Where are markets headed in the second half of 2026?

AI momentum is likely to remain a key market driver in the second half of 2026, but the winners may continue to shift as competition, valuation, and capex trends evolve. Inflation appears to be cresting, which supports a Fed-on-hold backdrop and suggests bond yields may stay rangebound while income remains attractive. At the same time, resilient consumers and stronger earnings expectations still support risk assets, though investors should expect more volatility as markets rotate beyond the largest AI names.

The main opportunity set now looks broader than earlier in the year, with selective exposure across AI enablers, small caps, international equities, and income-generating fixed income. Risks remain tied to an AI correction or renewed inflation pressure that could hurt stocks and keep rates elevated. In this environment, diversification and flexibility appear especially important as markets move through changing leadership patterns.