Top investment themes to watch in 2026

The dust has barely settled on 2025's dramatic market swings, but investors are already looking ahead to a 2026 that promises both opportunity and uncertainty. While artificial intelligence continues to dominate headlines, the investment landscape for 2026 is broadening considerably.

From nuclear energy's renaissance to unprecedented defence spending, gold's relentless rally to emerging market resilience, the themes shaping returns this year extend well beyond Silicon Valley's data centres.

AI enters a new phase?

After three years of explosive growth driven by infrastructure buildout, artificial intelligence is entering what analysts are starting to call ‘phase two.’ The initial period often rewarded companies based on sentiment alone, or those who could deploy capital at scale. But 2026 marks a transition toward monetisation and return on investment.

Tech firms spent around $405 billion on AI infrastructure in 2025, a staggering sum that now demands justification. Wall Street's patience for speculative AI plays is arguably wearing thin, and companies will need to demonstrate concrete revenue generation from their massive capital expenditures.

This shift creates both risk and opportunity.

The good news is that adoption remains the defining theme for equity markets in 2026, with institutional investors maintaining universal optimism despite elevated valuations. AI agents (autonomous systems capable of complex decision-making) are moving from research labs into corporate workflows, with companies like Salesforce, ServiceNow and Palantir leading deployments.

However, concentration risk looms large. The largest technology companies, such as Nvidia, now represent a massive chunk of the major market indices by weight, so any stumble in AI monetisation could trigger significant market volatility. Goldman Sachs forecasts the S&P 500 will reach 7,600 by year-end, representing solid but more modest gains than recent years, reflecting this growing caution.

Beyond US borders, sovereign AI investments are accelerating. Countries in the Middle East, Europe and Southeast Asia are investing heavily in domestic AI capabilities to avoid any dependence on American or Chinese technology. This geographic diversification of AI development could create new investment opportunities in emerging markets while reducing US dominance.

Nuclear renaissance powers ahead

Perhaps no investment theme has generated more excitement than nuclear energy's dramatic comeback, with the combination of AI's power demands and climate commitments transforming nuclear into a critical growth industry.

Small modular reactors represent the cutting edge of this renaissance. The Trump administration has promised a major policy push to revive and expand nuclear energy in 2026, including deployment targets at military installations by 2028. Companies like Oklo and BWX Technologies are racing to commercialise SMR technology that can be factory-built and deployed far more quickly than traditional reactors.

The investment case rests on simple mathematics. Data centres supporting AI workloads require baseload power that intermittent renewable sources cannot reliably provide. Major technology companies are voting with their wallets: for example, Google has contracted with Kairos Power for SMRs operational by 2030, while Amazon announced multiple SMR partnerships including a $500 million investment in X-energy.

The regulatory landscape is also improving. The Nuclear Regulatory Commission approved NuScale's upgraded 77-megawatt reactor design in 2025, a crucial milestone that strengthens its commercialisation prospects. Congress is continually holding hearings on cutting regulatory barriers and implementing rules to support accelerated nuclear deployment.

However, investors might wish to consider their risk profile. Despite soaring stock prices, execution risk remains substantial, with regulatory hurdles, nuclear waste concerns and uncertain adoption rates tempering the bullish thesis.

Gold breaks new ground

While technology captures headlines, precious metals are staging one of their most impressive rallies in decades. Gold is closing in on $4,500 per ounce, and JPMorgan analysts project the metal hitting more than $5,000 per ounce by late 2026, with $6,000 possible longer term.

Multiple structural forces are converging to support gold's rise.

Central banks, particularly in emerging markets, are diversifying away from dollar-denominated reserves at an accelerating pace. For context, fiscal deficit concerns are mounting as the US national debt continues its upward trajectory, with investors using gold as a hedge against currency debasement. Growing concerns about Federal Reserve independence under political pressure have also reinforced gold's role as an insurance policy against institutional decay.

Silver has joined gold's rally, driven by industrial demand from solar panels, electric vehicles and AI infrastructure colliding with stagnant mine production. This is creating a structural supply-demand imbalance that could persist for years.

Gold mining equities, which have historically lagged bullion prices, are beginning to attract serious institutional interest as investors recognise their improved fundamentals and leverage to rising gold prices. This sector may finally earn a strategic role in diversified portfolios after years in the wilderness.

Defence spending accelerates

Geopolitical tensions are driving an unprecedented expansion in global defence budgets. At the 2025 NATO Summit, allied nations committed to a new spending target: allocating at least 3.5% of GDP annually on defence expenditure by 2035, with total defence and security spending reaching 5% of GDP.

This represents a massive escalation. Major European markets are expected to see defence spending increase by 60% by 2030, creating substantial opportunities across the aerospace and defence supply chain for companies like Rolls-Royce. EU member states' defence investments already reached €106 billion in 2024, up 42% year-over-year, with projections of nearly €130 billion for 2025.

The spending surge is driven by multiple factors. Russia's ongoing aggression and hybrid warfare operations against NATO states have created an acute sense of vulnerability, while China's military modernisation and assertiveness in the Indo-Pacific is also driving concerns.

And rather than simply buying American weapons, European nations are coordinating procurement to develop indigenous defence industries. Requirements increasingly favour European manufacturers, with targets to source 55% of weapons from European or Ukrainian suppliers by 2030. Germany's procurement plan through 2026 allocates only 8% to US suppliers, a dramatic shift from recent years.

For investors, this creates opportunities across multiple segments. Defence contractors focused on artillery, missiles, drones and air defence systems are primary beneficiaries. But the spending extends beyond traditional weapons to encompass cybersecurity, space-based systems, AI-enhanced military capabilities and critical infrastructure protection.

Defence technology represents a particularly attractive niche, with significant investment flowing into autonomous systems, advanced sensors, satellite communications and electronic warfare capabilities.

Geopolitical fragmentation deepens

The investment landscape sadly can’t be separated from increasingly fractured geopolitics. The United States is unwinding its own global order, creating uncertainty about long-standing security arrangements and trade relationships.

Several flashpoints demand attention. The potential for intensified military pressure by China on Taiwan and armed clashes between Russia and NATO member countries are both risks to consider in 2026. While full-scale war remains unlikely, grey zone conflict between Russia and NATO is intensifying, with more frequent and dangerous confrontations expected.

The Trump administration's focus on the Western Hemisphere, particularly Venezuela, also represents a significant strategic shift. Toppling the Maduro regime appears may be just the start, even though aftermath planning seems lacking. The intervention could destabilise an entire region already struggling with migration pressures and economic dislocation, as well as put significant downwards pressure on oil.

Meanwhile, China is cementing its control of critical mineral supply chains while the West continues to dominate AI and semiconductor advances. This divergence has profound implications for global supply chains, trade patterns and geopolitical influence.

For investors, geopolitical fragmentation might be an argument for active management over passive strategies. Country, industry and company-level dynamics are diverging sharply, creating opportunities for those who can navigate complexity while avoiding the growing number of potential traps.

Emerging markets resilience

Against this backdrop, select emerging markets are demonstrating surprising resilience. Mexico investment may accelerate as USMCA discussions progress and nearshoring trends gain traction, positioning the country as a major beneficiary of efforts to reduce dependence on Chinese manufacturing.

Gulf states, particularly the UAE and Saudi Arabia, are emerging as AI-linked growth stories. Saudi Arabia's valuation reset and capital markets reform agenda may provide additional upside beyond the oil sector. These countries are leveraging their sovereign wealth to position themselves as technology hubs for the Middle East and North Africa region.

India remains a standout story, with decent growth and an accelerating earnings trajectory supported by structural reforms and infrastructure investment. The country's large domestic market and improving business environment are making it increasingly attractive to global investors seeking alternatives to China.

Eastern Europe could also benefit meaningfully if geopolitical risks continue to ease, though this remains highly uncertain given tensions with Russia. Select African and frontier markets may re-emerge as macro stability improves and reforms advance, though these opportunities require careful due diligence.

The key to emerging market success in 2026 will be focusing on high-quality companies with strong balance sheets, durable earnings power and exposure to long-duration structural themes.

Fixed income finds its footing

After years of disruption, bonds are potentially reasserting their traditional 60:40 role as a portfolio ballast. Fixed-income markets may rally in the first half of 2026 as central banks pivot from inflation control to equilibrium management, creating opportunities for tactical allocation.

The Federal Reserve's cautious stance, with only one additional rate cut expected in 2026, contrasts sharply with more aggressive easing by the European Central Bank. Meanwhile, Japan is continuing to struggle to maintain yield curve control. This creates opportunities across yield curves and geographies for sophisticated bond investors.

The intermediate portion of the US yield curve (the belly) appears particularly interesting, offering an appealing combination of income and stability. Emerging market bonds also present compelling opportunities supported by a potentially weaker US Dollar, easier global financial conditions and improving sovereign balance sheets.

With nearly $9 trillion still sitting in money market funds or similar, a substantial reallocation is likely as investors seek higher-returning fixed income alternatives. This flow could support bond prices even as economic conditions normalise.

Tech-related financing may still dominate credit markets, with growing demand for AI and data centre infrastructure translating into significant debt issuance. Of the trillions in data centre-related capital expenditures expected, perhaps only a small amount has been deployed thus far.

Navigating 2026

Investment success in 2026 may require balancing conviction with caution. The core drivers of the bull market — AI adoption, easing monetary policy and productivity gains — remain intact. However, elevated valuations, concentrated market leadership and geopolitical uncertainty make proper risk management perhaps more important than ever.

The broadening of market leadership beyond mega-cap technology stocks creates opportunities for active investors. Healthcare and consumer discretionary sectors, overlooked in 2025's AI frenzy, may be positioned for rebounds. Many healthcare stocks now trade at attractive valuations despite solid fundamentals, while consumer discretionary could benefit from AI exposure, tax cuts and resilient spending.

Energy markets present a split narrative. Traditional oil investments face structural headwinds from oversupply and weak demand, but the data centre boom has made electricity the new energy story. Industrials (the makers of transformers, switchgear and other electrical infrastructure) may prove more attractive than heavily regulated utilities despite the obvious power demand growth.

Volatility is likely to increase across most asset classes in 2026. With historically elevated valuations and optimistic investor positioning, markets remain vulnerable to disappointing news. This environment has historically rewarded diversification across asset classes, geographies and investment styles.

Perhaps the key is recognising that while the past three years have rewarded concentrated bets on technology, the year ahead may reward those who can identify value across a broader investment landscape.