by Louis Navellier
June 2, 2026
The stock market is still being led by AI and – as I said in the opening of my podcast last Wednesday – “everybody’s looking for the next AI plays.” Micron Technology (MU) is obviously one of the leaders. They haven’t announced their earnings yet, but the stock crossed over $1-trillion in market capitalization and is surging before its upcoming earnings announcement after the analyst community revised its price targets higher. In fact, UBS is anticipating tremendous appreciation for Micron, as it more than tripled its price target, from $535 to $1,625 per share! President Trump has praised the company for expanding its production in the U.S. and furthermore, President Trump has personally invested in Micron Technology.
Barron’s featured an article entitled, “The Chip Rally Has Gone Parabolic. It Is Time to Separate the Pillars from the Pretenders.” I appreciate the fact this article recast “The Fab Five” as Micron Technology, Nvidia, Broadcom, Advanced Micro Devices and Taiwan Semiconductor Manufacturing.”
From all this evidence, I think it is safe to conclude the AI boom is alive and well.
One surprising AI-related play is Ford (F), which announced a new energy storage subsidiary, namely Ford Energy, which is using batteries for energy storage systems for AI data centers, utilities and large industrial customers. Ford has forged an alliance with China’s CATL, so it is using iron phosphate (LFP) batteries for energy storage. Ever since the tragic battery fire at PG&E’s Moss Landing facility, there has been a big push to replace lithium phosphate energy storage batteries with LFP batteries, which are much less likely to catch fire. So essentially, Ford Energy is now competing with Tesla for LFP battery storage.
Compare U.S. carmakers to those in the European Union (EU), which are systematically destroying their auto industry, since they force companies to make heavier EVs and hybrids which compromise on ride quality and handling. Britain is implementing most of the EU’s oppressive rules. What’s more, the particulate filters on exhaust systems are making European vehicles quieter and less exciting, even on Ferraris. As a result, Alfa Romeo, Jaguar and Maserati are all expected to fail to sell well due to a poor reception for their EVs, since these are iconic brands, where excellence in performance is in high demand.
Looking at specific luxury cars, the best word to describe Luce – Ferrari’s new EV – is “polarizing.” With a price tag of $650,000, the Luce will likely be a failure, as that’s a lot of money for an EV, and I would say the design for the Luce’s interior is neither inspiring nor aspirational. Frankly, I am worried about Ferrari, since their recent models, like the 849, have poor styling, and Luce’s styling is problematic.
It will be interesting to see if any European manufacturers will elect to divert more of their production to the U.S., where oppressive emission and noise regulations do not exist. Even in the U.S., however, it looks like vehicle sales are expected to stagnate and drop by approximately 1-million due to higher prices.
Spectacular earnings announcements are still driving stocks higher, even going into the start of June. For example, Elbit Systems (ESLT) announced its first quarter revenue was up 15.5% to $2.189-billion, compared with $1.896-billion in the same quarter a year ago. During the same period, the company’s earnings rose 50% to $160.8-million (from $107.1-million) and EPS rose 42%, from $2.35 to $3.34.
Excluding extraordinary items, Elbit Systems’ operating earnings were $3.87 per share. The analyst community was expecting revenue of $2.137-billion and operating earnings of $3.44 per share, so the company posted a 2.4% revenue surprise and a 12.5% earnings surprise. Also, I should add, Elbit Systems’ order backlog continues to grow, indicating continued positive results in the upcoming quarters.
Goldman Sachs – the lead underwriter on the upcoming SpaceX IPO – is set to collect record underwriting fees. Last Tuesday Goldman raised its S&P 500 end-of-year target to 8,000 from 7,600, because it expects valuations to be supported by continued growth in corporate profits. Goldman, Deutsche Bank and Morgan Stanley have also set S&P 500 price targets of 8,000. Ed Yardeni sees an even bigger rise, with 8,300 as his S&P 500 price target. Obviously, Wall Street does not want the party to end, especially due to SpaceX and other IPOs enriching investment banks like Goldman Sachs.
June also provides a potential boost for our best small stocks, since there is a Russell index realignment each June, which could boost some of our fast-growing stocks if they are added to the Russell 1,000 and 2,000 indices. The actual Russell reconstitution occurs on Monday, June 29th, but Russell has been (and will continue) to announce its preliminary lists of stocks it plans to add to its respective indices every Friday in June. In other words, many of fast-growing stocks could benefit greatly by the end of June.
Mid-cap stocks also have a chance to grow this month. In the wake of the military action in Iran, many small-to-mid capitalization stocks benefit from a bias to more domestic stocks, since the U.S. is an economic oasis compared to the rest of the world, which suffers from sputtering GDP growth.
GDP Growth Was Slow Last Quarter, But It Should Pick Up Soon
As evidence of accelerating GDP growth, the Commerce Department announced on Thursday durable goods orders surged 7.9% in April, up from a 1.3% increase in March. Economists were expecting a 3.5% annual surge, so the April durable goods report was much stronger than anticipated. Transportation orders surged 21.5% in April. Excluding transportation, durable goods orders rose at a 1.1% pace in April, which was much stronger than the economists’ consensus estimate of a 0.5% increase.
As an example of a demographic decline in the rest of the world, The New York Times recently reported Japan’s population declined by over three-million people in the last five-years, from 126.1-million in 2020 to only 123-million in 2025. This is the largest Japanese population decline since records started there, over a century ago. In another example of sputtering GDP growth, closer to home, Canada reported its GDP has contracted for two-consecutive quarters, so Canada is officially in a recession after fourth and first-quarter GDP declined at a 1.0% and 0.1% annual pace, respectively. In the meantime, economic growth is booming in the U.S. and the S&P 500’s earnings are now fore-casted to rise by 21.5% in 2026.
As I predicted early in 2025, we can look forward to 5% to 6% annual GDP growth rates arriving no later than the third-quarter of 2026. As evidence of accelerating GDP growth, the Commerce Department recently announced durable goods orders surged 7.9% in April, up from a small 1.3% increase in March. Economists were expecting a 3.5% annual surge, so the April durable goods report was more than double estimates. Transportation orders surged 21.5% in April. Excluding transportation, durable goods orders rose at a 1.1% pace, which was much stronger than economists’ consensus estimate of a 0.5% increase.
The booming order backlog for companies associated with data-centers exploded in the first-quarter, so it now looks like the AI-related data-center boom will persist for at least the next three-years. Our trade deficit is also shrinking, due in large part to booming energy exports. That’s important because a shrinking trade deficit can boost GDP growth. Retail sales have been promising in the past few months, another positive GDP boost. But by far, the biggest boost to GDP growth is productivity gains, which should be at least 3% per year and may rise to 4% in 2027, as AI makes America more productive.
Our new Fed Chairman, Kevin Warsh, is a big proponent of AI productivity growth and is expected to strive to convince other members of the Federal Open Market Committee (FOMC) about the AI-related productivity gains not being inflationary. Energy prices are expected to decline this fall, since worldwide seasonal demand for crude oil drops in the fall, and the War in Iran may be resolved by then.
In conclusion, let’s celebrate! We are in the best investment environment for growth stocks since the Internet boom of the late 1990s. The current AI boom looks even stronger since it will take at least three-years to fulfill the current order backlogs. We will soon see another strong earnings announcement season in July. Around election time, we can expect the announcement of 5% to 6% GDP growth in the third quarter, plus a Fed rate cut to help boost employment growth from AI disruptions.
As a result of all these fundamentals, we have a lot to look forward to in June and the second half of 2026.
Navellier & Associates; own Micron Technology, Inc. (MU) and Elbit Systems Ltd (ESLT) in managed accounts. We do not own Ford (F), CATL (CTATF) or Ferrari NV (RACE) in managed accounts. A few accounts own Tesla (TSLA) per client request. Louis Navellier and his family own Micron Technology, Inc. (MU) and Elbit Systems Ltd (ESLT) via a Navellier managed account. They do not own Ford (F), CATL (CTATF) or Ferrari NV (RACE) personally.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
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