Global Equity: Outlook 2026
December 2025 | Paul Markham
We have seen significant capital committed to AI-related activity over the last two to three years and this has accelerated in recent months with large investment programmes announced by suppliers of infrastructure and solutions such as Oracle and AMD, as well as the ‘hyperscalers’ and various other participants in the supply chain.
This has led to a degree of excitement in markets as the rush to capitalise on this wave of interest in what is without doubt a generational technological, economic and social development.
While there are some parallels to the late-1990s ‘tech bubble’ (and we are monitoring them carefully), we still see plentiful opportunities to benefit from AI tailwinds. Our focus on companies with strong franchises and moats, financial stability and the capacity to generate cash will provide support to our exposure to this area. Volatility will be difficult to avoid; but compelling upside is there in the right stocks.
Lessons from 2025
The incoming US presidency moved quickly to implement its programme in the early months of 2025, leaving us increasingly concerned about the thematic and macro backdrop. As the US economy slowed, inflation remained somewhat stubborn and tariffs threatened to both further exacerbate inflation and geopolitical tensions, as well as stifle growth, we believed that markets looked vulnerable. We reduced the relative risk of the portfolios significantly as a result, both before and after the so-called ‘Liberation Day’ announcement; but after a short and sharp period of weakness global equity markets rallied violently, led by the US, as it became clear that the Trump administration was backing away from its initial demands. Unfortunately, a period of fund underperformance followed; and as a team we undertook a root-and-branch review of the portfolio on both a structural and line-by-line basis. We concluded that our concerns were no longer immediately valid and moved decisively to revise exposures accordingly. This took the form of amending weightings in a range of favoured long-term holdings, as well as establishing positions in new names. It is clear to us that liquidity remains abundant; and while our primary focus continues to be on stock fundamentals, guided by our thematic framework, it seems possible that this wall of money can support markets as we enter the new year.
Opportunities in 2026
The wider global equity universe is a broad one and we see no shortage of potential investment ideas. The rise of AI is, of course, front of mind for many investors but tectonic geopolitical shifts also afford opportunities within the infrastructure and defence sectors, for example. As ever, we will continue to reflect the most compelling aspects of the opportunity set through the strategic prism of our thematic framework and implement it via focused positions in favoured companies.
Paul Markham is an Investment Director investing in Global Equity and Disruptive Growth strategies at GAM Investments.