Unveiling Growth: Where to Find Tomorrow's Winners Today

In the ever-evolving landscape of global markets, identifying the next big growth opportunities requires more than just following trends. It demands a deep understanding of the macroeconomic environment, structural shifts, and discerning metrics that separate enduring winners from fleeting fads.

This article delves into the three critical layers of context necessary to unveil the growth winners of tomorrow in the coming years. As we look towards 2026 and beyond, the backdrop for growth investing is shaped by high valuations, concentrated markets, and a shift towards earnings-driven returns.

Global equities expected return is projected to be around 9% price gains with 11% total return, primarily fueled by fundamental profit growth rather than multiple expansion. This shift underscores the importance of focusing on companies with robust earnings potential.

Re-rating opportunities may be limited, making earnings growth the key driver. Valuations are historically high across major regions, but growth-adjusted metrics are converging.

The Macro Backdrop: Setting the Stage for Growth

Understanding the current market environment is crucial for spotting tomorrow's winners. Key insights from leading analysts highlight several important trends.

• Goldman Sachs Research forecasts approximately 9% price gains and 11% total return for global stocks over the next 12 months.
• Most returns are expected to be driven by earnings growth rather than multiple expansion.
• Valuations are historically high in the US, Europe, Japan, and emerging markets.
• Growth-adjusted valuation ratios are converging, implying less upside from re-rating.
• Morningstar estimates the US stock market trades at about a 4% discount to fair value.
• Small caps remain especially attractive, indicating potential for hidden gems.

This macro context suggests that investors need to be selective. Earnings growth rather than multiple expansion will be the primary source of returns.

Morgan Stanley expects another 10% S&P 500 gain in 2026, driven by double-digit earnings growth. Low recession odds support this optimistic outlook.

J.P. Morgan anticipates winner-takes-all dynamics with extreme crowding in popular trades. This concentration risk highlights the need to look beyond obvious leaders.

Uncovering Structural Growth Themes

Beyond the macro, identifying where structural growth is occurring is essential. Several themes are poised to drive the next wave of winners.

• Artificial Intelligence (AI) – expanding beyond tech megacaps to non-tech sectors like data center power infrastructure.
• AI infrastructure, semiconductors, and enabling hardware, with companies like ASML and Vertiv showing high potential.
• Software and data platforms, including Tyler Technologies and CoStar Group, expected to compound revenue significantly.
• Energy transition and nuclear, with beneficiaries like BWX Technologies and Constellation Energy.
• Robotics and automation, represented by firms like Hyundai for Boston Dynamics.
• Healthcare, particularly the GLP-1 wave, with Novo Nordisk trading at a discount.
• Cybersecurity, cloud, and hyperscale, with Microsoft and Palo Alto Networks as key players.

Non‑tech sectors likely to perform strongly due to AI capex spillovers offer diversified opportunities. AI supercycle is expected to drive above-trend earnings growth for the S&P 500.

For instance, Micron's fair value was raised 50% due to AI-driven revenue increases. This shows the tangible impact of thematic trends on company valuations.

In software, proprietary commercial real estate data from CoStar Group supports long-term compounding. Similarly, Tyler Technologies benefits from high switching costs in public-sector software.

This table helps visualize where growth might emerge. It emphasizes the importance of diversifying across themes to manage risk effectively.

Navigating Factors and Sizes for Hidden Gems

The type of stocks that become tomorrow's winners often depends on factors like growth vs. value and market cap size.

• Goldman Sachs expects diversification across growth and value factors to remain key in 2026.
• Growth stocks as a group trade at a discount to fair value, suggesting upside potential.
• Small-cap stocks are especially attractive, with lower correlations offering alpha opportunities.
• J.P. Morgan warns of winner-takes-all dynamics and extreme crowding in popular trades.
• This tension means that uncrowded, small- or mid-cap names might be the real winners.

Small caps remain especially attractive for those willing to look beyond the obvious leaders. Lower correlations between individual stocks increase the chance for alpha generation.

Growth stocks as a group trade at a discount after major fair-value upgrades, per Morningstar. This creates a contrarian opportunity if growth is delivered as expected.

Investors should balance exposure between large caps and smaller companies. Uncrowded, small‑ or mid‑cap names could offer higher returns with less competition.

Separating Winners from Fads: Practical Metrics

To avoid chasing hype, investors should use specific metrics to assess real growth potential.

• Focus on revenue compounding and sustainable growth rates, as seen with CoStar Group's expected 12.5% annual revenue growth.
• Evaluate valuation relative to fair value, like Morningstar's analysis showing growth stocks at a discount.
• Assess moat and switching costs, such as Tyler Technologies' wide moat in public-sector software.
• Monitor earnings growth consistency, with AI supercycle expected to drive 13-15% S&P 500 EPS growth.
• Consider risk-adjusted returns, exemplified by Novo Nordisk's discount vs. Eli Lilly's premium in healthcare.

Metrics for separating winners from fads include both quantitative and qualitative factors. Revenue compounding and significantly undervalued stocks can signal long-term value.

For example, Palo Alto Networks trades at a 20% discount with a wide moat in cybersecurity. This underscores the importance of moat analysis in growth investing.

In agriculture, Deere and CNH Industrial are poised for a cycle recovery. Risk‑adjusted way to play the obesity/GLP‑1 theme might favor Novo Nordisk over Eli Lilly due to valuation disparities.

Conclusion: Building a Portfolio for Tomorrow

Putting it all together, here are actionable steps to identify and invest in tomorrow's growth winners.

• Start with the macro backdrop to understand overall market conditions and return drivers.
• Dive into structural growth themes, focusing on both direct and indirect beneficiaries.
• Pay attention to factors like size and style, with an eye on small caps and uncrowded areas.
• Use rigorous metrics to validate growth stories and avoid overhyped fads.
• Diversify across themes and sectors to manage risk and capture broad growth opportunities.

By following this layered approach, investors can position themselves for success in the evolving market landscape. Diversification across growth and value factors remains a prudent strategy for navigating volatility.

Remember, the winners of tomorrow are often found where others aren't looking. Stay informed, stay selective, and let data guide your decisions in this dynamic investment era.