An Overview of BlackRock's 2026 Investment Outlook Highlights: Can the Global Bull Market Driven by the AI Bubble Be Sustained?

Author: Azuma, Odaily Planet Daily

On December 2, BlackRock, the world’s largest asset management company, released its 2026 Investment Outlook Report. While the report doesn’t have much direct connection to the cryptocurrency market (only one page of the 18-page PDF mentions stablecoins), as the “king of global asset management,” BlackRock’s report outlines the current global economic environment and its variables. With the crypto market becoming increasingly linked to mainstream financial markets, this may provide some macro-level guidance for the future. Additionally, BlackRock also presents its allocation strategies for the new market environment, which could be of reference for users looking to expand their investment scope.

The full report is quite lengthy, so in the following, Odaily Planet Daily will attempt to provide a concise overview of BlackRock’s 2026 playbook.

“Mega Forces” Are Reshaping the World

BlackRock opens by stating that today’s world is undergoing a structural transformation driven by several “mega forces”—including geopolitical fragmentation, evolution of the financial system (Odaily note: this part mainly discusses stablecoins), and the energy transition. The most notable of these is artificial intelligence (AI), which is advancing at unprecedented speed and scale. The shift in the industry from a “light capital” model to a “heavy capital” model is profoundly changing the investment environment.

In the current market structure, investors cannot avoid making judgments about future directions—meaning there is no truly neutral stance, and even broad index investing is not a neutral choice.

Dominant Force: AI

AI is the current dominant mega force, driving US stocks to new highs this year. In recent months, investors have become increasingly concerned about whether an AI bubble is forming—Shiller P/E data shows US equity valuations have reached peaks not seen since the dot-com bubble and the Great Depression of 1929.

Historically, major transition periods have often been accompanied by market bubbles, and this episode may repeat itself, but bubbles usually only become obvious after they burst. For this reason, BlackRock’s report focuses on whether the scale of AI investment is matched by its potential returns—this is both BlackRock’s main thread for tracking the AI tech revolution and the core question this report seeks to answer.

BlackRock believes the AI theme remains the main driver of the US stock market, so the firm will maintain a risk-on stance, but the current environment requires greater active investment. Whether it’s identifying winners in the current AI race or capturing opportunities as AI profits spread in the future, active selection is crucial.

Key Market Question: Do “Front-Loaded Spending” and “Back-Loaded Returns” Match?

Currently, the core question for market investors is how to assess the enormous capital expenditures on AI and the potential revenue scale—do the two match in magnitude?

AI development requires upfront investments in computing power, data centers, and energy infrastructure, but the returns from these investments are delayed. The time lag between capital expenditure and returns has led AI builders to rely on debt to bridge financing gaps. While this front-loaded spending is necessary to achieve eventual returns, it also creates a distinctly different investment environment, characterized by:

• Higher leverage: Public and private credit issuance has increased significantly;
• Higher cost of capital: Massive borrowing drives up interest rates;
• Concentrated opportunities: Until AI returns spread throughout the broader economy, market gains remain highly concentrated in the tech sector;
• More room for active management: Once income truly spreads to non-tech industries, the space for active management and stock picking will increase significantly.

There is no definitive answer to whether spending and returns are matched. BlackRock believes the final answer depends on whether US economic growth can break through the long-term 2% trend line.

BlackRock expects AI-related capital expenditure to continue supporting economic growth into 2026. This year, investment’s contribution to US economic growth has reached three times the historical average. This “heavy capital” growth momentum is likely to continue into next year, allowing the economy to remain resilient even if the labor market continues to cool.

But is this enough to push the US economy above the long-term 2% trend line? In the past 150 years, all major innovations—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. The reason is that AI is not only an innovation itself, but also has the potential to accelerate other innovations. It goes beyond automating tasks, and through self-learning and iterative improvement, it can speed up idea generation and scientific breakthroughs.

Three Core Themes

Micro Has Become Macro

AI infrastructure construction is currently dominated by a handful of companies, and their spending is large enough to have macro-level effects. In the future, the total revenue generated by AI may support this spending, but it’s still unclear how much of that will go to the tech companies leading the development.

BlackRock will maintain a risk-on stance and overweight US equities on the AI theme (supported by strong profit expectations. Even if individual companies can’t fully recoup their investments, overall capital expenditure is likely to be rewarded), and the firm sees this as an excellent time for active investing.

Rising Leverage

To overcome the “front-loaded investment, back-loaded returns” financing hump of AI development, long-term funding support is needed, making leverage unavoidable. This process has already begun, as evidenced by recent large-scale bond issuances by major tech companies.

BlackRock expects companies to continue tapping both public and private credit markets on a large scale. The expansion of borrowing by both public and private sectors may continue to put upward pressure on interest rates. High debt servicing costs are one reason BlackRock expects term premiums (the extra compensation investors demand for holding long-term bonds) to rise and push up yields. Based on this, the firm is underweight long-term US Treasuries.

The Pitfall of Diversification

Portfolio decisions made in the name of “diversification” have actually become bigger active bets than ever before, aiming to avoid exposure to the handful of forces currently driving the market. BlackRock’s analysis shows that after removing common equity return drivers like value and momentum, a growing share of US market returns reflects a single, common driver. Market concentration is increasing, with breadth narrowing. Attempting to diversify US or AI risk by shifting to other regions or equal-weighted indices actually constitutes a bigger active bet than ever.

BlackRock believes true diversification means shifting from broad asset class or regional views to more refined, flexible, and cross-scenario allocations and themes. Portfolios need a clear Plan B and must be ready to pivot quickly. In this environment, investors should reduce blind risk diversification and focus more on consciously taking risk.

Views on Stablecoins

When summarizing the “mega forces” currently reshaping the global economy and financial markets, BlackRock highlights five areas: AI, geopolitics, the financial system, private credit, and energy infrastructure.

In the evolution of the financial system, BlackRock discusses stablecoin development as the sole example. The firm sees stablecoin adoption expanding and further integrating into mainstream payment systems.

Stablecoins are likely to compete with bank deposits or money market funds and, if large enough, could significantly impact how banks extend credit to the broader economy. Beyond banking, BlackRock also notes the potential for stablecoins in cross-border payments. In emerging markets, stablecoins can serve as an alternative to local currencies for domestic payments, expanding the use of the dollar; but if local currency use declines, it could challenge monetary policy control and, to some extent, support the dollar.

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

BlackRock’s Allocation Plan

Now, the most important part: at the end of the report, BlackRock provides its asset allocation strategies, analyzing its investment logic from both tactical and strategic perspectives. “Insight is less important than following the leader”—if you don’t want to rack your brains thinking for yourself, perhaps just copy their homework.

For periods longer than 5 years (strategic) and for 6–12 months (tactical), BlackRock’s core allocation thinking is as follows.

Strategically:

• Portfolio construction: As AI winners and losers become clearer, we prefer to use scenario analysis for portfolio construction. We rely on private markets and hedge funds for special returns, anchoring allocations to “mega forces.”
• Infrastructure equity and private credit: We believe infrastructure equity valuations are attractive, and mega forces are driving structural demand. We remain bullish on private credit but foresee industry differentiation—highlighting the importance of manager selection.
• Beyond market-cap-weighted benchmarks: We’ll make more granular allocations in public markets. We favor developed-market government bonds outside the US. For equities, we prefer emerging markets over developed markets overall, but will be selective within both. Within emerging markets, we favor India, at the intersection of several powerful forces; within developed markets, we like Japan, due to moderate inflation and corporate reforms improving prospects.

Tactically:

• Remain bullish on AI: Strong earnings, solid profit margins, and healthy balance sheets of large, listed tech companies will continue to support AI. Continued Fed easing through 2026 and reduced policy uncertainty bolster our overweight US equities stance.
• Selective international exposure: We favor Japanese equities for strong nominal growth and successful corporate governance reforms. We remain selective on European equities, preferring financials, utilities, and healthcare; for fixed income, we prefer emerging markets, as these economies show greater resilience and more robust fiscal and monetary policy.
• Evolving diversification tools: As long-term US Treasuries no longer provide portfolio stability, we recommend seeking “Plan B” portfolio hedges and watching for potential sentiment shifts. Gold, due to its unique drivers, can be used tactically, but we do not view it as a long-term portfolio hedge.

For a more detailed breakdown, BlackRock’s allocation thinking and reasoning for stocks and fixed income in various markets is as follows.

• US equities (overweight): Strong corporate earnings (partly driven by the AI theme) plus a favorable macro backdrop will support US stocks;
• European equities (neutral): Awaiting more pro-business policies and deeper capital markets; currently prefer financials, utilities, and healthcare;
• UK equities (neutral): Valuations remain attractive relative to the US, but there is a lack of near-term catalysts for upside, so we stay neutral.
• Japanese equities (overweight): Strong nominal GDP, healthy corporate capital spending, and governance reforms all benefit Japanese equities.
• Chinese equities (neutral): Within a neutral stance, we prefer tech stocks.
• Emerging markets (neutral): Economic resilience has improved, but selectivity is still needed. We focus on opportunities related to AI, energy transition, and supply chain reorganization, such as in Mexico, Brazil, and Vietnam.