Investors may go value hunting in 2026 as AI rally matures

By Niket Nishant, Kanchana Chakravarty and Joel Jose

Jan 5 (Reuters) - Global investors volition actively question opportunities this twelvemonth successful undervalued pockets of fiscal markets arsenic increasing concerns implicit an AI bubble propulsion traders to look beyond highly valued exertion stocks, according to respective analysts.

U.S. stocks were volatile successful 2025, plunging to adjacent carnivore marketplace territory successful April pursuing President Donald Trump's sweeping tariffs earlier yet ​rebounding to grounds highs.

The upward momentum is expected to proceed successful 2026, analysts said, though investors whitethorn person to get selective astir the assets they pick.

"This situation is ripe for progressive investing," strategists astatine ‌BlackRock Investment Institute said.

Metal prices were the standout winners successful 2025 arsenic the dollar slumped connected expectations of involvement complaint cuts by the Federal Reserve, which besides boosted emerging marketplace assets.

But strategists are betting connected a fewer different plus classes to summation traction this year.

SMALL CAP STOCKS

After ‌years connected the sidelines, U.S. tiny caps whitethorn instrumentality to the spotlight arsenic net prospects amended and borrowing costs fall.

"The large quality going into 2026 is that we yet are seeing net maturation travel backmost into tiny caps," said Oren Shiran, portfolio manager astatine Lazard Asset Management.

Traders expect 2 25-basis-point cuts from the U.S. cardinal slope successful 2026, according to estimates compiled by LSEG. Small headdress companies typically transportation higher debt, truthful they are among the archetypal to payment erstwhile involvement rates determination lower.

Jefferies equity strategist Steven DeSanctis expects the Russell 2000 index, which tracks tiny headdress stocks, to ascent to 2,825 points by the extremity of 2026, marking a adjacent 14% summation from 2025.

GOLD

Gold's historical tally successful 2025 made it the ⁠best twelvemonth for the yellowish metallic since the 1979 lipid crisis. J.P. Morgan ‌and Bank of America forecast golden prices to deed $5,000 per ounce this year, compared with $4,314.12 successful 2025.

Analysts astatine the Wells Fargo Investment Institute expect favorable conditions to persist, but said the gains could travel astatine a much measured pace.

Another root of enactment could travel from buying by cardinal banks, which person been diversifying their reserves beyond dollar-denominated assets.

HEALTHCARE AND FINANCIALS

Healthcare ‍could beryllium 1 of the standout sectors, powered by a question of argumentation boosts. Morgan Stanley said the increasing scope of weight-loss drugs could boost the industry.

Financials, peculiarly banks, are besides expected to outperform arsenic M&A enactment accelerates and indebtedness maturation rebounds.