Investors heading into the second half of 2026 face a complex market landscape where artificial intelligence growth is expected to drive returns, even as geopolitical tensions and persistent inflation create substantial headwinds. A survey of 33 strategists at Natixis Investment Managers released on July 15 found that 91% believe AI will be the key factor driving market performance in the second half of the year, despite ongoing U.S.-Iran conflict, volatile energy markets, and inflation concerns.
The optimism around AI carries significant caveats. Of the Natixis strategists surveyed, 88% expect productivity gains from AI to translate into higher corporate profits, yet 79% warn that volatility driven by AI fears will persist and could spread across multiple industries. This tension between opportunity and risk defines the 2026 investment landscape.
Concentration in the AI rally presents another challenge. Natixis strategists ranked concentration risk as medium or high in 85% of responses, citing the fact that only six or seven AI companies are driving a disproportionate share of market returns. This narrow base of leaders has made the broader market vulnerable to sharp selloffs when sentiment shifts. Earlier this month, tech volatility hit its highest levels since the aftermath of Donald Trump’s tariff rollout a year ago, according to Fortune, with the Volatility Index reaching 29.7 on July 7—a sign of investor anxiety despite overall market resilience.
Geopolitical risks compound the picture. The Natixis survey found that 97% of strategists rank inflation among the top risks in the second half of 2026, with 70% saying an escalation or re-escalation of the U.S.-Iran war could represent a key risk. The first half of 2026 saw oil prices spike sharply after the closure of the Strait of Hormuz, doubling prices and fueling inflation concerns. While a joint memo of understanding between the U.S. and Iran has provided temporary relief, strategists warn that energy costs remain vulnerable to further geopolitical shocks.
The AI boom’s sustainability remains a point of debate among market observers. Central banks have sounded warnings about stretched valuations. In October 2025, the Bank of England cautioned that the risk of a sharp market correction had increased amid what it termed stretched AI-related valuations. Earlier this year, when a correction in technology stocks materialized in spring 2026, Goldman Sachs examined parallels to the dot-com bubble, noting both similarities and differences in how valuations have inflated. Despite these warnings, Natixis strategists remain relatively sanguine on recession risk, with only 3% rating it as high—down sharply from 62% who rated recession as a medium or high risk in last year’s survey.
For those looking to invest in 2026, the consensus points to selectivity. Natixis strategists favor U.S. equities, with 67% expecting them to outperform in the second half, and 42% identifying U.S. markets as likely to deliver the best returns globally. Within equities, 76% believe large-cap stocks will outperform small-caps, and 82% prefer growth over value. Technology remains the primary sector bet, with 61% of strategists in both the U.S. and Asia expecting IT to be the top performing sector.
Sources
- Natixis Investment Managers — July 15, 2026 strategist survey showing 91% of strategists expect AI to drive H2 2026 market performance, 88% expect productivity gains, 79% see persistent volatility, 85% rank concentration risk as medium/high, 97% rank inflation as top risk, 70% cite U.S.-Iran escalation risk, 67% expect U.S. equities to outperform, 76% favor large-caps, 82% prefer growth
- Fortune — July 7, 2026 report on tech volatility hitting highest levels since Trump tariff rollout, with 30-day volatility at 29.7
- Bank of England — October 2025 warning via CNBC of sharp market correction risk amid stretched AI valuations
- Goldman Sachs — March 27, 2025 analysis of tech stock correction parallels to dot-com bubble
