BlackRock predicts AI to dominate markets in 2026, expecting investors to face a bumpy ride due to speculative trading and leverage. Helen Jewell, BlackRock’s CIO of fundamental equities EMEA, foresees AI-linked investments continuing to rise, but warns of sector valuation doubts leading to stock volatility.

Jewell highlights concerns about market crowding and leverage causing fluctuations. Doubts over AI groups overspending on new data centers led to a significant U.S. stock market pullback in November. Hedge funds trading with high leverage pose risks of rapid selloffs if asset prices decline, forcing liquidation to meet lender requirements.

BlackRock is increasing positions in European energy and power infrastructure companies like Siemens Energy, benefiting from the AI boom’s demand for turbines, grid technology, and clean energy. Jewell remains positive on defense stocks but less optimistic than earlier in the year. European aerospace and defense shares dropped 8% in November amid speculation of a potential Ukraine-Russia peace deal.

Read more at Yahoo Finance: BlackRock expects AI to continue dominating markets in 2026 despite risks