As year-end approaches, the artificial intelligence (AI) market has experienced periodic fluctuations, prompting investors to reassess the sector's outlook following its rapid rally. Attention has shifted to profitability timelines, valuation levels, and long-term growth sustainability in AI. Foreign asset managers have offered 2026 projections across dimensions including earnings trends, industrial structure, and risk assessment.
While AI remains a pivotal force in global capital markets, institutional views diverge on investment approaches and risk perception. The long-term AI trajectory remains intact, though its evolution and market performance may grow more complex. Some firms emphasize valuation concerns, concentration risks, and asset allocation uncertainties despite maintaining bullish long-term outlooks.
**Long-Term Optimism Persists** Fidelity International maintains a constructive stance, noting that US markets haven't pinned such broad hopes on a single theme in years—AI represents that rare paradigm-shifting force. The firm highlights AI's cross-sector capital demands and expects robust earnings growth to extend through 2026, acknowledging that structural transformations historically face volatility but yield lasting impact.
Earnings-wise, Fidelity observes strengthening fundamentals in tech: nearly half of analysts now expect AI to boost profitability by 2025, up from 26% a year ago. The firm anticipates 2026 equity markets to benefit from improved fundamentals and resurgent optimism.
Morgan Asset Management identifies China's AI sector as particularly compelling within global markets, citing East Asia's critical role in semiconductors, chips, and AI supply chains. Surging hardware demand driven by AI advancements underpins long-term regional growth.
**Valuation and Structural Risks in Focus** Schroders cautions that while global equity valuations are elevated, they haven't reached extremes. The firm advocates diversification, noting 2025's outperformance of non-AI assets and value stocks outside the US.
Allianz Global Investors acknowledges AI-driven economic tailwinds but urges investors to broaden opportunities amid shifting dynamics. It warns that stretched valuations in AI and tech sectors warrant prudence despite corporate earnings support.
Fidelity underscores risk dispersion needs, noting geopolitical recalibrations among investors. Any earnings expectation volatility or policy disruptions could impact capital flows. Observers also flag concentration risks in the S&P 500, where AI's dominance alongside high valuations may amplify market swings.
Comments