2026 Midyear Global Outlook: AI vs geopolitics
We are sharing this midyear outlook during a remarkable moment for markets and for our clients.
Global equities have continued to push higher, supported by resilient growth and sustained earnings upgrades – led in particular by technology and energy. But beneath the surface, momentum is becoming increasingly concentrated, with a narrow group of companies driving returns.
At the same time, fixed income markets are digesting a surge in bond issuance to support artificial intelligence (AI)-related expenditure reminiscent of the 19th century railways boom, if not greater in scale.
Investor sentiment is elevated, leaving risk assets more exposed to negative surprises, while the path of interest rates – and the possibility of even higher bond yields – continues to threaten valuations and government finances.
Within our outlook, we focus on the two forces responsible for much of this backdrop: the dramatic acceleration of AI and an ever-more contested geopolitical order.
Key takeaways include:
- Tighter monetary policy could create space for AI-led growth
- We see potent investment opportunities in the quest of energy resilience
- The AI revolution may outweigh geopolitics as a long-term theme
- Conventional inflation hedges are not meeting investor needs
We also discuss how liability-driven investment strategies are evolving to capture market opportunities, and why investment-grade private credit and asset-backed finance stand out in today’s tougher landscape.
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Podcast: Our midyear investment outlook – the CIO call
2026
The interplay between AI acceleration and geopolitical fragmentation, what a raft of blockbuster IPOs mean for index investors and how AI is fundamentally reshaping dynamics across industries are just some of the topics covered in a new podcast marking the publication of our Midyear Global Outlook.
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