Investors Eye Value Opportunities in 2026 as AI Rally Matures
Global investors are expected to shift their focus in 2026 towards undervalued sectors and assets, as concerns over a potential artificial intelligence (AI) bubble prompt a move away from high-priced technology stocks. Analysts say that after a year of strong gains driven by AI enthusiasm, markets are entering a phase where selectivity and active investing will be crucial.
Selective Investing Takes Centre Stage
Following a volatile 2025 — marked by sharp swings due to US tariff policies and a subsequent recovery to record highs — analysts predict continued upward momentum in 2026. However, they expect investors to turn to value opportunities across small-cap stocks, financials, and emerging markets.
“This environment is ripe for active investing,” strategists at the BlackRock Investment Institute said. They noted that the focus will likely shift from growth-oriented technology shares to assets with stronger fundamentals and attractive valuations.
Small Caps and Gold Emerge as Favourites
US small-cap stocks, which struggled through much of 2025, are projected to rebound as borrowing costs ease. “The big difference going into 2026 is that we finally are seeing earnings growth come back into small caps,” said Oren Shiran, portfolio manager at Lazard Asset Management.
Traders are pricing in two quarter-point interest rate cuts by the US Federal Reserve this year. Lower rates typically benefit smaller companies that carry higher debt levels. Jefferies strategist Steven DeSanctis expects the Russell 2000 index to climb to 2,825 points by the end of 2026 — a rise of nearly 14 per cent from last year.
Gold also continues to attract investors after a record-breaking 2025. J.P. Morgan and Bank of America project prices could hit 5,000 US dollars per ounce this year, up from 4,314 in 2025. Central bank purchases and diversification away from dollar-based reserves are expected to provide further support.
Sector Opportunities: Healthcare and Financials
Healthcare is positioned for another strong year, with analysts citing policy support and the expanding market for weight-loss drugs. Morgan Stanley said that financial stocks could also outperform as merger activity rebounds and AI adoption drives efficiency gains. Mid-sized banks are seen as early-cycle winners amid deregulation and renewed loan growth.
Currency and Emerging Market Outlook
Analysts anticipate another period of weakness for the US dollar as the Federal Reserve cuts rates to cushion a softening labour market. This could make emerging market currencies such as the Chinese yuan and Brazilian real more attractive. Commodity-linked currencies, including the Australian and New Zealand dollars, may also benefit from an improving global growth outlook.
Emerging markets overall are expected to see continued inflows, supported by stable macroeconomic conditions and favourable valuations. However, political risks remain, particularly in countries heading into elections such as Brazil and Colombia.
Bond Markets and New Asset Classes
High-yield and corporate bonds are expected to stay active in 2026 as companies raise capital for mergers and AI-driven infrastructure investments. Janus Henderson portfolio managers described the market as “constructive,” citing strong investor appetite that comfortably absorbed high issuance levels in 2025.
A new area attracting attention is event contracts — financial instruments that allow traders to bet on the outcomes of real-world events such as elections or sports. Robinhood CEO Vlad Tenev described the trend as “the early stages of a supercycle,” with market revenues projected to increase five-fold by 2030. However, regulators are watching closely, warning that these contracts could blur the line between investing and gambling.
As 2026 begins, analysts agree that while the AI boom remains a powerful driver of innovation, the next phase of the market will likely reward investors who can identify value beyond the crowded technology sector.
with inputs from Reuters