Gemini's 2026 Outlook from 8 Major Investment Banks: Fiscal Stimulus, AI Capital Boom, and New Investment Paradigms

Original author: szj capital

Original article translated by: Deep Tide TechFlow

As the year draws to a close, various institutions are beginning to forecast the market outlook for the coming year.

Recently, overseas netizens compiled the annual outlook reports of eight top investment banks, including Goldman Sachs, BlackRock, Barclays, and HSBC, and had Gemimi Pro3 provide a comprehensive interpretation and analysis.

The following is a full translation to save you time and give you an overview of important economic trends for next year.

Executive Summary: Navigating the "K-Shaped" New World Order

2026 is destined to be a period of profound structural change, characterized no longer by a single, synchronized global cycle, but by a complex and multifaceted matrix of economic realities, policy disconnects, and thematic upheavals. This comprehensive research report brings together forward-looking strategies and economic forecasts from leading global financial institutions, including JP Morgan Asset Management, BlackRock, HSBC Global Private Banking, Barclays Private Bank, BNP Paribas Asset Management, Invesco, T. Rowe Price, and Allianz.

These institutions collectively paint a picture of a global economy that is "bent but not broken": the era of "loose monetary policy" of the past decade has been replaced by a new landscape of "higher for longer," fiscal dominance, and technological disruption. The core theme for 2026, as Barclays Private Bank calls it, is "The Interpretation Game"—an environment of contradictory economic data and rapidly changing narratives where market participants must proactively interpret conflicting signals rather than relying on passive investment.

One of the core pillars for 2026 is the significant divergence between the United States and other countries. JPMorgan Chase and T. Rowe Price believe that the US economy is driven by unique growth momentum from artificial intelligence (AI) capital spending and fiscal stimulus known as the "One Big Beautiful Bill Act" (OBBBA). This stimulus is expected to deliver a "stimulant effect" of over 3% economic growth in early 2026, which will gradually diminish thereafter; while Allianz and BNP Paribas predict that the Eurozone will exhibit a "flat" recovery pattern.

However, beneath the surface growth figures lies a more volatile reality. Allianz warns that the global business bankruptcy rate will reach a "historic high," projected to increase by 5% by 2026, representing the final impact of the lagged effects of high interest rates on "zombie companies." This scenario paints a picture of a "K-shaped" expansion: large-cap tech companies and the infrastructure sector thrive on the "AI Mega Force" (a BlackRock concept), while small businesses reliant on leverage face an existential crisis.

Asset allocation consensus is undergoing a significant shift. The traditional 60/40 portfolio (60% stocks, 40% bonds) is being redefined. BlackRock has proposed the concept of a "New Continuum," arguing that the lines between public and private markets are blurring, and investors need to permanently allocate to private credit and infrastructure assets. Invesco and HSBC recommend a return to "quality" in fixed income investing, favoring investment-grade bonds and emerging market debt while abandoning high-yield bonds.

This report analyzes the investment themes of various institutions, covering “Physical AI” trades, the “Electrotech Economy”, the rise of protectionism and tariffs, and the strategic priorities investors should take in this divided world.

Part One: The Macroeconomic Landscape – A World of Multi-Speed Growth

In the post-pandemic era, the synchronized global recovery many had hoped for failed to materialize. 2026 is characterized by unique growth drivers and policy divergence. Major economies are progressing at different paces due to their respective fiscal, political, and structural forces.

1.1 The United States: The "North Star" of the Global Economy and the Stimulus from OBBBA

The United States remains the undisputed engine of the global economy, but its growth drivers are shifting. It is no longer solely reliant on organic consumer demand, but increasingly on government fiscal policies and corporate capital expenditures on artificial intelligence.

The phenomenon of "Big and Beautiful Act" (OBBBA)

A key finding in the 2026 outlook by JPMorgan Asset Management and T. Rowe Price is the anticipated impact of the Big and Beautiful Act (OBBBA). This legislative framework is considered a defining financial event for 2026.

• Operating Mechanism : JPMorgan Chase points out that the OBBBA is a broad legislative program that continues key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) while introducing new spending items. It includes approximately $170 billion in border security (law enforcement, deportation) funding and $150 billion in defense spending (such as the Golden Dome missile defense system and shipbuilding). Furthermore, the bill raises the debt ceiling by $5 trillion, indicating that fiscal easing will continue.
• Economic Impact : T. Rowe Price believes that this bill, combined with AI spending, will help the US economy escape the growth panic at the end of 2025. JPMorgan Chase predicts that OBBBA will drive real GDP growth to about 1% in the fourth quarter of 2025 and accelerate to over 3% in the first half of 2026, as tax refunds and spending will go directly into the economy. However, this growth is seen as a short-lived acceleration—a reversal of the “fiscal cliff”—and as the stimulus effects fade, growth will fall back to the 1-2% trend line in the second half of the year.
• Tax implications : The bill is expected to permanently extend the top personal income tax rate of 37% and restore 100% depreciation of corporate bonuses and deductions for R&D expenses. Morgan Stanley notes that this is a significant supply-side incentive that could reduce the effective corporate tax rate in some sectors to as low as 12%, thereby driving a “Capex Supercycle” in manufacturing and technology.

The Paradox of the Labor Market: Economic Drift

Despite fiscal stimulus, the U.S. economy still faces a major structural headwind: labor supply. JPMorgan Chase describes this environment as "economic drift," noting that a sharp decline in net immigration is expected to lead to an absolute decrease in the working-age population.

• Impact on growth : This supply constraint means that only 50,000 new jobs are projected to be created each month in 2026. This is not a failure on the demand side, but a bottleneck on the supply side.
• Unemployment cap : As a result, the unemployment rate is expected to remain low, peaking at 4.5%. While this “full employment” dynamic prevents a deep recession, it also sets a hard cap on potential GDP growth, further exacerbating the sense of economic “drift”—the economy appears stagnant despite positive data.

1.2 Eurozone: The Surprising Beauty of Simplicity

In stark contrast to the volatile and fiscally dramatic narrative in the United States, the Eurozone is gradually becoming a symbol of stability. Allianz and BNP Paribas believe that Europe may exceed expectations and perform exceptionally well in 2026.

Germany's "fiscal reset"

BNP Paribas points out that Germany is undergoing a key structural shift. Germany is gradually moving away from its traditional "black zero" fiscal austerity policies and is expected to significantly increase spending on infrastructure and defense. This fiscal expansion is projected to have a multiplier effect across the Eurozone, boosting economic activity levels by 2026.

Consumer support policies

In addition, BNP Paribas noted that policies such as permanently reducing VAT on the catering industry and energy subsidies will support consumer spending, thereby preventing a collapse in demand.

Growth forecast

Allianz projects that the Eurozone's GDP growth rate will be between 1.2% and 1.5% in 2026. While this figure is modest compared to the US's "OBBBA stimulus," it represents a robust and sustainable recovery from the stagnation of 2023-2025. Barclays shares this view, believing the Eurozone may "deliver positive surprises."

1.3 Asia and Emerging Markets: "Extended Runway" and Structural Slowdown

The outlook for Asia is clearly polarized: on one hand, there is a maturing and slowing China, and on the other hand, there is a dynamic and rapidly developing India and the ASEAN region.

China: Orderly Slowdown

Most institutions believe that China's era of high-speed growth has come to an end.

• Structural headwinds : BNP Paribas predicts that China's economic growth rate will slow to below 4% by the end of 2027. T. Rowe Price added that despite stimulus measures, these are unlikely to provide a "substantial boost" due to deeply entrenched issues in the real estate market and demographics.
• Targeted stimulus : Unlike a broad-based, all-out stimulus, the Chinese government is expected to focus on supporting "advanced manufacturing" and strategic industries. This shift aims to move the economy up the value chain, but will sacrifice short-term consumption growth. Barclays predicts that China's consumption growth will be only 2.2% in 2026.

India and ASEAN: Growth Engines

In contrast, HSBC and S&P Global believe that South Asia and Southeast Asia are emerging as new global growth champions.

• India's growth trajectory : HSBC projects India's GDP growth at 6.3% by 2026, making it one of the fastest-growing major economies. However, HSBC also issues a tactical warning: despite strong macroeconomic performance, corporate earnings growth momentum is relatively weak in the short term, potentially creating a disconnect between current valuations and current levels, which could impact equity investors.
• Artificial Intelligence Supply Chain : Both JPMorgan Chase and HSBC emphasize the significant driving force of the "artificial intelligence theme" on emerging Asian markets, particularly Taiwan and South Korea (semiconductor sector) and ASEAN countries (data center assembly and component manufacturing). The "expansion" of AI trade is a key driver in the region.

1.4 Global Trade: The “Tax Effect” of Tariffs

A potential shadow looms over the 2026 outlook: a resurgence of protectionism. HSBC has explicitly lowered its global growth forecast from 2.5% to 2.3%, primarily due to the "multi-purpose tariffs" imposed by the United States.

Trade growth stagnates

HSBC forecasts global trade growth of only 0.6% in 2026. This near-stagnation reflects a world where supply chains are shrinking (“nearshore outsourcing”) and reconfiguring to circumvent tariff barriers.

Inflationary pressures

T. Rowe Price warned that these tariffs would act as a consumption tax, causing U.S. inflation to "persistently exceed target levels."

Part Two: The Dilemma of Inflation and Interest Rates

The era of "Great Moderation" preceding the 2020s has been replaced by a new normal of volatility. The intertwining of persistent inflation in the United States and deflationary pressures in Europe has driven a "Great Decoupling" of central bank policies.

2.1 Divergence in Inflation

• United States: Stubborn and structural

T. Rowe Price and BNP Paribas believe that US inflation will remain high due to the OBBBA fiscal stimulus and tariffs. JPMorgan Chase provides a more detailed analysis: it expects inflation to peak near 4% in the first half of 2026 due to tariffs, but will fall back to 2% by the end of the year as the economy gradually absorbs the shock.

• Europe: An Unexpected Surprise of Deflation

Conversely, BNP Paribas points out that Europe will face deflationary pressures, partly due to the "recirculation of cheap Chinese exports" into European markets. This could lead to inflation falling below the European Central Bank's (ECB) target, in stark contrast to inflation trends in the United States.

2.2 Decoupling from Central Bank Policy

The divergence in inflation dynamics has directly led to disagreements in monetary policy, creating opportunities for macro investors.

• The Federal Reserve ("slow path")

The Federal Reserve is expected to face limitations. JPMorgan Chase believes the Fed may only cut rates 2-3 times in 2026. T. Rowe Price, however, is more hawkish, warning that if OBBBA's fiscal stimulus leads to an overheated economy, the Fed may be unable to cut rates at all in the first half of 2026.

• European Central Bank (“dovish” path)

Faced with a weak growth outlook and deflationary pressures, the European Central Bank (ECB) is expected to cut interest rates significantly. Allianz and BNP Paribas predict the ECB will lower rates to 1.5%-2.0%, significantly lower than current market expectations.

• Impact of the foreign exchange market

This widening interest rate differential (with US interest rates remaining high and Eurozone rates declining) suggests a structural strength of the dollar against the euro, contradicting the common consensus that the dollar weakens as the economic cycle matures. However, Invesco holds the opposite view, betting that a weaker dollar will support emerging market assets.

Part Three: In-depth Analysis of the Theme – “Immense Force” and Structural Change

The investment strategy for 2026 will no longer focus on the traditional business cycle, but will instead revolve around structural "mega forces" (a concept proposed by BlackRock) that go beyond quarterly GDP data.

3.1 Artificial Intelligence: From "Hype" to "Physical Reality"

The narrative of artificial intelligence is shifting from software (such as large language models) to hardware and infrastructure (“physical AI”).

• "Capital Expenditure Supercycle" : JPMorgan Chase points out that data center investment already accounts for 1.2%-1.3% of US GDP and continues to rise. This is not a short-lived trend, but a substantial expansion of steel, cement, and silicon-based technologies.
• “Electrotech Economy” : Barclays has proposed the concept of the “Electrotech Economy.” The energy demands of artificial intelligence are endless. Investing in the power grid, renewable energy generation, and utilities is considered the safest way to participate in the AI wave. HSBC agrees and recommends shifting investment portfolios towards the utilities and industrial sectors, which will “power” this revolution.
• Contrarian View (HSBC's Warning) : In stark contrast to the market's optimistic consensus, HSBC is deeply skeptical of the financial viability of current AI model leaders. According to its internal analysis, companies like OpenAI could face computing power leasing costs of up to $1.8 trillion, resulting in a massive funding gap by 2030. HSBC believes that while AI is a real possibility, the profitability of model creators is questionable. This further supports its recommendation to invest in "tools and equipment" (such as chip manufacturers and utility companies) rather than model developers.

3.2 The “New Continuum” of the Private Equity Market

BlackRock's 2026 outlook focuses on the evolution of the private market. They argue that the traditional binary division between "public markets" (high liquidity) and "private markets" (low liquidity) is outdated.

• The rise of the continuum : Private equity assets are gradually becoming semi-liquid through "evergreen" structures, European Long-Term Investment Funds (ELTIFs), and the secondary market. This democratization trend allows more investors to access the "liquidity premium."
• Private Lending 2.0 : BlackRock believes that private lending is evolving from the traditional leveraged buyout model to "asset-based financing" (ABF). This model uses real assets (such as data centers, fiber optic networks, and logistics centers) as collateral, rather than relying solely on corporate cash flow. They believe this brings "profound incremental opportunities" in 2026.

3.3 Population Structure and Labor Shortage

JPMorgan Chase and BlackRock view demographics as a slow but unstoppable driving force.

• The immigration cliff : JPMorgan Chase predicts that declining net immigration to the United States will be a key limiting factor for growth. This means that labor will remain scarce and expensive, which will not only support wage inflation but also further incentivize businesses to invest in automation and artificial intelligence to replace human labor.

Part Four: Asset Allocation Strategy – “60/40+” and the Return of Alpha

Multiple institutions agree that the passive "buy-the-market" strategy popular in the 2010s will no longer be suitable for 2026. In the new market environment, investors need to rely on active management, diversify their allocation to alternative assets, and focus on "quality".

4.1 Portfolio Construction: The "60/40+" Model

JPMorgan Chase and BlackRock have explicitly called for reform of the traditional 60% equity/40% bond portfolio.

• The "+" component : Both institutions advocate a "60/40+" model, allocating approximately 20% of the portfolio to alternative assets (private equity, private credit, and real assets). This allocation aims to provide returns independent of traditional assets while reducing overall portfolio volatility in the face of increased correlation between stocks and bonds.

4.2 Stock Market: Quality and Rotation

• US Equities : BlackRock and HSBC are overweight on US equities, primarily driven by the artificial intelligence theme and economic resilience. However, HSBC recently reduced its allocation to US equities due to overvaluation. They recommend shifting from "mega-tech stocks" to broader beneficiaries such as the financial and industrial sectors.
• International Value Stocks : JPMorgan Chase believes there are strong investment opportunities in value stocks in Europe and Japan. These markets are undergoing a "corporate governance revolution" (including share buybacks and increased dividends), and their valuations are at a historic discount compared to the United States.
• Emerging Markets : Invesco is most bullish on emerging markets. They are betting that a weaker dollar (contrary to other institutions' forecasts) will unlock the value of emerging market assets.

4.3 Fixed Income: The Revival of Returns

The role of bonds is changing; they are no longer just about relying on capital appreciation (betting on interest rate cuts), but are returning to their essential nature of "yield".

• Credit Quality : Given Allianz's warnings of rising corporate bankruptcy rates, HSBC and Invesco strongly favor investment-grade (IG) bonds over high-yield (HY) bonds. The risk premium of high-yield bonds is considered insufficient to offset the impending default cycle.
• Duration allocation : Invesco holds an overweight position on duration (especially UK government bonds), expecting central bank rate cuts to be faster than the market anticipates. JPMorgan Chase, on the other hand, suggests remaining "flexible," trading within a range rather than making large-scale directional bets.
• CLOs (Loan-Backed Securities) : Invesco explicitly includes AAA-rated CLOs (Loan-Backed Securities) in its model portfolio, believing that their yield improvement and structural safety are superior to cash assets.

4.4 Alternative Assets and Hedging Instruments

• Infrastructure : Infrastructure investment is the most confident trading area among "real assets." BlackRock calls it a "generational opportunity" that not only hedges against inflation but also directly benefits from the wave of capital expenditures related to artificial intelligence.
• Gold : HSBC and Invesco view gold as a key portfolio hedging tool. Against the backdrop of geopolitical divisions and potential inflationary volatility, gold is considered a necessary "tail risk" insurance.

Part Five: Risk Assessment – The Shadow of Bankruptcy

While the U.S. macroeconomic outlook appears robust due to fiscal stimulus, credit data reveals a more somber side. Allianz provides a sober reflection on the market's optimism.

5.1 Wave of Bankruptcies

Allianz predicts that the global business bankruptcy rate will rise by 6% in 2025 and increase by another 5% in 2026.

• "Lagged trauma" : This growth is attributed to the delayed effects of high interest rates. Companies that locked in low interest rates in 2020-2021 will face a "maturity wall" in 2026, forcing them to refinance at significantly higher costs.
• "Tech Bubble Burst" Scenario : Allianz has specifically simulated a downside scenario: the bursting of the "artificial intelligence bubble." Under this scenario, it is projected that there will be 4,500 new bankruptcies in the United States, 4,000 in Germany, and 1,000 in France.

5.2 Vulnerable Industries

The report identified several industries that are particularly vulnerable to shocks:

• Construction industry : Highly sensitive to interest rates and labor costs.
• Retail/Disposable consumer goods : Squeezed by the “K-shaped” consumption trend, low-income consumers have significantly reduced their spending.
• The automotive industry faces multiple pressures, including high capital costs, supply chain restructuring, and tariff wars.

This risk assessment further supports the "quality-first" approach to asset allocation. The report warns investors to avoid "zombie" companies that are only surviving on cheap capital.

Part Six: Comparative Analysis of Institutional Perspectives

The table below summarizes the specific GDP and inflation forecasts for 2026 provided in institutional reports, highlighting the discrepancies in expectations.

Conclusion: Strategic Priorities for 2026

The investment landscape in 2026 is defined by the tension between two forces: fiscal and technological optimism (the US OBBBA program, artificial intelligence) and credit and structural pessimism (bankruptcy wave, demographic issues).

For professional investors, the future requires moving away from broad index investing. The characteristics of a "K-shaped" economy—the boom in data centers and the bankruptcy of construction companies—need investors to actively select industries.

Key strategic points:

• Pay attention to the pulse of "OBBBA" : The timing of US fiscal stimulus will determine the pace of the first half of 2026. Given the "stimulant effect" on US assets in the first and second quarters, and the potential pullback in the second half, developing tactical trading strategies is a wise move (JPMorgan Chase).
• Investing in AI "tools and equipment" : Avoid valuation risks of pure AI models (HSBC's warning), focus on physical infrastructure such as utilities, power grids and data center REITs (Barclays, BlackRock).
• Diversification through the private market : leveraging the “new continuum” to enter the private credit and infrastructure sectors, ensuring these assets are “asset-based” to withstand the impact of a wave of bankruptcies (BlackRock, Allianz).
• Hedging “Decoding the Game” : In a rapidly changing narrative environment, maintain structural hedging tools, such as gold, and adopt a “barbell strategy” (growth stocks + high-yield assets) to cope with volatility (HSBC, Invesco).

2026 will not be a year for passive investing, but rather a year for investors who are good at interpreting market signals.