Companies are experiencing a once in a generation investment boom across a growing list of industries, but there are nascent signs that artificial intelligence (AI) is already suppressing wages, and potentially consumer demand with it. This year’s Analyst Survey takes the temperature of more than 120 analysts covering thousands of companies across the globe.
Key takeaways
- Corporate confidence has been steadily rising in recent years, boosted by the optimism around tech.
- But cost pressures are one fly in the ointment, with most analysts expecting these to rise in 2026.
- Geopolitics is making growth uneven and threatens its stability.
Download the Analyst Survey 2026 PDF
The results are in, the AI investment boom has companies feeling better than at any point since the chaotic aftermath of the Covid pandemic. In the background, however, hang risks to raw material costs, wages, and household spending that threaten to weigh over the global economy for years to come, the more so with conflict in the Middle East.
Those are the central conclusions of this year’s Analyst Survey, the product of the detailed observations of more than 120 specialised analysts who cover the world’s biggest companies in eye-watering detail. Spaced across equities, fixed income, and a handful of alternative asset classes, they’ve reported back from more than 20,000 meetings with C-suite executives over the last year. And, overall, the message is positive.
The analysts are clear on the source of that optimism: we are in the middle of the biggest investment boom in years, driven by spending on AI and the infrastructure needed to deliver it.
“AI pull-through is broadening”
says Terence Tsai, the leader of a team of tech analysts who cover semiconductor producers globally.
“The buildout is expanding, not peaking.”
That development is bolstering spending by the customers of a wide range of businesses and points the way to streams of revenue that extend years into the future. Information technology is the clearest beneficiary, but the effects are also strongly visible in the materials and energy sectors, where demand for power and the commodities needed to construct a world of new datacentres and power plants follows more than a decade in the doldrums. Some 64 per cent of materials sector analysts say company managers are moderately or significantly more confident about the coming year than the previous, compared to 81 percent in the information technology (IT) sector.
“Orders are off the charts,” says Srishti Sinha, who covers the US power companies tasked with delivering several percentage points of additional capacity every year for the rest of the decade. “My sector utilities have increased their five-year capex plans by 20 per cent when they rolled forward, and that was after a 20 per cent increase last year as well.”
Expectations on mergers and acquisitions also speak to the glut of money circulating. Some 50 per cent of industrials analysts expect M&A deals to be more prevalent this year versus a third a year ago. And while the volume of IT deals may be held back to some degree by companies pouring capital into the AI buildout, 63 per cent of IT sector analysts now expect a rise in M&A in the months ahead.
“Achieving meaningful productivity gains from AI in system integration may require a certain level of scale,” says Japanese sector analyst Noriyuki Takizawa. “Larger players may therefore seek consolidation to strengthen their AI implementation capabilities. Overall sector valuations are [also] meaningfully cheaper than they were two to three months ago.”
There is of course a catch.
Costs have increased significantly in the past year across sectors, and many expect those pressures to rise further in the months ahead. Only 8 per cent of analysts covered by the survey expected inflationary pressures to ease off in the next 12 months. Half said pressures would continue at the same level and 40 per cent expected a rise.
Crucially, however, the results also point to a divergence in wage and non-wage cost pressures. The survey’s quarterly indicator on expectations for labour costs over the next six months is close to zero for the first time in 3 years.
It is telling then that most of the analysts covering consumer companies in the annual survey point to affordability, its impact on poorer consumers, or overall demand as their biggest concern for the year ahead. Yes, they say, for middle America they’re constructing a new power plant across the road to fuel the gigantic datacentre warehouse on the other side of town. And out beyond the suburbs there might be a copper mine delivering on the enormous demand for power cabling. But for consumers not benefitting from stock market gains, or higher interest rates, or returns on gold, the picture is less rosy. Fuel costs will continue to rise, and wages will not.
“I think rising unemployment and consumer spending pullback would be the biggest risk to fundamentals of my companies over the coming 12 months”
says Chase Bethel, who covers Walmart, Costco and a host of other US retailers.
The other big risk many cited was the geopolitical backdrop. Jousting by governments over industrial commodities raises costs and pressures manufacturers’ margins. The supply-side driven inflation may prevent central banks from cutting interest rates. That will become even harder if governments wind up spending to offset the impact of higher oil and gas prices on lower-income households, drawing base long-term interest rates higher. The risk to private credit markets in higher rates is already becoming apparent.
Healthcare analysts also point to the fiscal fallout of militarised conflict, adding to widespread concern in the sector about political pressure to regulate pricing more aggressively.
“Healthcare is a significant line item in the budget for all countries,” says analyst Justin Teo. “As other priorities like defence spending take precedence, there’s increased pressure on healthcare budgets.”
Confidence
All that said, corporate confidence among companies does remain high: they are benefitting from the AI capital spend and rising stock markets. Returns on capital and dividend payouts to investors are widely expected to improve. More than half of all the analysts surveyed expect dividends to rise; in IT that figure is 63 per cent.
A more complicated geopolitical situation, by hook or by crook, is delivering a messier economic outlook, and, as our tech analysts discuss here, AI’s contribution may be to make it easier for companies to do more with less and reduce the relative size of workforces - but at a time when the economy is already putting pressure on middle-income consumers.
None of that should detract from the central message, however: that the investment by Microsoft, Meta and Google in AI is not just a driver of stock market valuations. Main Street continues to feel cost pressure, but it is anticipated that wall of capital will eventually trickle down to the builders and electricians who are constructing the new factories and data centres. When that happens, we can expect the beneficiaries to widen out with higher living standards and a better breadth of stock market returns.
