Neil Robson, Head of Global Equities at Columbia Threadneedle Investments shares his overview of the Columbia Threadneedle 2026 Equity Outlook with us as follows:
On why the outlook equities remains constructive in 2026
“Today’s mix of policy easing, supportive fundamental backdrop, and transformative AI investments sets a constructive outlook for equity markets in 2026. Economic growth is steady, and central banks stand poised for further rate cuts as inflation moderates.”
“Despite this broad-based optimism, we remain cognisant of potential risks and view diversification as essential, particularly as a broader set of opportunities emerges.”
On earnings momentum
“US company earnings will likely be a key driver of equity returns in 2026. Our expectations are for robust growth with the likelihood of upside surprises exceeding the potential for disappointment.”
“Companies appear to have adjusted well to the new environment of higher tariffs and resulting cost shifts with redesign, alternative sourcing and selective pricing curbing earnings headwinds to an estimated 3-5% range.”
“The AI-driven capital expenditure cycle persists as a potent force, and we expect it to be stimulative for revenues across a broadening range of sectors.”
On the $3.5 trillion AI capex cycle
“The AI-fuelled capital expenditure (capex) cycle could reach an extraordinary $3.5 trillion through to 2030, primarily through the build-out of data centres and related infrastructure.”
“We view the magnitude of this investment cycle as transformative, with its impact reaching far beyond technology companies. In the US, AI capex currently contributes more to GDP growth than traditional consumption.”
“Valuations are elevated, but with interest rates falling and earnings growth both broadening and accelerating into 2026 it is unlikely we will see a significant correction. Indeed, the surprise may be that these conditions enable valuations to expand further”
On diversification and leadership broadening
“Diversification always matters, but we view it as a crucial consideration in 2026. We expect continued strength in the US, but opportunities are evolving from the era of US exceptionalism.”
“We anticipate that pockets of earnings growth in Europe and Japan will keep pace with the US, and a broader range of sectors look capable of delivering appreciation. Defence and financials are two notable examples. From a market perspective, we also see firmer support for small cap stocks.”
“When constructing and monitoring portfolios, we contend that investors should also be wary of hidden concentrations – especially as the AI investment cycle diffuses across a host of industries.”
On Europe
“The prospect of fiscal expansion stoked the fires of interest in European equities during 2025 – and we see this being realised in 2026. The relaxation of Germany’s debt brake and associated defence and infrastructure spending are set to unlock growth, and lower interest rates also lend support.”
“At the same time, we are mindful of risks, especially in countries like France, where political uncertainties cast doubt on economic discipline and the sustainability of high debt levels. Opportunities abound but investors should be attentive to broader developments.”
On Japan
“Japan’s economic transformation continues with deflation firmly in the rearview mirror – inflation stands at around 2% and bond yields are above the 3% mark.”
“Ongoing reforms support a more favourable growth environment., and corporate Japan is streamlining balance sheets, embracing a new focus on returns on equity, and investing capital.”
