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The Real Eisman Playbook · 3 min · Jan 5, 2026

Pharma and biotech may lead a historically underweighted sector

CVChris Verrone · Strategas

Chris Verrone says healthcare’s S&P weight hit a 25-year low and points to improving pharma and biotech charts, while rejecting a recovery call for health insurers.

In this episode

Full analysis
  1. 8:51AI adoption is early, but power and scaling remain constraints5 min
  2. 28:13Housing affordability depends on local supply barriers3 min
  3. 40:22Software incumbents may retain value through installed bases3 min
  4. 21:04Oracle’s credit signals may overstate its financing risk7 min
  5. 43:05Pharma and biotech may lead a historically underweighted sector3 min
  6. 58:59Verrone expects a 2026 shift toward real-economy stocks3 min
“The foundation of my health care call is the sector got to a 25-year waiting low in the S&P 500.”
CVChris Verroneat 44:45 · The Real Eisman Playbook
44:45

Takeaways

  1. Healthcare’s weight fell below 10% of the S&P.
  2. Verrone sees pharma and biotech as potential leaders into 2026.
  3. He avoids HMOs, citing long-term broken trends.

About this segment

Chris Verrone says healthcare’s S&P weight hit a 25-year low and points to improving pharma and biotech charts, while rejecting a recovery call for health insurers. That makes the sector a possible rotation beyond tech.

CV

Chris Verrone

Strategas

From “2026 Predictions with Dan Ives and Chris Verrone | The Real Eisman Playbook Episode 40”, Jan 5, 2026. Watch the full episode

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

  1. 43:17

    What's the area that you think – like if there's one that you think is going to like – that's been a laggard? Yeah, I think this turn in healthcare is a real deal. And listen, and we could say there's some defensive element to that. It may be. It may not be. When you say healthcare, which parts of healthcare? I'm talking about – That's a broad statement, healthcare. The most important healthcare stocks after 18 months of indifference are back in gear.

  2. 43:42

    Look at Lilly. Look at Intuitive Surgical. Look at Natera. Look at the turns. even like bristol and and bmy health and health insurance is that turned no that has not i mean that was the only game for 15 years where the insurers and the hmos i think that's over i think pharma and biotech is the leadership or the leadership that's on the come uh into 26 so you would not bottom fish united health care i would not like that i would not i think these are long long-term broken trends uh in the hmo space on health care is there also like to your point is Is there like an AI trade component where you could start to actually get multiple expansion because of like AI where there's like pharma or biotech?

  3. 44:24

    So you hear that a lot, right, that the AI application will allow drug discovery to become – right? Or diagnostic discovery. Or if AI is very good at finding order, right, it should very quickly be able to help in the pharmaceutical and biotech space. Whether or not that's actually happening, I think you got to – I mean, it should be obvious, right? What CEO? would not want to talk about how accretive this is to their business.

  4. 44:52

    So it should be obvious, and it should be obvious soon. That's not the foundation of my health care call. The foundation of my health care call is the sector got to a 25-year waiting low in the S&P 500. Say that again. You have to go back to Hillarycare, to the last time health care's weight earlier this year. What's the weight now of health care in the S&P? It's less than 10%. It got like borderline single digits earlier in the year.

  5. 45:14

    25-year waiting low. So what do we look for? By the way, let me just go for one second. this tells you everything you need to know about the U.S. economy. The weighting of, and just Infotech in the S&P is 35%. The next- But wasn't really. Oh, it's more than that, but I'm just taking, strictly the strict category is 35%. What's the next category? The next category is financials at 14%. So the second largest, now obviously it's much bigger than 35%.

  6. 45:43

    You had Google and all that stuff. The second largest sector is 60% lower than just pure infotech. It'd be 80% lower if you add in all the other stuff that's in consumer discretionary. I mean, what's Staples 3? What's Energy 2? What's Materials 1? REITs 1? I mean, these are big segments of the US economy. The S&P needs to rejigger because there are categories now that are basically irrelevant. Yeah.

  7. 46:10

    I mean, you see it. Energy's 3%. Who cares?