2026: The Year of Reacceleration in Global Equities

The global equity markets are poised for a reacceleration in 2026, driven by a confluence of structural tailwinds that justify a forward-leaning, risk-on strategy. Artificial intelligence (AI) adoption, looser financial conditions, and improving labor markets are converging to create a fertile environment for equity allocation, particularly in AI-driven sectors and resilient U.S. growth markets. While regional divergences and bond opportunities in Australia add nuance to the investment landscape, the overarching case for an equity-biased portfolio remains compelling.

AI-Driven Sectors: The Engine of Growth

The AI revolution is accelerating, with capital expenditures projected to surge to $527 billion in 2026, up from $465 billion at the start of 2025. This spending is fueling robust growth in semiconductors, cloud computing, and robotics, sectors poised to benefit from the infrastructure demands of AI.

Semiconductors are at the forefront, with the global industry expected to grow by 26% in 2026, reaching $1 trillion in revenue. TSMC, the world's largest semiconductor foundry, is a key beneficiary, with consensus estimates predicting a 25% earnings increase in 2026. Morgan Stanley forecasts TSMC's actual revenue growth could exceed 30%, driven by AI demand and 3-nanometer capacity expansion.. NVIDIA, another critical player, is anticipated to see meaningful revenue from its Rubin AI platform in the second half of 2026.

Cloud computing is also experiencing a renaissance, with the market projected to grow from $781.27 billion in 2025 to $905.33 billion in 2026, a 15.7% compound annual growth rate (CAGR). Amazon Web Services (AWS) and Microsoft Azure are leading the charge, with Azure's revenue growing 40% year-over-year in Q3 2025. Alphabet's cloud business also saw a 32% year-over-year increase in AI-powered revenues to $15.16 billion in the same period.

Robotics is an emerging growth area, with global industrial robot installations valued at $16.7 billion in early 2026. The integration of AI into robotics is enhancing autonomy and versatility, with humanoid robotics expected to grow at a 137.7% CAGR from 2024 to 2030. This sector's potential is underscored by BNP Paribas identifying robotics as a key emerging market in the tech sector.

U.S. Growth Resilience and Monetary Policy

The U.S. economy's resilience is a cornerstone of the equity-biased argument. While 2025 saw modest job gains, 2026 projections suggest stronger labor market improvements, with average monthly payroll growth expected to rise to 70,000. Wage growth is also anticipated to increase to 2.3% in 2026, supported by a labor market that remains relatively strong despite AI-driven productivity shifts.

Monetary policy is another tailwind. The Federal Reserve is expected to cut interest rates two to three times in 2026, with the fed funds rate potentially falling below 3% by year-end. This dovish stance aligns with broader global disinflation trends and is expected to enhance equity valuations by reducing borrowing costs. J.P. Morgan notes that central banks' accommodative policies could provide a tailwind for equities, particularly in emerging markets, which are well-positioned for robust performance due to lower local interest rates and attractive valuations.

Regional Diversification and Bond Opportunities

While the U.S. and AI-driven sectors dominate the growth narrative, regional divergences highlight the importance of diversification. In Australia, the Reserve Bank of Australia (RBA) faces inflationary pressures, with economists forecasting at least two rate hikes in 2026. However, if the RBA delivers rate cuts in the first half of 2026, local bond yields could fall toward 3.75% by year-end, offering decent capital returns for fixed-rate bonds. This dynamic underscores the potential for a balanced approach, combining equity exposure with strategic bond allocations in regions like Australia.

Globally, the reflationary environment driven by AI-linked growth is expected to support equities, particularly in the first half of 2026. However, investors must remain cautious about overinvestment in AI and supply chain risks. Emerging markets, including parts of Asia, may benefit from a weaker U.S. dollar and AI exposure but could still face challenges from trade uncertainties.

Strategic Implications for 2026

The case for an equity-biased portfolio in 2026 is robust, supported by AI-driven sector growth, U.S. economic resilience, and accommodative monetary policy. However, strategic diversification across regions and asset classes is essential to mitigate risks. Investors should overweight AI-linked sectors like semiconductors, cloud computing, and robotics while maintaining exposure to international equities and select bond markets, such as Australia's, to balance growth and risk.

As the global economy navigates the complexities of AI adoption and monetary normalization, a forward-leaning, risk-on strategy-anchored by sector-specific insights and regional diversification-offers the best path to capturing 2026's reacceleration in global equities.