'GEOPOLITICAL SHOCK': Exec points to China, Taiwan as greatest market risks of 2026

Key Concepts

• Generative AI Leverage: Companies positioned to benefit from the implementation and scaling of generative AI technologies.
• Picks and Shovels vs. Implementation: The shift in AI investment focus from enabling technologies (picks and shovels) to companies actively implementing AI for growth.
• Old Economy AI Pivot: Established companies successfully integrating AI into their existing business models.
• Geopolitical Risk (China/Taiwan): A significant concern regarding potential disruptions to global supply chains and economic stability.
• Dividend Growth & Stock Buybacks: Indicators of financial health and management confidence in companies.

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Investment Outlook & Stock Analysis – Nancy Tangler Interview

Introduction & Previous Performance (Five for 25)

The interview began with a discussion of Nancy Tangler’s previous investment recommendations, the “Five for 25” stock picks from the prior year. These selections demonstrated strong performance, with an average return of 28% as of the current month and only one stock experiencing a decline.

ServiceNow (NOW) – Opportunity in Weakness

Charles Payne inquired about ServiceNow (NOW), acknowledging a personal investment experiencing a downturn. Tangler explained that ServiceNow’s recent performance was impacted by the broader “software is dead” narrative, despite the company positioning itself as a “control tower for generative AI” – essentially, the central orchestrator for AI applications. She described ServiceNow as being in a “sweet spot” regarding AI leverage, anticipating continued revenue growth of around 20% annually, despite recent slowdowns. A recent acquisition was highlighted as mirroring Bill McDermott’s successful strategy at SAP, focusing on end-to-end security. Tangler recommended viewing the current price dip as a buying opportunity, anticipating positive returns over the next two years, particularly while the current CEO remains in place ("By the way, as long as he's a CEO, I'm in the stock. So, just let people know. I invest in people. So, he's amazing.").

Six for 26 – New Investment Recommendations

The conversation transitioned to Tangler’s upcoming “Six for 26” list. Discussion centered on several key picks:

D.R. Horton (DHI) – Housing Market Rebound

Despite recent negative earnings reports impacting homebuilder stocks, Tangler expressed optimism regarding D.R. Horton (DHI). She cited the company’s focus on more affordable housing in favorable geographic regions – the Southwest, Southeast, and West (avoiding the Northeast) – with an average home cost of $378,000. She believes the Biden administration will be compelled to implement regulatory and fiscal incentives to stimulate the housing market to avoid midterm election challenges. Furthermore, D.R. Horton’s dividend increase and stock buyback program were viewed as positive indicators.

AI Implementation & the Shift from "Picks and Shovels"

Payne noted Tangler’s previous commentary on the evolution of AI investment, moving beyond the initial “picks and shovels” phase (companies providing the infrastructure for AI) to companies actively implementing AI for operational improvements and growth. Data presented showed that companies mentioning AI implementation experienced significant stock performance gains (illustrated by blue bars in a visual aid). Caterpillar was specifically highlighted as the top performer in the Dow Jones Industrial Average, driven by its AI initiatives.

RTX – Defense & Supply Chain Optimization

RTX, a defense contractor, was identified as a company successfully leveraging AI. Tangler initially recommended the stock years prior for its defense component and dividend growth. She emphasized RTX’s effective use of AI to streamline its supply chain, leading to margin expansion and consistent earnings growth. The company’s strong management was also noted.

Walmart (WMT) – Old Economy AI Leader

Walmart was presented as a prime example of an “old economy” company successfully pivoting to AI. Tangler highlighted several key AI-driven improvements: 35% of digital orders delivered within three hours, 50% of fulfillment automated and robotic (utilizing Symbotic software – initially adopted by Target but not fully implemented), and AI integration across advertising and e-commerce (up 27% last quarter). Walmart’s consistent dividend growth (10-12% in recent years) further reinforced its positive outlook. Tangler stated Walmart is “the best utilizer of AI across all of their business lines.”

Geopolitical Risks & Concerns for 2026

Concluding the interview, Tangler identified geopolitical risk, specifically concerning China and Taiwan, as her primary concern for 2026. While acknowledging a premature exit from Taiwan Semiconductor Manufacturing (TSMC) previously, she emphasized the potential for significant disruption if tensions escalate. The construction of TSMC facilities in Arizona was noted as a mitigating factor, but a rapid escalation of threats would still pose a substantial shock to the system.

Notable Quote:

“By the way, as long as he's a CEO, I'm in the stock. So, just let people know. I invest in people. So, he's amazing.” – Nancy Tangler, regarding her investment strategy and confidence in ServiceNow’s leadership.

Technical Terms:

• Generative AI: Artificial intelligence capable of generating new content, such as text, images, or code.
• Symbotic: A robotics and automation company specializing in warehouse fulfillment systems.
• Dividend Growth: A consistent increase in the amount of dividend paid out to shareholders.
• Stock Buybacks: A company repurchasing its own shares, reducing the number of shares outstanding and potentially increasing the value of remaining shares.
• Geopolitical Shock: An unexpected event with significant political and economic consequences on a global scale.

Synthesis/Conclusion:

Nancy Tangler’s investment outlook emphasizes identifying companies not just enabling AI, but actively implementing it to drive growth and efficiency. Her recommendations span diverse sectors, from technology (ServiceNow, RTX) to retail (Walmart) and housing (D.R. Horton), highlighting opportunities across the market. While optimistic about the potential of AI, she cautioned about the significant geopolitical risks, particularly concerning China and Taiwan, which represent a key concern for 2026. The interview underscored the importance of strong management, dividend growth, and strategic AI integration as key factors for successful investment in the current market environment.