Why AI Infrastructure and Healthcare Are BofA's High-Conviction 2026 Winners

As 2026 approaches, investors are increasingly turning their attention to sectors poised to thrive in a high-capital-expenditure (capex) environment. Bank of America's (BofA) latest research underscores a strategic pivot toward AI infrastructure and healthcare, positioning these industries as high-conviction bets amid evolving market dynamics. This analysis explores the rationale behind BofA's outlook, focusing on sector rotation and valuation opportunities in a landscape defined by aggressive capex and technological transformation.

AI Infrastructure: The Midpoint of a Global Computing Overhaul

BofA's Q1 2026 "Top 10 U.S. Stock Ideas" report identifies AI infrastructure as a cornerstone of its investment thesis, framing 2026 as the midpoint of a global computing infrastructure overhaul. This shift is driven by the exponential demand for advanced semiconductors, data centers, and cloud computing capabilities to support AI adoption across industries. According to the report, companies like Nvidia, Broadcom, and Lam Research are central to this transition, as they supply the hardware and tools enabling enterprises to scale AI applications.

The high-capex environment amplifies the appeal of AI infrastructure. As businesses and governments invest heavily in building out next-generation computing systems, the sector is positioned to benefit from sustained revenue growth and margin expansion. BofA's Global Research team notes that AI-related capex is not merely a short-term trend but a structural shift, with global spending on AI infrastructure projected to outpace traditional IT investments. This creates a fertile ground for sector rotation, as capital flows toward companies with clear competitive advantages in hardware, software, and data management.

Healthcare: Value-Oriented Growth in a Post-Policy Uncertainty Era

While AI infrastructure captures the imagination of growth investors, BofA's healthcare sector strategy for 2026 is equally compelling. The firm highlights healthcare as a "value-oriented growth" opportunity, emphasizing attractive valuations and clinical catalysts. A key driver of this optimism is the easing of regulatory overhangs, particularly the stalled "most favored nation" drug pricing proposal, which had previously weighed on investor sentiment according to analysis.

In a high-capex context, healthcare's appeal lies in its dual role as a defensive sector and a beneficiary of innovation. BofA anticipates robust M&A activity as providers consolidate to strengthen balance sheets and scale operations according to industry trends. This trend aligns with broader economic themes, including the need for efficiency in capital allocation amid rising interest rates. Companies such as Merck, Cigna, and Vertex Pharmaceuticals are highlighted for their ability to deliver earnings growth while navigating a landscape of reduced policy risks as noted in BofA's research.

Sector Rotation and Valuation Opportunities

The interplay between AI infrastructure and healthcare reflects a broader strategic shift in 2026. As markets adjust to high valuations in traditional tech stocks, investors are rotating into sectors with clearer earnings visibility and long-term growth potential. BofA's research underscores that AI infrastructure offers the scalability of tech with the tangible returns of industrial capex, while healthcare provides a balance of stability and innovation as detailed in the firm's outlook.

Valuation opportunities are particularly pronounced in healthcare, where years of regulatory uncertainty have created bargains. With policy risks receding, the sector is primed for a valuation catch-up, especially as clinical advancements and AI-driven diagnostics unlock new revenue streams according to market analysis. Meanwhile, AI infrastructure's valuation premium is justified by its role in enabling the next phase of digital transformation-a narrative supported by BofA's forecast of stronger-than-expected global economic growth in 2026.

Conclusion

Bank of America's high-conviction bets on AI infrastructure and healthcare for 2026 are rooted in a nuanced understanding of sector rotation and capital allocation. In a high-capex environment, these industries represent not just growth but resilience-AI infrastructure as the engine of technological progress and healthcare as a sector rebalancing toward value. For investors, the key takeaway is clear: aligning with these themes offers a pathway to capitalize on both macroeconomic tailwinds and industry-specific catalysts.