Reliably and consistently predicting stock market crashes is nearly impossible. If anyone could do so, they would likely have become the world’s richest person by now. However, we can make informed speculations based on data and historical events.
So, will there be a market crash in 2026? We can start from one noteworthy reason and explore how investors should respond.
Currently, some investors are concerned that the market is in an artificial intelligence bubble. Indeed, AI technology is transforming various industries, and leading companies are profiting handsomely from it. However, the rapid and substantial rise in the stock prices of some AI companies—with a few heavily weighted stocks making up significant portions of major indices—has led to excessive market valuations, a viewpoint that is now being widely discussed.
Is there data to support this assessment? Looking at the Cyclically Adjusted Price-to-Earnings (CAPE) ratio, it is currently slightly below 40. How does this compare to historical averages? Historical data shows that the last time the CAPE ratio reached similarly high levels, the internet bubble burst. Therefore, historical experience suggests we might be standing on the brink of a bear market.
Can we be certain that a market crash is imminent? Not necessarily. The market will experience a correction sooner or later, but the exact timing is unknown, and the trigger may not necessarily be AI stocks. Nonetheless, it is always crucial for investors to remain prepared. One current strategy to consider is focusing on the stocks of companies that appear undervalued. Pharmaceutical giant Pfizer (PFE) is one such option worth considering.
In recent years, Pfizer’s market value has significantly declined due to poor financial performance. The company’s management has pointed out that over the coming period, key products will face patent exclusivity expirations. For example, the anticoagulant Eliquis and the cancer drug Xtandi will lose patent protection in the next few years, which could pose short-term challenges. However, this specialized healthcare company has a foundation for recovery.
Pfizer boasts a robust research and development pipeline covering vast or rapidly growing disease areas such as oncology and weight management. The company is also fully implementing AI technology to reduce costs. Despite fluctuating revenue performance, its profitability remains relatively stable. As more new products are launched, revenue growth will eventually stabilize. Moreover, Pfizer’s stock currently trades at a forward price-to-earnings ratio of approximately 9, significantly lower than the healthcare industry average of 18.6, making its valuation quite attractive.
If AI stocks do trigger market volatility, Pfizer’s stock price is expected to decline less sharply than major AI companies. Even if the market does not crash, Pfizer is likely to gradually regain its long-term growth momentum from recent difficulties.
In any case, history reminds us: market cycles always exist, and carefully selecting reasonably valued assets may be one way to navigate through uncertainty.
