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Artificial Intelligence (AI)-Adjacent themes representing computing bottlenecks such as AI semiconductors/quantum (CHPX), along with critical inputs needed for capital spending on infrastructure / advanced devices such as copper miners (COPX). These themes trade at slight premium valuations (moderately negative Value exposure), but whose financial profiles are turning more stable (moderately positive Quality exposure). We believe the structural growth narrative remains intact given the strong AI and broader infrastructure capital expenditure cycle.

Precious metals mining and/or exploration themes, such as AUAU, GOEX, SIL, benefited from the late 2025/early 2026 run-up in precious metals prices (primarily gold and silver) before correcting later in the year. The precious metals complex may face headwinds if heightened inflation expectations continue to warrant a hawkish monetary policy path for the Federal Reserve. Still, strong earnings growth (positive Growth exposure), improving financial metrics (positive Quality exposure) and reasonable valuations may help buffer further pressures on hard assets stemming from higher inflation-adjusted (real) interest rates and tighter monetary policies.

Energy Producers (GXPE, LNGX) and Energy Distributors/Delivery (MLPA, MLPX) have benefitted from conventional energy supply constraints, largely brought on by geopolitical events (Ukraine/Russia, Strait of Hormuz Conflict) which disrupted global oil supply routes. Themes tied to conventional energy, whether upstream production or mid-stream distribution/delivery, are trading at less expensive valuations than the broader market, as investors likely expect the bump from higher commodity prices to near-term earnings growth to eventually normalize to lower long-term trend levels.

Genomics (GNOM) rounds out the list, with renewed interest driven by AI’s transformative potential for gene therapy, drug discovery, and personalized medicine; it also appears on the Long-Term Reversal list below as this theme appears to be recovering from long-term underperformance versus the broader market. We profile the genomics theme (GNOM) as this month’s Top Trending Theme in Focus

Genomics and biotech are entering a multi-decade growth phase driven by platform breakthroughs, AI-driven R&D productivity, and demographic demand. Gene editing has moved into approved medicine, with CRISPR therapies cleared by the FDA, next-generation approaches advancing in the clinic, and the FDA streamlining pathways for personalized treatments.^2,3 AI is cutting drug discovery cost and time from roughly $2-3 billion and 10-15 years, and cheap whole genome sequencing (approaching $500) is enabling population-scale precision medicine.⁴ Heightened demand may be driven by an aging population (the 60+ cohort doubling by 2050), expanding modalities such as mRNA, ADCs, cell and gene therapy, radiopharmaceuticals, and protein degraders, and pharmaceutical-focused capital deployed through M&A and partnerships.^5,6

Market sentiment (Momentum) has significantly improved as the theme appears to be bottoming from a long-term downward trend (Long-Term Reversal). Recent news tied to advancements in personalized cancer vaccine treatments and AI model training likely serve as the catalysts for the turnaround in sentiment.^7,8

Commensurate with the improvement in sentiment, the fund is also exhibiting improving Growth and Quality factor readings as well as lower Volatility versus its trailing five-year history.

GNOM has positive exposure to Growth and Momentum while exhibiting lower Volatility versus its 5-year history.

Estimated earnings for the underlying constituents of the Solactive Genomics Index (the tracking index for GNOM) have improved, though the underlying constituents of the index remained unprofitable. As of 9/30/26, its forward price/sales ratio has improved from the trough levels seen over the past two years, reflecting improving prospects, and room to grow into that valuation should these advancements in gene therapy reach commercialization.

Forward EPS for the Solactive Genomics Index has improved despite constituents having ongoing operating losses, while the Price/Sales ratio for the index has slowly expanded.

After troughing towards the end of April, the fund has recovered, sitting comfortably above its 200 moving day average as of 9/30/2026. The fund is neither overbought nor oversold on a short-term basis (as indicated by the 14-Day RSI through 9/30/2026), and the fund could see trend-following investors drive “buy-the-dip” demand on near-term pullbacks should the underlying fundamentals hold.

Overall, the genomics and biotechnology theme has benefited from a combination of positive price trends and strong growth catalysts

Price was above intermediate support (200-Day Moving Average); the RSI suggests the fund is neither overbought nor oversold as of 9/30/2026.

Genomics and energy producers appear to be recovering from long-term underperformance (Long-Term Reversal) based on recent positive Momentum.

Natural Gas Energy Producers (LNGX) remains out of favor as the natural gas market has lagged the recent advances seen across other conventional energy sources, such as oil and coal. However, as mentioned above, themes tied to conventional energy, whether upstream production or mid-stream distribution/delivery, are trending higher and trading at less expensive valuations (Value) than the broader market. We profile the U.S. natural gas theme (LNGX) as this month’s Out-of-Favor Theme in Focus.

The genomics and biotechnology theme (GNOM) has long been out of favor but is starting to see renewed interest as AI advances gene therapy and drug discovery. Earlier, we highlighted GNOM as the Top Trending Theme in Focus.

Alternative energy inputs/processing such as Hydrogen (HYDR), are showing some signs of consolidating as the growth outlook improves (Growth).

Defensive-oriented dividend payers (DIV, QDIV, SRET), free cash flow generators (FLOW), and our multi-factor ETF (AUSF) remained out of favor amid strong “risk-on” appetite and an optimistic earnings-growth outlook. A shift away from pro-cyclical leadership would likely be the catalyst for a turnaround, and low valuations (Value) may offer support for patient investors.

Food-innovation and agricultural tech theme (KROP) remained out of favor as earnings normalized from the post-Russia/Ukraine hypergrowth period and tracked lower grain and soybean prices. We view the theme as attractively valued but in need of a sustained growth catalyst.

The structural bull case for U.S. natural gas producers and liquified natural gas (LNG) companies rests on a convergence of durable, multi-year demand catalysts. U.S. LNG feedgas demand is projected to more than double to 29.7 billion cubic feet/day (bcf/d) between 2024 and 2030, creating an average supply deficit of 0.6 bcf/d over that period.⁹ Peak LNG export volumes are projected to exceed 25 bcf/d by 2028 as new capacity additions ramp, with data center build-outs expected to cause a 7.7 gigawatt (GW) increase in average power demand in 2026 alone.¹⁰ Global LNG demand is forecast to grow at 5.8% per annum from 2025–2030, driven primarily by emerging Asia, with Chinese LNG demand projected to rise 65% during this period.¹¹ Geopolitical disruptions, including damage to Qatari LNG facilities taking approximately 50 million tonnes per year offline, could take years to repair, further accelerating demand for U.S. supply.¹²

Excess production leading to oversupply and questionable capital allocation decisions have weighed on this theme, helping to explain the long-term underperformance.¹³

The geopolitical environment has contributed to the disruption of global energy supplies, including LNG as well as surging AI data center power demand are now fueling a recovery in natural gas producers and distributors, reflected in LNGX’s positive Momentum reading.

LNGX’s Growth factor exposure remains negative as earnings growth has stalled (see below) while waiting for the demand environment to turn more favorable for the sector; however, the theme continues to trade at attractive valuations (Value).

The theme is also exhibiting lower volatility (Volatility, 30-Day Idiosyncratic Return), possibly reflecting the steady environment of natural gas pricing and demand.

LNGX has exhibited less volatility (Volatility, 30-Day Idiosyncratic Return) while Value remains attractive but the Growth outlook is likely contingent on demand catalysts to be realized.

Estimated earnings for the underlying constituents of the Global X U.S. Natural Gas Index (the tracking index for LNGX) have slowly improved since inception of the index, likely helped by the supply constraints from the aftermath of geopolitical conflicts. As of 9/30/26, its forward price/earnings multiple has compressed slightly as projected earnings have risen, possibly indicating investor expectations of a normalized path of earnings following the spike in energy prices in response to the Strait of Hormuz conflict.

Forward EPS for the Solactive U.S. Natural Gas Index has improved following the Strait of Hormuz conflict, while the Price/Earnings ratio has declined, improving the valuation profile.

After rallying sharply through the height of the Strat of Hormuz conflict (around the end of March), LNGX has traded in a tight range, having just broken its 200 moving day average (as of 9/30/2026). The recent selling pressures (as indicated by the 14-Day RSI through 9/30/2026) appear to be overextended as natural gas prices have pulled back from their recent highs.

The natural gas theme is enjoying improving sentiment although the growth outlook appears to in a holding pattern until demand catalysts start to materialize. LNGX potentially offers high operating leverage to greater demand posed by energy-hungry data centers and from energy importing countries across Asia and Europe.

LNGX’s price has mostly trended higher but just recently dropped below its 200-day moving average. The RSI points to oversold conditions.

For themes with positive price trends, consider AI-adjacent themes (CHPX), commodity producers (AUAU, COPX, GOEX, GXPE, MLPA, MLPX, and SIL), and genomics (GNOM). Keep in mind, precious metal miners and/or explorers (such as AUAU, GOEX, SIL) could remain pressured by inflation and interest rate uncertainty but could see better entry points if rates decline. We highlighted GNOM as a Top Trending Theme following July’s tech sell-off.

For out-of-favor themes showing recent recovery, consider conventional and alternative energy (GXPE, HYDR, LNGX) and life sciences (GNOM). Defensive, dividend- and cashflow-focused themes (AUSF, DIV, QDIV, FLOW, SRET) and food innovation/ agriculture tech (KROP) remained out of favor but could turn if market sentiment shifts defensive. We highlighted LNGX as a Top Out-of-Favor Theme given its improving sentiment and attractive valuations.

This month highlights semiconductors/quantum computing as one of the top trending themes and hydrogen as an out-of-favor-theme showing possible recovery.

This month highlights semiconductors/quantum computing as one of the top trending themes and hydrogen as an out-of-favor-theme showing possible recovery.

Electrification, energy infrastructure, alternative power, and critical materials are converging into what we believe is a multi-decade supercycle.

The War in Iran could impair energy output and thus reshape supply chains. It also highlights the growing importance of North American energy infrastructure.