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2026 Global Market Outlook
AI is driving real change, but bubble concerns are growing. Investors must balance exposure to AI with broader opportunities and enduring risks in 2026.
What’s ahead for markets in 2026
Balancing AI winners with broader opportunities and enduring risks
AI is powering measurable change—and this will continue in 2026. But rapid capital deployment has led to stretched valuations in AI sectors, raising concerns about speculative bubbles and sustainability. Investors must balance excitement with disciplined analysis and risk management.
Meanwhile, the world continues to grapple with non-AI forces. Inflation remains stubborn in many developed economies, growth trajectories are diverging and geopolitical uncertainty—from trade tensions to the war in Ukraine—is adding further complexity to the global outlook.
Navigating this environment will require balancing exposure to enduring AI leaders with emerging opportunities in cyclical and international markets—while remaining vigilant to persistent macro risks. The age of speculation is giving way to real-world results, but investors must be mindful that old challenges—valuation, inflation, and geopolitical uncertainty—remain firmly in play.
2026 Global economic outlook
Economy
The U.S. economy is shaking off the 2025 growth scare, but the eurozone may lag as tariff front‑loading weighs on manufacturing.
The U.S. economy is set to rebound in 2026, driven by AI spending and fiscal expansion, while Europe may lag due to early tariffs draining manufacturing demand. Emerging markets have inflation and debt under control, but tariffs remain a risk. Central banks' policy paths will diverge, with easing likely in the UK and eurozone, and tightening in Japan
2026 Artificial intelligence outlook
Artificial Intelligence
AI is poised to be the biggest productivity driver since electricity, but soaring capex and the growing use of debt finance are fueling demands for clear monetization strategies.
AI’s story is shifting from possibility to profitability. Investment and innovation are booming, but bubble concerns are growing amid rising valuations and speculative activity in some areas of the market. Investors need to focus not only on visionary technology, but also on execution, financial discipline and clear paths to monetization.
2026 Equity outlook
Equity
Equity market leadership is broadening as AI gains spread, while fiscal stimulus and reindustrialization are driving opportunities beyond US tech.
While AI continues to be a transformative force, we anticipate broader market participation in 2026. Within AI, the focus is shifting from digital to physical infrastructure. At the same time, fiscal stimulus and deregulation are creating opportunities in different sectors and across the globe. It is becoming clearer that the equity market’s “good ponds” are no longer confined to US tech.
2026 Fixed income outlook
Fixed Income
We anticipate there will be selective opportunities in credit, but expansionary fiscal policy will drive longer‑maturity government bond yields higher.
Despite tight spreads, there will still be credit opportunities in 2026—however, selectivity will be crucial. Sub-investment grade bonds and bank loans offer attractive yields vs equities, while expansionary fiscal policy is likely to drive government bond yields higher. Inflation-protected bonds in the US, parts of Europe and Japan appear attractive, while opportunities also exist in select EM rates.
2026 Private market outlook
Private Markets
Stabilizing interest rates, lower market volatility and demand from AI‑related projects are helping to end the drought in key deal markets, driving renewed growth in private equity and credit.
Private markets are set for growth in 2026 as stabilizing rates and rising AI-driven capital needs revive the IPO and M&A markets. Private equity exits are increasing, and demand for private credit—especially for tech infrastructure—is strong. Opportunities span lending, distressed, and bespoke solutions, with fundamentals robust despite some idiosyncratic risks.
2026 Asset allocation outlook
Asset Allocation
We favor stocks over bonds as we expect the two-speed economy to avoid recession, and non-U.S. currency exposure as a way to benefit from likely U.S. dollar weakness
The U.S. economy is set for further growth, but stretched valuations complicate tactical asset allocation. We favor equities over bonds given inflation risk, with international and small‑cap stocks best positioned. High yield offers a lower‑risk way to benefit from a strong economy, and we prefer unhedged exposure to non‑U.S. currencies given the weakening dollar.
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