Bank of America Global Research forecasts that the global economy will advance more robustly in 2026 than investors currently anticipate. The firm expects stronger growth in both the US and China, sustained momentum in AI-driven investments, and a rotation in market leadership.

Following a strong rally in US and international markets during 2025, investors are increasingly questioning how much further the bull run can extend.

Candace Browning, Head of Bank of America Global Research, stated: "Despite prevailing concerns, our team remains optimistic about global economic and AI development." She dismissed fears of an imminent AI bubble burst as "overstated" and projected that both US and Chinese GDP growth in 2026 will surpass market consensus.

Here are Bank of America's 10 key predictions for 2026:

1. US GDP Growth to Outperform Expectations The bank takes a significantly more bullish stance than most market participants, with senior economist Aditya Bhave forecasting 2.4% annualized GDP growth. Key drivers include fiscal support from the CHIPS Act, reinstated Tax Cuts and Jobs Act incentives, favorable trade policies, sustained business investment, and lagged effects of Fed rate cuts.

2. AI Boom Continues Without Bubble Formation The firm maintains that AI investment cycles will progress constructively rather than abruptly end. AI-related capital expenditures—including data centers, chip manufacturing, and automation—have already boosted GDP and will remain crucial growth engines in 2026. The iShares Semiconductor ETF has surged 40% year-to-date and 450% since ChatGPT's November 2022 launch.

3. Emerging Markets to Benefit From Improved Macro Conditions A weaker dollar, lower US rates, and softer oil prices should create favorable conditions for emerging markets. Strategist David Hauner predicts this "triple tailwind" will ease financing pressures and spur capital inflows.

4. China's Growth Outlook Improves Chief Economist Helen Qiao expresses optimism about China's prospects, citing positive trade negotiation developments and gradually effective stimulus measures.

5. Strong S&P 500 Earnings With Limited Price Gains Equity strategist Savita Subramanian forecasts 14% EPS growth but only 4-5% price appreciation, setting a 7100 year-end target. She anticipates a shift from consumer-driven cycles to capex-led expansion, particularly in tech and infrastructure.

6. Treasury Yields May Fall More Than Expected Rates strategist Mark Cabana projects 10-year yields between 4%-4.25% by end-2026, below consensus, expecting Fed rate cuts in December 2025 and mid-2026 to exert downward pressure.

7. Stable US Home Prices With Upside Risks The securitized products team led by Chris Flanagan predicts flat national prices but improved turnover rates, with regional divergences based on local supply and affordability trends. Lower mortgage rates could create upward price pressure.

8. Increased Volatility as AI Impact Becomes Clearer The bank anticipates heightened market swings as investors better understand AI's economic implications, with potential reassessments of GDP potential, inflation trajectories, and corporate capex cycles creating cross-asset volatility.

9. Private Credit Returns to Moderate Following strong 2025 performance, strategist Neha Khoda expects private credit returns to decline from ~9% to ~5.4%, potentially driving investors toward high-yield bonds or better-valued income assets.

10. Copper to Extend Gains Despite 35% YTD gains, metals strategist Michael Widmer forecasts further copper price appreciation in 2026, supported by persistent supply constraints, policy easing, and improving global demand.