Strategists are backing AI and US equities to drive H2 returns, even as inflation remains a concern
Nearly all strategists (97%) believe that AI will provide second and third order gains as the AI narrative.
Investors are heading into the second half of 2026 faced with potential risks, from the ongoing US-Iran conflict, volatile energy markets, and persistent inflation, yet despite this, nine out of ten (91%) Natixis strategists are optimistic that Artificial Intelligence (AI) will continue to be the key factor driving market performance.
The 2026 Natixis Strategist Outlook, created in collaboration with CoreData, captures the forward-looking expectations of its global network of market strategists, portfolio managers, research analysts and economists across the Natixis Investment Managers affiliated group.
Nearly all strategists (97%) believe that AI will provide second and third order gains as the AI narrative expands beyond the companies that write the code, build the chips that construct the infrastructure to support it. Almost nine in ten (88%) expect the AI sector will continue to accelerate, and believe productivity gains from AI will translate into higher corporate profits (88%).
As adoption deepens across the economy, Natixis strategists’ long-term view of AI is changing, with more than two in five (45%) expecting to see return on investment on AI capital expenditure within the next year. However, there are some more immediate benefits, as over half (52%) of Natixis strategists say that IPOs in the AI sector are likely to increase liquidity in private equity.
Danny King, Country Head Australia and New Zealand said, “What we’re hearing from Australian clients is that they’re trying to balance short-term uncertainty with the need to remain invested for the long-term. While concerns around inflation, policy settings and market concentration remain front of mind, investors are increasingly focused on where the next phase of earnings growth will come from.
“For Australian investors, the key takeaway is that our strategists believe the AI opportunity is expanding beyond a handful of technology companies and increasingly being reflected across the broader economy in productivity gains, stronger corporate earnings and investment opportunities across multiple asset classes.
“The challenge is avoiding the temptation to react to every headline and short-term event, and instead maintain a diversified, actively managed portfolio that can participate in long-term structural growth themes while remaining resilient through periods of market volatility.”
Inflation and geopolitical risk
Inflation remains persistent in H2, driven by the US-Iran related spike in energy costs. Overall, almost all (97%) of strategist’s rank inflation among the top risks (70% medium and 27% high) for the remainder of the year, a notable jump from 79% on the same question in the survey last year.
Natixis’ strategists do not see the Iran war as an isolated incident. For the remainder of the year, seven in ten (70%) say that an escalation or re-escalation of the war could represent a key risk, nearly two-thirds (64%) believe a new geopolitical conflict could arise and two thirds (67%) say it is the confirmation of a realignment of the world order.
Nearly eight in ten strategists (79%) warned of a renewed energy crisis in the remainder of the year, but the consequences may not all be negative. Over two-thirds (67%) believe the war will ultimately serve as a catalyst for increased investment in renewable energy and they do not expect energy prices to revisit the extremes seen earlier in the year. Almost eight in ten (82%) believe oil prices have already peaked, none expect prices to return to the lows seen at the start of the year.
New safe havens amid uncertainty
In fixed income, investors are rethinking safety, with nearly half (48%) of strategists believing Treasuries are no longer the safe-haven they once were and more than half (55%) are saying investment-grade credit may be better positioned to play that role.
In the face of geopolitical uncertainty, inflation concerns, and market volatility, investors may be driven to cash as a perceived safer alternative than equity and bond markets. However, two-thirds of Natixis’ strategists warn that cash leaves investors exposed to inflation risk (67%), and more than half (52%) think cash may not offer sufficient returns to meet long term goals, meaning more attractive returns elsewhere in the market which could be missed (45%).
This year, strategists are concerned about forces reshaping the economic landscape. On monetary policy, nearly six in ten (58%) think the Fed will hold rates in this half, while more than half (52%) believe rate hikes are more likely for the Bank of England, and roughly three-quarters say the same for both the ECB (76%) and the Bank of Japan (76%). Fewer than half (45%) of Natixis’ strategists believe a central bank mistake poses a meaningful risk for the remainder of the year.
On trade, seven in ten (70%) of strategists say tariffs are now a long-term feature of trade assumptions, and nearly nine out of ten (88%) see opportunity emerging from deglobalisation as supply chains become increasingly regional. Nearly eight in ten (79%) believe the war in Iran will intensify competition between the US and China, yet over four in five (85%) believe the Chinese economy will remain resilient.
Opportunities in H2
Despite the political and macro shocks, global markets proved resilient in H1 2026, with the S&P, Euro Stoxx, and FTSE all generating modest single-digit returns. While the first half is a story of geopolitical disruption and economic change, Natixis strategists are sticking with the themes that have driven markets for the past two years, with two-thirds (67%) expecting US equities to outperform, more than three-quarters (76%) believe large-caps will outperform small-caps, and over eight in ten (82%) preferring growth over value.
Looking ahead, more than four in ten (42%) of strategists expect US markets to deliver the best returns in H2 2026, driven by AI and large-cap growth stocks, up from nearly three in ten (29%) who held the same view last year. Strategists favour technology as the primary source of market returns. In both the US & Asia, nearly two thirds (61%) expect IT to be the top performing sector, all other sectors trailing with 10% or less.
