Three global headwinds investors can’t ignore in 2026

Global markets look set to end 2025 on a high. The resilience of earnings, heavy enthusiasm around artificial intelligence, and renewed appetite for risk have pushed equities towards one of their strongest multi-year runs in recent memory. 

Investors who held their positions through this period have been rewarded. Yet the strength of this year should not be mistaken for a preview of the one ahead. The forces building beneath the surface point to 2026 being a far more challenging period for investors worldwide.

I expect markets to advance again, but not in the confident manner implied by multiple year-end forecasts. 

The next phase of this cycle will be shaped by profit pressure in AI, the market’s dependence on a tiny cluster of dominant companies, and the volatility created by unpredictable policy shifts. These are global headwinds with the power to reshape sentiment quickly.

AI will drive innovation and instability in equal measure

The scale of investment in artificial intelligence across 2024 and 2025 has been extraordinary. Capital has poured into infrastructure, computers, research and deployment at a speed rarely seen in technology cycles. The optimism surrounding AI remains justified in the long term. Its potential impact on productivity and business models is profound. 

However, enthusiasm has elevated expectations to a level where companies will face intense scrutiny next year.

Revenue growth will not match investment growth in a straight line. Earnings delivery in AI is uneven, expensive and subject to timing risks. After two years of aggressive spending, markets now want evidence, not aspiration. 

I expect frequent profit checks throughout 2026 as investors assess whether firms can convert their investment into measurable returns. Those that do will remain leaders. Those that fall short will likely encounter sharp adjustments to their valuations.

This isn’t an argument against AI’s trajectory. It’s a recognition that the market has moved from imagination to interrogation. Investors must distinguish between near-term execution risk and long-term potential. The coming year, I believe, will not forgive companies that overpromise.

Market concentration is now a structural risk

Another challenge is the extraordinary concentration of returns in a small group of mega-cap firms. This narrow leadership creates a market that appears strong at the index level but fragile beneath it. When such a small set of names drive global equity performance, even minor disappointments can influence sentiment across markets.

Concentration also distorts the signals investors rely on. Strong index performance can mask weakness across the majority of companies. 

This reduces the breadth that usually provides resilience during unsettled periods. The episode earlier this year, when markets fell sharply following tariff changes before rapidly recovering, exposed how quickly sentiment can shift when the largest companies come under pressure.

Investors should not underestimate the vulnerability created by this imbalance. A market supported by a narrow front produces more abrupt reactions to earnings, guidance and policy headlines. The strength of 2025 has obscured this fragility; 2026 is likely to reveal it.

Policy likely to create volatility rather than stability

Interest rate cuts are expected next year in many major economies, and that expectation has supported appetite for risk. Yet confidence in timing is weak. 

Inflation has eased but remains inconsistent across regions. Economic data is improving in some geographies while disappointing in others, and this uncertainty means rate moves may not align with investor expectations.

Trade policy will also remain a source of volatility. The tariff shock last April, a rapid decline of nearly 15 per cent across several days, showed how sensitive global markets remain to abrupt shifts.

Supply chains are still adapting, and the potential for further action is very much alive. Firms exposed to international flows of goods and inputs face an unpredictable environment next year.

Fiscal policy adds complexity. Corporate tax incentives have lifted earnings forecasts, but they have also raised the bar for what counts as “good enough” performance. 

Companies may find that results supported by tax measures are no longer sufficient to satisfy investors, who are increasingly focused on the quality of underlying growth.

These dynamics create a policy environment that moves markets rather than anchors them. Investors should treat policy as a primary driver of volatility in 2026, not as a stabilising force.

Judgment will matter more than momentum next year

The combination of these three headwinds — AI profit pressure, extreme concentration and policy unpredictability — will define market behaviour next year. 

Each one exerts influence on its own, but together they create a setting where volatility could become the norm rather than the exception.

We expect considerable opportunity in 2026. Markets do not need calm conditions to generate strong returns. What they need is clarity. 

The coming year demands more careful selection, stricter attention to earnings quality and a deeper understanding of risk than the past two years have required.

Nigel Green, deVere Group CEO and founder