AI Upside, Market Asymmetry: Bonds and Value Favored for 2026

This outlook argues that AI could lift U.S. growth toward 3% over time, but equity returns may lag the economic boom 

• AI capital spending—projected at $2.1tn through 2027—remains in early-cycle “capital deepening,” with U.S. GDP forecast at 2.25% in 2026 and core inflation sticky near 2.6%, limiting Fed cuts below a 3.5% neutral rate.

• U.S. equities may see near-term strength, yet 10-year return expectations are muted at 4%–5%, reflecting valuation risk and creative disruption among AI leaders.

• Vanguard favors high-quality U.S. fixed income (~4% projected returns), U.S. value and developed ex-U.S. equities as superior risk-return plays.

Is AI-driven growth already priced—or mispriced? The full outlook details scenario-weighted implications.