2026 Mid-Year Investment Outlook

J.P. Morgan Asset Management

Research

12 Pages

J.P. Morgan explores how artificial intelligence, global fragmentation, and persistent inflation pressures are reshaping the investment landscape. The outlook suggests investors may be underestimating both the durability of the AI investment cycle and the portfolio implications of a less globalized world.

Key Takeaways

Defense Spending Surge: NATO defense spending reached 2.6% of GDP in 2025, up from 1.6% in 2021, supporting increased investment across defense and industrial sectors.
Inflation Remains Sticky: U.S. consumer prices have risen more than 25% this decade while core fixed income returned just 5%, highlighting ongoing purchasing power challenges.
AI Investment Cycle: Hyperscaler capital expenditures are projected to exceed $500 billion in 2026, reflecting continued commitment to AI infrastructure despite economic uncertainty.
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