BlackRock's 2026 Investment Outlook: Can the AI Bubble-Driven Global Bull Market Sustain?

Original article by Odaily Planet Daily ( @OdailyChina )

Author｜Azuma ( @azuma_eth )

On December 2nd, BlackRock, the world's largest asset management company, released its 2026 Investment Outlook report. While the report doesn't have much direct relevance to the cryptocurrency market (only one page of the 18-page PDF mentions stablecoins), as the "king of global asset management," BlackRock outlines the current global economic environment and uncertainties in the report. Given the increasingly close linkage between the cryptocurrency market and mainstream financial markets, this report may offer some guidance for future macroeconomic changes. Furthermore, BlackRock provides its allocation strategy for the new market environment, which may be of some reference value to users looking to expand their investment horizons.

The full report is quite long, so Odaily will attempt to provide a concise summary of BlackRock's 2026 preparation guide below.

"Superpowers" are reshaping the world.

BlackRock states in its opening that the world today is undergoing a period of structural change driven by several "mega forces," including geopolitical fragmentation, the evolution of the financial system (Odaily note: this mainly discusses stablecoins), and energy transition. Among these, the most significant force driving change is undoubtedly artificial intelligence (AI) —AI is developing at an unprecedented speed and scale, and the industry's shift from a "light capital" model to a "heavy capital" model is profoundly altering the investment environment.

Under the current market structure, investors cannot avoid making judgments about the future direction of the market—which means that there is no absolutely neutral position, and even broad index investing is not a neutral choice.

Dominant force: AI

AI is currently the dominant superpower, driving US stocks to record highs this year. In recent months, investors have become increasingly concerned about whether an AI bubble is forming—Shiller's price-to-earnings ratio data shows that US stock valuations have reached peak levels not seen since the dot-com bubble and the Great Depression of 1929.

Historically, market bubbles have occurred during numerous major periods of transformation, and this time may well be no different. However, bubbles often only reveal themselves clearly after they burst. Therefore, BlackRock will focus on examining the alignment between the scale of AI investments and their potential returns in this report—this is both the main theme of BlackRock's tracking of the AI technological revolution and the core question this report aims to answer.

BlackRock believes that AI will remain a major driver of the US stock market, and therefore the institution will maintain its risk appetite. However, the current market environment places higher demands on active investing . Whether it's identifying winners in the current AI race or seizing opportunities when AI benefits begin to spread in the future, proactive selection is crucial.

The core question in the market: Do the "upfront expenses" and "returns" match?

Currently, the core question for market investors is how to assess the huge capital expenditures on AI and its potential revenue scale, and whether the two can be matched in magnitude.

The development of AI requires upfront investment in computing power, data centers, and energy infrastructure, but the returns on these investments are delayed. This time lag between capital expenditure and final returns has prompted AI developers to leverage debt to overcome financing difficulties. While this upfront expenditure is necessary to achieve the final returns, it also creates a drastically different investment environment—whose core characteristics include:

• Higher leverage ratios: Credit issuance in both public and private markets increased significantly;
• Better cost of capital: Massive borrowing drives up interest rates
• Opportunities are concentrated: Before the benefits of AI spread to the overall economy, market gains remain highly concentrated in the technology sector;
• Increased opportunities for active investment: As revenues truly spread beyond technology sectors, the scope for active management and stock selection will increase significantly.

There is no definitive answer to the question of whether spending and income are aligned. BlackRock believes the ultimate answer depends on whether the US economy can break through its long-term 2% trend line.

BlackRock projects that capital spending on AI will continue to support economic growth in 2026, with investment this year already contributing three times the historical average to U.S. economic growth. This "capital-intensive" growth momentum is likely to continue into next year, enabling economic growth to remain resilient even if the labor market continues to cool.

But is this enough to propel the US economy above its long-term 2% growth trend? All the major innovations of the past 150 years—including the steam engine, electricity, and the digital revolution—have failed to achieve this breakthrough. However, AI may make it possible for the first time. This is because AI is not only an innovation in itself, but also has the potential to accelerate other innovations. It goes beyond automating tasks; through self-learning and iterative improvement, it can accelerate the generation of ideas and scientific breakthroughs.

Three core themes

The micro has become the macro

The development of AI infrastructure is currently dominated by a few companies, whose spending is so large that it has a macro-level impact. The total revenue generated by AI in the future may be able to support this expenditure, but it remains unclear what share the leading technology companies will ultimately capture.

BlackRock will maintain a risk appetite and overweight US equities on the AI theme (supported by strong earnings expectations. Even if individual companies fail to fully recoup their investments, overall capital expenditures are expected to pay off), while believing that now is an excellent time for active investment.

Leverage ratio rises

To overcome the financing hump of AI development, which involves "upfront investment and delayed returns," long-term financial support is needed, making leverage inevitable. This process has already begun, as evidenced by the recent large-scale bond issuances by major tech companies.

BlackRock expects corporations to continue to utilize public and private credit markets on a large scale. The expansion of public and private sector borrowing is likely to continue to exert upward pressure on interest rates. High debt servicing costs are one reason why we believe the term premium (the compensation investors demand for holding long-term bonds) will rise and push up yields. Based on this, we are shifting to an underweight position on long-term U.S. Treasuries.

The trap of diversification

Portfolio decisions made under the guise of "diversification" have in fact become larger, more proactive bets than ever before, aimed at mitigating the few forces currently driving the market. BlackRock analysis shows that, after removing common drivers of stock returns such as value and momentum, the increasing share of US stock market returns reflects a single, shared driver. Market concentration is increasing, while breadth is narrowing. Attempts to diversify exposure to the US or AI by shifting to other regions or equally weighted indices constitute, in effect, a larger proactive decision than ever before.

BlackRock believes that true diversification means shifting from a broad view of asset classes or regions to a more refined, flexible allocation and themes that work across scenarios. Portfolios need a clear Plan B and the ability to quickly adapt. In this environment, investors should reduce blind diversification and focus more on conscious risk-taking.

Views on stablecoins

In summarizing the “superpowers” currently reshaping the global economy and financial markets, BlackRock highlighted five areas: AI, geopolitics, the financial system, private lending, and energy infrastructure.

In its analysis of the evolution of the financial system, BlackRock used the development of stablecoins as a sole case study. BlackRock observes that stablecoin adoption is expanding and they are becoming increasingly integrated into mainstream payment systems.

Stablecoins have the potential to compete with bank deposits or money market funds, and if they become large enough, could significantly impact how banks extend credit to the broader economy. Beyond the banking sector, BlackRock has also noted the adoption potential of stablecoins in cross-border payments. In emerging markets, stablecoins could also serve as an alternative to local currencies for domestic payments, expanding the use of the US dollar, while simultaneously challenging monetary policy control should local currency use decline, and providing some support for the dollar.

These changes mark a modest but important step toward a tokenized financial system that is rapidly evolving— with digital dollars coexisting with traditional channels and reshaping intermediation and policy transmission methods.

BlackRock's configuration plan

Okay, now for the most important part: BlackRock provides its asset allocation strategies at the end of the report, and analyzes its investment logic from both tactical and strategic perspectives. "Knowledgeable" is not as good as "following the lead"; if you're unwilling to rack your brains and think for yourself, perhaps you can simply copy their work.

BlackRock's core allocation strategy is as follows, considering both 5-year (strategic) and 6-12 month (tactical) timeframes.

At the strategic level:

• Portfolio Construction : As the winners and losers in AI become clearer, we tend to use scenario analysis to construct portfolios. We rely on the private market and hedge funds to obtain special returns and anchor our allocation to "superpowers".
• Infrastructure Equity and Private Lending : We believe infrastructure equity valuations are attractive, and strong fundamentals support structural demand. We remain bullish on private lending, but anticipate sector differentiation – highlighting the importance of manager selection.
• Beyond market capitalization weighted benchmarks : We will be selectively allocating in the public markets. We favor developed market government bonds outside the US. In equities, we are generally more bullish on emerging markets than developed markets, but will be selective within both. Among emerging markets, we favor India, which is at the crossroads of several major changing forces; among developed markets, we favor Japan, as moderate inflation and corporate reforms are improving its outlook.

On a tactical level:

• We remain bullish on AI : The strong earnings, robust profit margins, and healthy balance sheets of large listed technology companies will continue to support the development of AI. The Federal Reserve's continued accommodative policy through 2026 and reduced policy uncertainty reinforce our overweight position on US equities.
• Selective international exposure : We are bullish on Japanese stocks due to their strong nominal growth and smooth progress in corporate governance reforms. We maintain selective investment in European stocks, favoring the financial, utilities, and healthcare sectors; in fixed income, we prefer emerging markets due to their increased economic resilience and more robust fiscal and monetary policies.
• Up-to-date diversification tools : Given that long-term US Treasuries can no longer provide portfolio stability, we recommend seeking "Plan B" portfolio hedging tools and monitoring potential shifts in sentiment. Gold, due to its unique drivers, can be used as a tactical tool, but we do not consider it a long-term portfolio hedging tool.

To elaborate further, BlackRock's allocation strategy and rationale for equities and fixed income across various markets are explained below.

• US stocks (overweight) : Strong corporate earnings (partly driven by the AI theme) coupled with a favorable macroeconomic backdrop will support the performance of US stocks;
• European Equities (Neutral) : We need to see more pro-business policies and a deeper capital market. For now, we prefer the financial, utilities, and healthcare sectors.
• UK Equity (Neutral) : Valuations remain attractive relative to the US, but there is a lack of catalysts to drive the market upward in the short term, hence the neutral stance.
• Japanese stocks (overweight) : Strong nominal GDP, healthy corporate capital expenditure, governance reforms, etc., are all positive factors for the performance of Japanese stocks.
• China Stock Market (Neutral) : Prefers technology stocks within the neutral range.
• Emerging Markets (Neutral) : Economic resilience has improved, but careful selection is still necessary. Opportunities related to AI, energy transition, and supply chain restructuring will be highly valued, such as in Mexico, Brazil, and Vietnam.