#London #United Kingdom #Artificial Intelligence #Natixis #US-Iran Conflict

The Future of the Market: AI's Promising Outlook in H2 2026

As we move into the second half of 2026, investors are facing a tumultuous backdrop. The ongoing conflict between the US and Iran has raised significant concerns, alongside inflation that continues to persist. However, a recent survey conducted by Natixis Investment Managers reveals an overwhelmingly positive sentiment among strategists regarding the potential of Artificial Intelligence (AI) to propel market performance.

Key Findings of the Natixis Survey

According to the responses from 33 market strategists, the belief that AI will be the primary driver of market performance in the latter half of the year is shared by 91% of the participants. Additional key insights include:

• - Productivity Gains: 88% anticipate that gains in productivity derived from AI advancements will lead to enhanced corporate profitability.
• - US Equities Outperformance: Approximately 67% predict that US equities will outperform other global markets, with 42% specifically identifying these markets as likely to yield the best returns.
• - Overstated Credit Concerns: Over half of the strategists (55%) suggest that anxiety surrounding private credit may be exaggerated.

Navigating Geopolitical Risks

Despite this optimism surrounding AI, the survey has not overlooked the looming threats posed by geopolitical tensions, particularly concerning the ongoing US-Iran conflict. Nearly all strategists (97%) have ranked inflation as one of the foremost risks heading into the second half of 2026. The energy market has seen contributions to inflation due to disruptions linked to military actions, particularly with oil prices experiencing significant fluctuations. As the situation develops, 70% believe that a potential increase in hostilities may escalate these risks further.

Evolving Economic Sentiments

The sentiment regarding recession has notably shifted, with only 3% rating it as a high risk compared to 62% from the previous year. It appears that strategists are more focused on the broader shifts in the economic landscape rather than immediate recession fears. Concerning monetary policy, nearly 58% believe that the Federal Reserve will maintain current rates, while a significant portion of European strategists foresee possible rate hikes.

Defense Sector on the Rise

Amidst the global uncertainty, the defense sector stands out positively, with 70% of respondents indicating that it could benefit from ongoing geopolitical dynamics. This outlook aligns with a global trend of increased defense spending, which many believe will remain sustained given current threats.

Shift in Investment Strategies

As investors reevaluate their safety measures in fixed income markets, nearly half (48%) have reconsidered the status of Treasuries as safe assets, favoring investment-grade credits instead. In terms of diversification, two-thirds (67%) of strategists are integrating alternative strategies, with infrastructure investments singled out as attractive due to their stable returns amid economic volatility.

In conclusion, while geopolitical tensions and inflation pose substantial risks, the resilience of the AI sector and optimism about US equities suggest that investors may find opportunities for growth in the latter half of 2026. The focus will likely remain on leveraging technological advancements such as AI to navigate these challenges effectively, as the survey indicates a long-term transformative view of AI across businesses. Investors are encouraged to adopt a proactive strategy to position themselves advantageously in what promises to be a dynamic market landscape.