AI exuberance: Economic upside, stock market downside

Vanguard

Research

28 Pages

Vanguard’s capital markets projections show that the strongest risk-return profiles across public investments over the coming five to 10 years are, in order:

  1. High-quality U.S. fixed income.
  2. U.S. value-oriented equities.
  3. Non-U.S. developed markets equities.

Date published: December 2025

Key Takeaways

Higher growth is on the horizon: On the back of AI capital investment and a potential productivity surge, the U.S. economy could eventually grow by 3%.
Value Stocks: From a risk-return perspective, both U.S. value-oriented and non-U.S. developed markets equities provide more attractive prospects than U.S. growth equities, especially if AI transforms the economy.
Fixed Income: Vanguard maintains their view that high-quality bonds offer compelling real returns.
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