Wall Street’s 2026 Outlook: Gold’s Surge, AI’s Momentum & Fed Policy Turning Point

The TradingView article outlines five major predictions from Wall Street—based largely on research from Goldman Sachs, Morgan Stanley, J.P. Morgan, and Bank of America—that sketch a textured investment landscape for 2026. Several macro themes emerge as foundational.

1. AI spend escalation with risk of profit lag. Goldman Sachs forecasts AI capital expenditure reaching $527 billion in 2026, up from $465 billion at the start of 2025. Bank of America warns of a potential “air pocket” where capex has surged, but profit streams may lag, especially under rising debt loads: hyperscaler debt issuance in 2025 exceeded $121 billion, with a projected $100 billion more in 2026. Companies that can demonstrably monetize AI will outperform.

2. Sector rotation away from mega tech. 2025 was dominated by mega-cap tech (“Magnificent Seven”) but strategists from Goldman and Morgan Stanley expect financials, industrials, and healthcare to lead in 2026. Drivers include rising net interest margins, infrastructure and AI capex demand, and valuation reset in tech multiples if AI monetization disappoints.

3. Gold’s strong bullish trajectory. Gold is forecast to surge: Goldman Sachs targets $4,900 per ounce by end-2026; J.P. Morgan forecasts ~$5,055 per ounce in Q4 2026; Deutsche Bank expects an average of $4,450, with a $3,950-$4,950 range. The bullish thesis rests on central bank buying (70 tonnes/month in Goldman’s model), expected Fed rate cuts, risky real yields, inflation, and geopolitical uncertainties.

4. Fed rate path and asset bifurcation. Analysts see a gradual rate-cut path by the Fed in 2026 rather than a steep drop, anticipating yields to fall in H1 and then stabilize amid inflationary persistence. Real interest rates, inflation expectations, and currency strength will influence whether assets like gold, bonds, or equities outperform.

5. Diverging outlooks for equities. J.P. Morgan sees S&P 500 at 7,500 by end-2026 assuming 13-15% earnings growth; Morgan Stanley’s 7,800 target assumes similar conditions. Bank of America, however, offers only ~4% upside from current levels unless valuations reset. Such divergence reflects uncertainty over earnings growth and multiple compression.

Strategic implications and open questions:

• Investors may need to favor evidence-based AI plays—those showing revenue growth and manageable debt—over pure capex stories.
• Portfolio allocations may shift: increasing exposure to financials, industrials, healthcare, plus safe-haven assets like gold for risk diversification.
• Fixed income and duration exposure will be sensitive to the pace of Fed cuts; front-loaded easing could benefit bonds, but delaying cuts may favor shorter durations.
• Open questions: How rapidly can AI companies monetize large capex? Will inflation and fiscal large-deficit pressures force the Fed to remain tighter longer? To what extent will central bank gold purchases continue, and will geopolitical shocks escalate or stabilize? How much downside risk exists if the “valuation reset” scenario plays out?