Stan Wong’s Top Picks for Nov. 12, 2026

Stan Wong, Portfolio Manager, Scotia Wealth Management

Focus: North American Large Caps & ETFs

Top Picks: Alphabet, iShares Semiconductor ETF, Vanguard Industrials ETF

MARKET OUTLOOK:

The outlook for global equities remains constructive despite recent market volatility. The U.S. economy has maintained steady growth, and corporate earnings continue to grow. Persistent inflation and elevated bond yields remain risks, especially for stocks whose valuations leave little room for earnings disappointments.

Technology has seen some of the sharpest swings. In the recent market decline, the Nasdaq-100 fell about 15 per cent from peak to trough, while the Philadelphia Semiconductor Index fell about 40 per cent. The selling pressure extended to companies supplying power and equipment for data centers as investors reassessed the regulatory outlook following the U.S. midterm elections. The selloff may also have been intensified by hedge funds exiting crowded and, in some cases, leveraged positions tied to artificial intelligence.

The market reaction appears to have overstated the long-term risk to AI investment. Permitting delays and power constraints remain legitimate near-term challenges, as they can raise costs and postpone projects. However, global demand for computing capacity continues to grow, several states within the U.S. are competing to attract data center projects, and strategic competition with China gives the U.S. another reason to keep building. For investors, the question is whether share prices have fallen further than the earnings outlook warrants. Order backlogs, margins and cash flow can help gauge whether project delays are starting to weigh on earnings prospects.

At The Stan Wong Group, we continue to favour high-quality large-cap businesses with resilient cash flows, durable competitive advantages and strong growth prospects. We remain disciplined about what we pay for that growth. As always, investment decisions should be made within the context of each investor’s broader total wealth plan.

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TOP PICKS:

Alphabet (GOOGL NASD)

Alphabet’s recent drawdown of more than 30 per cent has created an unusual opportunity to invest in one of the world’s highest-quality technology companies at a notably lower valuation. The shares now trade at approximately 18 times forward earnings, below their 10-year average of about 20.7 times.

Alphabet is much more than a search company. Its businesses span Search, YouTube, Google Cloud, subscriptions and Waymo, giving it several powerful ways to monetize artificial intelligence. The latest results showed that AI is strengthening rather than disrupting the core business. Revenue increased 25 per cent to US$127.6 billion, while Search revenue grew 12 per cent and query growth reached its fastest pace in five years. Gemini has reached one billion users, demonstrating enormous scale in generative AI.

Google Cloud is becoming a much larger earnings engine. Revenue more than doubled to US$30.7 billion, while operating income more than tripled to US$11.1 billion. Cloud backlog reached US$561 billion, with more than half expected to become revenue within two years, providing strong visibility into future growth.

Meeting that demand requires substantial investment. Alphabet expects 2026 capital expenditures of US$195 billion to US$205 billion, primarily for AI and cloud infrastructure. This is pressuring near-term free cash flow, but approximately US$265 billion in cash and marketable securities gives Alphabet considerable capacity to fund the buildout.

When the shares last crossed the 30 per cent drawdown threshold in September 2022, they gained 36.8 per cent over the following 12 months. Technically, the shares appear to be stabilizing, and a recovery toward the 200-day moving average would confirm improving momentum.

iShares Semiconductor ETF (SOXX NASD)

The iShares Semiconductor ETF provides diversified exposure to 30 leading semiconductor companies and seeks to track the investment results of the NYSE Semiconductor Index. Major holdings include AMD, Nvidia, Broadcom, Micron and Intel. Its management fee is 0.33 per cent.

Semiconductors are the essential building blocks of artificial intelligence, cloud computing, smartphones, automobiles, industrial automation and defence. AI-driven demand is broadening beyond graphics processors into memory, networking chips, power-management semiconductors and advanced packaging. Global AI-server revenue is projected to increase 64 per cent in 2026 to US$462 billion, with AI servers expected to represent 77 per cent of total server revenue. SOXX provides exposure across this expanding value chain without requiring investors to identify one eventual winner.

The recent selloff has dramatically improved valuations. The NYSE Semiconductor Index currently trades at approximately 15 times forward earnings, nearly half the peak multiple reached during 2025 and back to levels last seen in 2022.

SOXX recently experienced a drawdown of 40 per cent. Bloomberg analysis of previous SOXX drawdowns of at least 40 per cent over the past 25 years shows an average 12-month forward return of 25.3 per cent, with positive returns 75 per cent of the time. While history does not guarantee the same result, severe semiconductor corrections have often created attractive long-term buying opportunities.

From a technical perspective, the correction has reset momentum and created a more attractive entry point. SOXX has begun to stabilize and is working back toward its 200-day moving average. A recovery above that level would provide further confirmation of improving momentum. Compelling valuations and a powerful growth outlook reinforce the long-term opportunity.

Vanguard Industrials ETF (VIS NYSE)

The Vanguard Industrials ETF provides exposure to nearly 400 U.S. industrial companies for a low expense ratio of 0.09 per cent. Major holdings include Caterpillar, GE Aerospace, RTX, Eaton and Deere. This diversified portfolio captures several important long-term investment themes.

The U.S. industrial cycle is gaining momentum. Core capital-goods orders increased 14.1 per cent year over year, signalling stronger business investment. Manufacturing reshoring, infrastructure renewal, aerospace and defence spending, electrification and grid modernization are creating sustained demand for machinery, transportation, engineering and electrical equipment.

Artificial intelligence provides another powerful growth engine. Data center construction spending is forecast to increase 33 per cent in 2026 and a further 25 per cent in 2027. The benefits extend beyond technology companies because these facilities require electrical equipment, cooling systems, automation, construction machinery and reliable power. Many VIS holdings provide the physical infrastructure required to build and operate the AI economy.

The ETF combines established industrial leaders with companies positioned at the core of the power and data center buildout, reducing reliance on any one company or theme. It also provides exposure to a recovery in traditional capital spending beyond AI.

From a technical perspective, VIS recently experienced a drawdown of almost 15 per cent following a strong multi-year advance. The pullback has improved the risk-reward profile, and the ETF is now recovering toward its 200-day moving average. A sustained move above that level would strengthen the technical outlook. Improving capital spending, durable secular growth drivers and broad diversification reinforce our positive view.

PAST PICKS: NOV. 13, 2025

Eli Lilly (LLY NYSE)

Then: US$1022.87

Now: US$1444.31

Return: 41%

Total Return: 42%

Goldman Sachs (GS NYSE)

Then: US$805.50

Now: US$919.00

Return: 14%

Total Return: 16%

Taiwan Semi (TSM NYSE)

Then: US$282.20

Now: US$404.47

Return: 43%

Total Return: 45%

Total Return Average: 34%