Position your portfolio for what’s next
A volatile geopolitical landscape, rapid technological shifts and evolving energy systems are helping to reshape investment returns.
As we settle into 2026, the challenge for investors is in understanding and taking advantage of (or avoiding, if necessary) these global trends.
The artificial intelligence boom has taken much of the oxygen in the market. The tech giants have committed massive infrastructure spending with global data centre investments reaching a record $61 billion in 2025, cementing the evolution from a speculative investment.i
These titanic financing needs are reshaping how capital is deployed, according to S&P Global 451 Research. More than $900 billion is needed for data centre investment over the next four years.ii
Some analysts warn of an AI bubble, noting that several of the Magnificent Seven stocks – the most influential companies in the US market – underperformed the S&P 500 in 2025. Others argue the boom has longer to run, citing historical cycles since 1920.iii
Nonetheless, investment opportunities are beginning to broaden into software and services as the sector matures.
These investments have become a dominant contributor to growth in the United States, accounting for 80 per cent of private domestic demand growth in the first half of 2025. While the US and China are leading the data centre charge, commanding more than 60 per cent of global capacity, players across Europe, the Middle East and Asia-Pacific are racing to establish their own digital sovereignty.iv
Australia ranks at the lower end of advanced economies in rates of adoption and trust in AI, according to a Reserve Bank report.v
Yet, Australian research and development investment in AI is experiencing significant growth. AI-related patents, while still low by world standards, almost quadrupled in the last decade, according to a National Artificial Intelligence Centre report.vi
The energy transition
The global energy mix is undergoing a significant shift with accelerating investment in electric transport, renewables and grids, driven by massive growth in demand and improved supply chains.
Capital flows to the energy sector rose to more than USD3 trillion last year and are forecast to hit USD3.3 trillion this year, partly fuelled by the dramatic cost reductions in solar power and battery storage.vii
This surge in spending creates investment opportunities directly in equities focused on the energy value chain. Infrastructure funds and private equity are also targeting renewable generation and storage assets for long-term, inflation-linked returns.
Navigating wars and tariffs
The markets are digesting a fragmented global economy pushed and pulled by ongoing conflicts and the shifting US tariff policy that are affecting supply chains, inflation and risk.
The risks to financial stability are also caused by stretched asset valuations, sovereign bond market pressures and the rising influence of non-bank financial institutions, the International Monetary Fund warns.viii
As a result, ‘safe havens’ have become a feature of many portfolios. Investors looking for protection from currency instability have headed to gold, pushing its price ever higher. Meanwhile, institutional investors have made defence stocks a cornerstone of their portfolios as many nations increase defence spending.
Beyond traditional assets
As traditional stock and bond correlations become less predictable, many individual investors are looking toward ‘alternatives’ in the hunt for stability . These alternatives include:
Infrastructure – such as toll roads and utilities
Private equity - offers a way to capture value in unlisted companies. New private equity funds are emerging to shake up the sector, allowing shorter term capital commitments.
Private credit (or private debt) market - offers floating-rate exposure, which can be a valuable hedge if interest rates are high. In Australia, the $224 billion private debt market accounts for some 14 per cent of all corporate lending.ix
Next steps
Looking ahead, success may hinge on positioning portfolios to capture emerging opportunities across technology, energy, geopolitics and alternative assets while mitigating the risks.
Please get in touch to talk about how to navigate the new opportunities.
i Investment in data centers worldwide hit record $61bn in 2025 | The Guardian
ii Data Centers: Are The Winning Odds Less Certain I S&P Global Ratings
iii US market boom-bust cycles - where are we now?
iv Look Forward: Data Center Frontiers | S&P Global
v Technology Investment and AI: What Are Firms Telling Us | RBA
vi Australia’s AI ecosystem | Department of Industry Science and Resources
vii World Energy Investment 2025 | IEA