Investing in 2026: AI, the Middle East, and Income

BlackRock

Rick Rieder

Research

9 Pages

BlackRock argues 2026 is being shaped by AI, Middle East risk, and a stronger case for income over broad beta. It highlights historic market dispersion, a roughly 30% software selloff, and a fixed income backdrop where selectivity matters more than passive exposure.

Key Takeaways

AI Spend Is Surging: Global AI infrastructure spend is projected to exceed $2.2 trillion by 2028, while hyperscaler CapEx is expected to reach $610 billion in 2026 from $360 billion in 2025.
Software Stress Is Real: Software equities are down roughly 30% year to date, and software related leveraged loans have fallen 15 to 20 points, exposing concentrated private credit risk.
Income Looks Attractive: BlackRock says a diversified income allocation can potentially generate 6% to 7% income, while high quality portfolios offer roughly 5x the real income of cash.
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