BlackRock expects AI to continue dominating markets in 2026 despite risks

Group 1 - BlackRock anticipates that AI will continue to dominate markets through 2026, predicting a turbulent investment environment due to speculative trading and leverage risks [1][2] - Returns from AI-linked investments are expected to trend upwards, driven by significant capital expenditures from companies with substantial cash reserves, although volatility in stock valuations is anticipated [2] - The recent U.S. stock market pullback in November was attributed to concerns over AI companies overspending on new data centers, highlighting the risks associated with high leverage among hedge funds [3] Group 2 - BlackRock is increasing investments in European energy and power infrastructure firms, such as Siemens Energy, due to heightened demand for turbines, grid technology, and clean energy driven by the AI boom [4] - The outlook for defense stocks remains positive, although less so than at the beginning of the year, reflecting changing market conditions [4] - European aerospace and defense shares experienced an 8% decline in November, marking the largest drop since June 2024, amid speculation regarding a potential peace deal between Ukraine and Russia [5]