AI rules investment strategy

THE investment world heads into 2026 staring at a growth model that looks nothing like the last decade, with capital intensity, leverage and politics back at the centre of returns.

Markets are no longer drifting on low rates and globalisation, but being pulled by a handful of powerful forces that reward big, deliberate calls.

BlackRock frames this as a moment of structural change rather than a typical cycle.

“We’ve long argued we’re in a world of structural transformation shaped by a few mega forces, including geopolitical fragmentation, the future of finance and the energy transition,” the fund management company says.

“But the most obvious now is artificial intelligence (AI), with a buildout of a potentially unprecedented speed and scale,” it adds.

Macro driver

AI dominates BlackRock’s 2026 outlook, not just as a technology story but as a macro driver.

The shift from capital-light to capital-intensive growth is, in its words, “profoundly changing the investment environment and pushing limits on multiple fronts – physical, financial and socio-political”.

Market concentration follows economic concentration, meaning investors cannot sidestep the theme.

“That means investors can’t avoid making big calls,” BlackRock highlights.

US equities sit at the centre of that call.

It notes that AI is the dominant mega force right now, helping propel US stocks to all-time highs in 2025, even as investors fret about stretched valuations and bubble risks.

History offers little comfort or clarity.

“Market bubbles have arisen in all major historical transformations – and that could happen again. But those bubbles also grew for some time and only became obvious after they burst,” it explains.

BlackRock points out that its response is to track the scale of spending and potential revenues rather than attempt to time sentiment.

Micro is macro

This thinking feeds into the first of three themes for this year: micro is macro.

The capital spending ambitions behind AI are so vast that individual company decisions ripple through growth, inflation and markets.

External estimates put global AI corporate capex at between US$5 trillion and US$8 trillion by 2030, mostly in the United States.

BlackRock says the key question is whether revenues can match that scale: “The overall revenues could justify the spend – yet it’s unclear how much will accrue to the tech companies building AI.”

At the macro level, it sketches a scenario where AI lifts productivity enough to add materially to trend growth.

Breaking out of the United States’ long-standing 2% growth rate is, it admits, “a tall order”, but AI makes it conceivable for the first time.

That possibility underpins its continued preference for US stocks.

“We stay pro-risk and ‘overweight’ US stocks on the AI theme,” it says, adding that this is “a great time for active investing for those with insights on who will capture the revenues”.

Leveraging up

The second theme is leverage. The AI buildout requires heavy, front-loaded investment in computer, data centres and energy, while revenues arrive later.

“The AI builders are leveraging up,” BlackRock says, calling this unavoidable to get over the financing hump.

Private sector balance sheets start from a healthy place, particularly in listed tech, but new debt issuance adds to already stretched public finances.

“Along with highly indebted governments, this creates a more levered financial system vulnerable to shocks – including bond yield spikes tied to policy tensions between inflation and debt sustainability,” BlackRock states.

That vulnerability shapes asset allocation. BlackRock expects higher credit issuance across public and private markets, and a structurally higher cost of capital.

It turns tactically “underweight” long-dated US Treasuries and sees opportunity in private credit and infrastructure as companies tap non-bank funding.

The interaction between AI financing needs and government debt constraints becomes a defining risk factor for this year.

Diversification mirage

The third theme is what the firm calls a diversification mirage. Concentration means that moves sold as diversification can amount to big active bets.

“Allocations made under the guise of diversification may now in fact be big active bets,” BlackRock warns.

Equal-weight indices and regional shifts have lagged precisely because they dilute exposure to the dominant driver of returns. Traditional hedges such as long-term government bonds offer less ballast, pushing investors to hunt elsewhere.

Instead, BlackRock argues for granularity and flexibility.

“We think portfolios instead require a clear plan B and a readiness to pivot quickly,” it says, favouring idiosyncratic exposures in private markets and strategies where manager skill can show through.

Physical constraints

Constraints loom large over all three themes, particularly energy.

Alastair Bishop, portfolio manager in fundamental equities, says the AI buildout faces many constraints – political and financial – but especially physical constraints involving computer and energy, with energy the most binding now.

Data centres could consume up to a fifth of current US electricity demand by 2030, testing grids and permitting systems.

China, he notes, stands in contrast with faster build-outs and cheaper power, shaping the global competitive landscape.

Geopolitics amplifies that landscape.

BlackRock vice-chairman Tom Donilon describes a reset in global order.

“We have entered the third distinct world order since World War Two as the United States fundamentally resets its economic and geopolitical relationships with the world,” he says.

AI sits at the heart of US-China rivalry, while wars, trade tensions and defence spending targets layer volatility onto markets and supply chains.

Be that as it may, BlackRock expects AI capital spending to keep supporting growth into 2026, even as labour markets cool and central banks cautiously cut rates.

Inflation risks, debt sustainability and geopolitical shocks remain live, but AI continues to outweigh traditional macro drivers.

In this environment, concentration, leverage and constraint define the investment map, and the fund manager positions its strategies around those realities rather than broad, passive diversification.