2026 Growth Stocks: Targeting Scalable Markets with Strong Fundamentals

The investment case for growth in 2026 hinges less on cheap valuations and more on a company's ability to capture a massive, expanding market. The recent past makes that clear. In 2025, growth stocks delivered a powerful rally, with the S&P 500 Growth index up 21.4% compared to just 11% for value. This premium reflects the market's enduring appetite for businesses that can scale rapidly and redefine industries.

Yet the setup now is more nuanced. While the broader market has seen strong gains, it currently trades 4% below Morningstar's fair value estimate. This gap suggests a potential re-rating opportunity for quality growth companies, provided they can demonstrate a credible path to sustained expansion. The key is to look beyond simple price tags and focus on the total addressable market (TAM) and the scalability of the underlying business model.

The primary headwind, however, is a shift in monetary policy. As the Federal Reserve moves toward normalized interest rates, the present value of distant future earnings is being discounted more heavily. This structural change favors companies with strong current cash flows and reduces the appeal of pure-play growth bets that rely on decades of hypothetical expansion. In this environment, the growth thesis must be exceptionally robust.

The bottom line for 2026 is that scalability is the new currency. Investors must identify companies not just with high growth rates, but with durable competitive advantages in markets that are large and accelerating. The goal is to find those rare businesses where the TAM is so vast and the execution so focused that they can continue to compound revenue even as the discount rate for future profits rises.

Stock Pick 1: Meta Platforms (META) - Capturing the AI Wearables TAM

Meta's bet on AI glasses is a direct play on a massive, emerging market. The company's Ray-Ban Display glasses are designed around the premise that glasses are "the ideal form factor for AI," a view that early demand is validating. The rollout delay is a telling sign: Meta had to delay the global rollout because U.S. demand is so strong. This isn't just early interest; it's evidence of initial market capture for a product that could redefine personal computing.

The real advantage, however, is scalability. Meta isn't launching a standalone gadget; it's deploying a new interface for its massive user base. That ecosystem provides a built-in audience and a powerful platform for software monetization. The company's scale in advertising and social connectivity gives it a unique advantage in driving adoption and creating a sticky AI experience, turning hardware sales into a potential new revenue stream.

Yet the primary risk is execution. First-mover advantage is a promise, not a guarantee. The company must successfully scale production to meet global demand while simultaneously developing the software and services that will make the glasses indispensable. The path from a niche, high-demand product to a mass-market platform is fraught with challenges. For Meta, the AI wearables TAM is vast, but capturing it will depend on flawless scaling and software innovation.

Stock Pick 2: Micron Technology (MU) - The AI Infrastructure Engine

Micron Technology is positioned as a critical, scalable supplier in the multi-year AI hardware build-out. The company's recent performance underscores its central role. Morningstar recently increased its fair value estimate for Micron by 50%, a move that reflects the firm's view of Micron's pivotal position in the AI infrastructure build-out with a multi-year total addressable market.

For a growth investor, the key question is whether this high growth is adequately priced. The PEG ratio (Price/Earnings to Growth) is a crucial metric here. It adjusts a stock's valuation for its earnings growth rate, helping to identify companies where the price paid for future growth is reasonable. Micron's inclusion among the top performers with a low PEG ratio for its industry suggests the market is currently pricing its expansion at a relatively fair multiple, a positive signal for scalability.

Yet the path to sustained dominance requires immense, ongoing investment. Scalability in semiconductor manufacturing isn't just about demand; it's about maintaining technological leadership through relentless R&D and capital expenditure. The company must continuously innovate to produce the next-generation memory and storage solutions that power AI data centers. This cycle of high capex is a necessary friction, but it also acts as a moat, deterring competitors who cannot match the scale and pace of investment required to stay relevant.

The bottom line is that Micron is a pure-play engine for the AI infrastructure boom. Its growth potential is tied directly to the longevity of that build-out, which Morningstar's valuation increase implies is multi-year in duration. For investors, the setup hinges on the company's ability to convert its critical role into sustained, high-margin revenue growth while managing the significant capital demands of the business.

Stock Pick 3: Mirum Pharmaceuticals (MIRM) - Niche Biotech Growth

Mirum Pharmaceuticals presents a classic high-conviction, high-risk growth opportunity in a niche but critical disease area. The company's strategy hinges on a pending acquisition that targets a large, specific market: chronic hepatitis delta virus (HDV). The deal to acquire Bluejay Therapeutics is expected to close in the first quarter of 2026, immediately expanding Mirum's pipeline into this rare but severe liver condition. For a growth investor, the setup is binary but potentially transformative.

The key catalyst is the phase 3 clinical trial results for Bluejay's HDV therapy, brelovitug, which are expected later in 2026. Success here would validate the entire growth narrative, confirming a viable treatment for a patient population with significant unmet need. The market for HDV therapies is substantial, and a positive readout could position Mirum as a leader in a new therapeutic category. This is the kind of inflection point that can justify a premium valuation for a small-cap biotech.

Yet the investment case is defined by its risks. The stock's valuation metrics-its price-to-earnings and price-to-sales ratios-must be weighed against the binary nature of clinical trial outcomes. A failed phase 3 study would be a major setback, while a successful one could propel the stock higher. Beyond the trial, the company must demonstrate its ability to commercialize a new drug, a challenge that requires significant resources and execution. Mirum's recent momentum, with shares up 91% last year, reflects high expectations. The path forward in 2026 will be determined by whether those expectations are met by the data and the company's operational prowess.

Catalysts, Risks, and What to Watch

For investors, the coming year is about monitoring the specific events that will prove or break the growth thesis for each pick. The path from potential to performance is paved with concrete milestones.

For Mirum Pharmaceuticals, the single most critical catalyst is the phase 3 clinical trial results for Bluejay's HDV therapy, brelovitug, expected later in 2026. Success here would validate the core of its acquisition strategy and unlock a substantial market. A negative readout, however, would likely derail the entire narrative. Beyond the data, investors should watch the company's execution on commercializing a new drug, a high-stakes challenge that will test its operational muscle.

Micron Technology's growth trajectory depends on two key, cyclical factors: AI hardware demand and inventory cycles. Investors must track whether the multi-year AI infrastructure build-out continues to drive robust demand for memory and storage. Simultaneously, monitoring inventory levels at major tech customers will signal if the cycle is peaking or if a correction is imminent. The company's ability to manage these cycles will determine the durability of its high-growth phase.

A broader, macro-level risk to watch is any shift in the Federal Reserve's policy path. While the Fed cut rates in 2025, the current backdrop of elevated valuations and uncertainty around the policy path means continued rate normalization could pressure growth stock valuations. The market's "priced-for-perfection" setup makes it sensitive to any change in the discount rate for future earnings. For all three picks, the ultimate validation will be whether their scalable models can deliver the revenue growth needed to justify their positions even in a higher-rate environment.