OUTLOOK:
With the second half of the year now well underway, the environment for equities remains constructive, underpinned by resilient economic growth, improving corporate earnings, and a less restrictive rate environment. While uncertainty remains elevated, investors appear increasingly focused on fundamentals, with earnings strength becoming a key driver of market confidence.
Oil prices remain an important variable. After spiking earlier in the year, crude prices have eased from peak levels but remain volatile, acting as a partial pressure valve for inflation concerns while still requiring close monitoring. Energy also remains vulnerable to renewed supply disruptions, particularly around key global shipping and energy chokepoints.
At the same time, the earnings picture continues to strengthen, with corporate America delivering one of the strongest earnings-growth environments in many years. Forecasts suggest the earnings cycle still has runway through the remainder of 2026 and into 2027, driven by artificial intelligence, digital infrastructure, electrification, and the broader capital spending cycle tied to supply-chain realignment. Money market fund assets recently topped US$7.9 trillion, representing significant dry powder that could rotate into risk assets if earnings remain resilient.
While the outlook remains constructive, investors must navigate several crosscurrents, including renewed oil-price volatility, sticky inflation, elevated bond yields, geopolitical uncertainty, seasonal volatility as markets approach the historically softer September period, and the approaching U.S. midterm elections. Against this backdrop, at The Stan Wong Group, we believe a disciplined active portfolio management approach remains important, with flexibility to make tactical adjustments as conditions evolve. We continue to focus on high-quality large-cap equities, favouring businesses with resilient cash-flow generation, competitive advantages, and strong growth prospects, within the context of each client’s broader total wealth plan.
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TOP PICKS:
Amazon (AMZN NASD)
Amazon is evolving from an online retailer into one of the world’s most important technology and digital-infrastructure companies. Fiscal 2027 revenue is forecast to reach almost US$950 billion, while earnings per share are expected to grow at an annualized rate of approximately 20 per cent through 2028.
Amazon’s latest results reinforced our positive outlook. Revenue and earnings exceeded expectations, led by Amazon Web Services, where growth accelerated to 37 per cent – the fastest pace in 18 quarters. After several years of heavy spending, Amazon’s investment cycle is beginning to produce stronger results. Greater use of artificial intelligence across cloud computing, advertising, logistics and online shopping is helping the company improve its services, operate more efficiently and drive faster growth.
The broader opportunity remains substantial. Companies around the world are moving more of their information and applications to the cloud while beginning to incorporate generative AI into their operations. Amazon is positioned to benefit through AWS, while its advertising and retail businesses provide additional growth engines. The key investment case is that Amazon is turning years of infrastructure spending into faster cloud growth, wider AI adoption and improving profitability across the company.
From a technical perspective, Amazon recently broke out to a record high and briefly crossed the US$3 trillion mark in market capitalization, becoming only the fifth company ever to reach that milestone. The shares continue to form a series of higher highs and higher lows, while the strong post-earnings reaction confirms renewed momentum. Faster cloud growth, rising earnings forecasts and a positive long-term share-price trend reinforce our bullish outlook.
Caterpillar (CAT NYSE)
Caterpillar is no longer simply a traditional manufacturer of construction and mining equipment. It is becoming a major beneficiary of the infrastructure, manufacturing, electrification and artificial-intelligence investment boom. Fiscal 2027 revenue is forecast to exceed US$84 billion, while earnings per share are expected to grow at an annualized rate of approximately 25 per cent through 2028.
Several long-term spending trends are converging in Caterpillar’s favour. Governments are upgrading roads and utility infrastructure, manufacturers are bringing more production back to North America, mining companies are expanding capacity for critical minerals, and data-centre operators are investing heavily in reliable power. Together, these trends are driving demand for Caterpillar’s construction equipment, mining machinery, engines, generators and turbines.
Caterpillar’s second-quarter results strengthened the investment case. Earnings exceeded expectations, management raised its full-year revenue outlook and strong orders lifted the company’s backlog to a record US$72.1 billion – nearly US$35 billion higher than one year earlier. This provides considerable visibility into future business. Data centres are becoming particularly important because they require dependable generators and backup-power systems. Caterpillar is helping provide the physical power behind the digital economy.
From a technical perspective, Caterpillar’s 200-day and 200-week moving averages continue to push higher, confirming a strong long-term uptrend across multiple time frames. The positive response to its latest earnings beat and raised outlook also points to renewed momentum. Rising earnings forecasts, record backlog and several long-term growth drivers make Caterpillar one of the market’s most compelling industrial companies.
Global X U.S. Electrification ETF (ZAP NYSE)
Artificial intelligence may live in the cloud, but it runs on electricity. The Global X U.S. Electrification ETF provides diversified exposure to companies that generate, transmit and manage the power required by the digital economy. Its holdings include leading utilities and electrical-infrastructure companies such as Quanta Services, Eaton, Dominion Energy, Bloom Energy, Southern Company and Duke Energy.
After remaining largely unchanged for more than a decade, U.S. electricity demand is entering a very powerful growth cycle. AI data centres, the return of manufacturing to the United States, electric vehicles and the broader move toward electrification all require substantially more power. U.S. data-centre electricity demand alone is forecast to more than double from 31 gigawatts in 2025 to 66 gigawatts in 2027.
Meeting this demand will require more than building additional power plants. The United States also needs new transmission lines, transformers, substations, electrical equipment, backup-power systems and smarter electricity grids. ZAP combines industrial companies positioned to benefit directly from this investment cycle with utilities that can provide more stable earnings and lower volatility. This offers investors a balance between growth potential and defensive characteristics while providing exposure across the electrification value chain.
From a technical perspective, ZAP remains strong, with both its 50-day and 200-day moving averages steadily trending higher. Its double-digit gain this year shows growing investor interest in electrification. Positive momentum, broad diversification and rising electricity demand make ZAP an attractive way to invest in the infrastructure behind the AI boom.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AMZN NASD | Y | Y | Y |
| CAT NYSE | Y | Y | Y |
| ZAP NYSE | Y | Y | Y |
PAST PICKS: AUG. 8, 2025
Netflix (NFLX NASD)
Then: US$121.64
Now: US$77.61
Return: -36%
Total Return: -36%
Visa (V NYSE)
Then: US$336.78
Now: US$362.17
Return: 7%
Total Return: 8%
Waste Management (WM NYSE)
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Now: US$226.96
Return: -3%
Total Return: -2%
Total Return Average: -10%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NFLX NASD | Y | Y | Y |
| V NYSE | N | N | N |
| WM NYSE | N | N | N |
