TLDR
- BlackRock identifies AI as the main driver of US equity markets through 2026 with three key investment themes shaping strategy
- “Micro is macro” theme highlights how large corporate AI infrastructure spending is big enough to impact the broader economy
- “Leveraging up” theme points to rising corporate borrowing in public and private credit markets to fund AI investments
- “Diversification mirage” theme warns traditional hedges like long-duration Treasuries may offer less protection in AI-dominated markets
- BlackRock recommends staying pro-risk with focus on US equities, short to medium-term Treasuries, and active investment strategies
BlackRock has released its market outlook for the next two years, placing artificial intelligence at the center of its investment strategy. The world’s largest asset manager says AI will be the primary force driving US equity returns through 2026.
The firm outlined three major themes that will shape markets during this period. The first theme, called “micro is macro,” describes how corporate spending on AI infrastructure has reached levels large enough to affect the entire economy. Companies are making capital expenditures at a scale that creates ripple effects across financial markets.
BlackRock notes these investments are happening even though the revenue from AI projects may take time to materialize. The firm expects businesses will need to regularly review their spending plans as energy requirements and revenue forecasts change. This ongoing assessment will be critical as companies balance current costs against future returns.
Corporate Borrowing to Fund AI Growth
The second theme focuses on corporate financing needs. BlackRock calls this “leveraging up” because companies will need to borrow more money to fund their AI investments. The asset manager sees this creating opportunities in both public and private credit markets.
Since the payoff from AI spending may not arrive immediately, companies are expected to increase their debt levels. This trend is particularly strong in the technology sector. Fixed-income and alternative credit investors may find new opportunities as this borrowing increases.
Traditional Hedges May Lose Effectiveness
The third theme addresses portfolio diversification. BlackRock warns that traditional hedging strategies may not work as well in an AI-dominated market. The firm calls this the “diversification mirage” because assets that once provided protection may lose their effectiveness.
Long-duration Treasury bonds, which investors typically use as a hedge, may offer less protection going forward. BlackRock recommends looking at assets with independent return sources instead. Private markets and hedge funds are among the alternatives the firm suggests.
The investment giant believes AI’s growth cycle will push US economic growth above its current 2 percent rate. This self-reinforcing innovation cycle could align infrastructure investments with future revenue streams. The firm sees this as a period ripe for active investing rather than passive strategies.
BlackRock’s outlook came as US stocks rose following new inflation data. The PCE inflation figures strengthened expectations that the Federal Reserve would cut interest rates. Treasury yields moved higher during the same period.
The firm recommends maintaining pro-risk positions in portfolios. It favors US equities, short to medium-term Treasuries, and active management strategies. BlackRock believes these approaches will best capture the expanding revenue opportunities that AI technologies create.
The asset manager emphasizes that few powerful drivers will dominate markets during this period. Traditional diversification approaches may need adjustment to account for AI’s central role. Investors will need to adapt their strategies to this new market environment where AI spending influences both corporate behavior and broader economic conditions.
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