BlackRock expects artificial intelligence to remain the dominant force in global markets in 2026, but the asset manager warned investors to brace for a volatile path as speculative trading and rising leverage amplify the risk of sudden selloffs. Reuters reported that the world’s largest asset manager sees continued momentum for AI-linked companies despite growing concerns over valuations.
Helen Jewell, BlackRock’s chief investment officer for fundamental equities in EMEA, said returns from AI-related investments should stay on an upward trajectory as companies continue to pour record sums into data-centre capacity and computing infrastructure. Speaking on the sidelines of a London conference, she noted that the scale of capital expenditure by some of the world’s most cash-rich firms supports the outlook.
“Do I expect an upward trend of AI growth returns? Yes, these are incredible capital spends being driven by companies with incredible amounts of cash,” Jewell told Reuters. “Do I think that there is likely to be a rocky ride as we go there? Also yes.”
Her caution follows last month’s sharp U.S. market pullback, which was triggered by investor anxiety that leading AI players may be overspending in their rush to build new data centres. Reuters reported that hedge funds are currently operating with near-record levels of leverage, raising the likelihood that even modest declines in asset prices could force rapid position liquidations, intensifying market swings.
Jewell said she was increasing exposure to European energy and power infrastructure companies, including Siemens Energy, arguing that the AI boom would drive sustained demand for turbines, grid technology and clean power systems. The accelerated build-out of data centres is expected to place pressure on electricity networks and spur investment in generation and transmission.
Addressing a separate panel, she added that BlackRock remained positive on defence stocks, though sentiment had moderated compared with earlier in the year. European aerospace and defence shares recorded an 8% decline in November—their steepest drop since June 2024—amid speculation of a potential Ukraine-Russia peace development.
AI’s rapid expansion will continue to shape investment flows into 2026, but warn that liquidity conditions, regulatory scrutiny and geopolitical shocks could add further instability. BlackRock’s outlook suggests investors will need to balance enthusiasm for AI-led growth with tighter risk management as leverage builds across parts of the market.