Economic Review: November 2026

Equity-market turbulence is a reasonable repricing of the increasingly complex AI investment cycle, warranting neutral risk exposure and strong diversification.

• The S&P 500 is about 3% below its all-time high, while the VIX remains below 20; since June 1, the index has stayed within a range of a 2.9% gain and a 4.4% loss.
• The article expects AI-driven productivity and earnings gains to broaden, but says the process is unfolding more slowly than anticipated and may not become clear until the first half of 2027.
• Technology earnings growth remains strong, but the author expects slower growth, potentially lower peak P/E multiples, and a shift toward valuing the sector as partly cyclical.
• The technology sector’s PEG ratio fell from 2.0x–2.5x during most of 2024–2025 to just under 1.0x in 2026, as earnings growth stayed robust while P/E multiples declined.
• AI infrastructure spending is shifting technology-sector cash flows from positive to negative, while data-center construction is expected to proceed more slowly and trigger a shakeout among weaker participants.

Takeaway: Investors should remain close to long-term risk targets with robust diversification and consider alternative risk-mitigation techniques, because unresolved questions around AI returns, computing prices, data centers, oil and interest rates create unusually wide positive and negative outcome ranges.