"After strong performance in 2025, the index is showing signs that future gains will depend less on liquidity and more on earnings quality and valuation resilience. "The market has shifted from being liquidity-driven to earnings-sensitive," said Saqib Iqbal, market analyst at Becoin.net. "With multiple rate cuts behind us and macro data softening, Nasdaq performance is now tied to profit growth and cash-flow resilience, rather than just cheap money.""
"As markets transition from liquidity-led rallies to fundamentals-based valuation, traders and investors should focus on earnings execution, sector performance, and macro signals. Sustained participation beyond megacap technology names will be essential for continued upside. The Nasdaq Composite's performance in the coming months will likely set the tone for equity markets in 2026, testing whether strong earnings can justify current valuations and broaden market participation."
The Nasdaq Composite achieved double-digit quarterly gains in 2025 concentrated in large-cap technology and AI-focused firms, while mid- and small-cap stocks lagged, producing narrower market breadth and concentration risk. The forward P/E near 25 reflects elevated expectations for earnings growth, especially in software, cloud services, and AI infrastructure. With multiple rate cuts largely priced in, near-term performance will depend on earnings execution and guidance, macro data such as inflation and employment, and shifts in risk appetite and Treasury yields. Continued upside will require sustained participation beyond megacap tech and proof that profit growth and cash-flow resilience can support current valuations into 2026.
Read at London Business News | Londonlovesbusiness.com
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