2026 Global Outlook: Risk and Reward Amid an AI Revolution
The first half of this decade has been characterised by a global pandemic, multiple geopolitical crises and dramatic developments in artificial intelligence. The latter trend seems set to dominate the second half.
Investor hopes for far-reaching applications of AI have certainly led risk assets in 2025. Albeit narrowly focused gains have driven many markets to significant returns, as at the time of writing, even after the recent pullback in some of the more speculative areas of the investment universe, such as crypto.
We share in some of this excitement. Economists have long debated the macro consequences of technological change. Joel Mokyr, an economic historian and recent Nobel laureate, has shown that innovations like railroads, automobiles and personal computers have had transformative effects.
AI is likely to prove just as transformative as it reinvents the ways in which we live, work and play–if not even more so, in our view. And yet, just as this new industrial revolution based around human-AI collaboration ushers in vast opportunities, it also presents manifold risks.
Key questions
As investors, we can prepare for some of the probable implications of AI, such as the explosion of public and private debt issuance to support the so-called ‘hyperscalers’. But we accept that many of the questions raised by the era-defining technology remain unanswered.
That is why much of this outlook, which includes views from across our global Asset Management business, is devoted to the theme. Key takeaways include:
- AI may have a far bigger impact on the economy and markets than historical parallels suggest
- The US economy will likely determine which of a wide range of scenarios for global growth plays out in 2026
- Carefully constructed index, equity and or multi-asset strategies could help investors overcome AI-related challenges and concentration risk
- Fixed income investors can take comfort in the notion that the US is still seen as the ‘cleanest dirty shirt’
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