Top 3 investment headwinds, tailwinds that will define rest of 2026

Investors heading into the second half of 2026 face an uncomfortable reality: the global economy is changing faster than many portfolios are adapting to it.

The forces reshaping markets today are structural. AI is triggering one of the largest capital investment booms in modern history. Digital assets have crossed into mainstream finance. Meanwhile, geopolitical conflict, sovereign debt and valuation risk continue to create significant uncertainty.

As the third quarter begins, investors are confronting one of the most consequential periods for capital allocation in decades.

Here are the three biggest headwinds and the three most powerful tailwinds that I believe will define investing through the remainder of 2026.

Headwind 1: Iran, oil and the return of geopolitical energy risk

The biggest geopolitical lesson of 2026 is that investors dramatically underestimated energy vulnerability.

The conflict involving Iran and the temporary disruption of shipping through the Strait of Hormuz reminded markets that roughly one-fifth of the world’s traded oil and a substantial proportion of LNG exports pass through a single strategic chokepoint.

During the height of the crisis, Brent crude surged to around $126 a barrel before retreating sharply after the US-Iran ceasefire and the reopening of shipping routes.

But investors should not mistake the recovery in oil prices for the disappearance of risk.

The UN has warned that the disruption will continue to affect vulnerable economies through higher transportation, food, and energy costs long after the immediate military crisis subsides.

Shipping volumes through Hormuz have recovered unevenly, while negotiations over future transit arrangements remain ongoing.

The lesson for investors is that energy security is no longer simply about oil and gas.

It is about inflation, monetary policy and, ultimately, portfolio construction.

Headwind 2: Sovereign debt and the end of cheap money

Markets spent much of the last decade benefiting from one extraordinary assumption: governments could borrow virtually without consequence.

This era is ending.

Global debt reached a record $353 trillion in the first quarter of 2026, while investors have increasingly begun diversifying away from US Treasuries and towards alternative sovereign markets.

Meanwhile, US government debt has climbed to approximately $39 trillion, while interest payments alone continue to rise at record rates.

The consequences go way beyond bond markets.

Higher debt servicing costs place upward pressure on interest rates, constrain fiscal flexibility, and increase the likelihood of future tax rises, spending reductions or monetary accommodation.

To my mind, the biggest long-term macroeconomic risk may not be inflation itself. It may be the fiscal arithmetic that governments increasingly appear unable to escape.

Headwind 3: AI valuation risk

AI will transform the global economy. In fact, it already is, as we can all already see.

But history teaches us that transformational technologies also create periods of extraordinary market exuberance.

Major technology companies are expected to spend approximately $765 billion on artificial intelligence infrastructure this year alone, with projections suggesting annual spending could rise to $1.6 trillion by 2031 and total investment could exceed $7.5 trillion over the next five years.

This level of investment is unprecedented outside of wartime mobilisation.

At the same time, investors have become increasingly concerned that parts of the AI ecosystem have moved ahead of commercial reality. Recent market volatility in semiconductor and technology shares has highlighted growing questions around valuation, monetisation and execution risk.

The question is not whether AI will change the world. It will. It’s whether every company currently benefiting from AI enthusiasm deserves the valuation investors have assigned to it.

Tailwind 1: The AI infrastructure supercycle

At the same time, AI represents one of the greatest investment opportunities of the modern era.

It’s an industrial revolution.

The same investment forecasts that raise questions about valuation also point to one of the largest capital expenditure cycles in modern history.

Investment is no longer concentrated in software or semiconductors. It is spreading across electricity generation, nuclear energy, transmission networks, data centres, industrial automation, advanced manufacturing and physical infrastructure.

Major investment banks have raised their forecasts for equity markets largely because they believe AI-driven productivity gains and infrastructure investment will continue to support economic growth and corporate earnings.

The opportunities created by this investment cycle are unlikely to be measured not in quarters but in decades.

Tailwind 2: Economic resilience

If there’s one investment lesson investors have repeatedly failed to learn over the past two years, it is never to underestimate the resilience of the global economy.

Despite wars, inflation shocks, higher interest rates, and repeated recession forecasts, major financial markets continue to perform remarkably well.

For instance, the S&P 500 has gained almost 10% this year, the Nasdaq has advanced more than 12%, and both indexes recently recorded their strongest quarterly performances since 2020. The Dow Jones Industrial Average has repeatedly reached record highs.

Corporate earnings have remained resilient, labour markets have remained stronger than expected, and consumer spending has continued to support growth.

Indeed, the most expensive trade of the past two years has, arguably, been betting against economic resilience.

Tailwind 3: The institutionalisation of digital assets

The debate over whether digital assets belong in mainstream finance is effectively over.

Institutional adoption continues to accelerate. Public companies have expanded digital asset treasury strategies. Governments are developing regulatory frameworks. Institutional investors have increased exposure through regulated investment products. Even the US President and Vice President now openly disclose significant involvement with digital assets.

Importantly, investors must distinguish between speculative digital assets and established cryptocurrencies such as Bitcoin.

Not all digital assets are equal and, as such, not all cryptocurrencies represent investment opportunities. And not all market enthusiasm is justified.

But the broader trend is undeniable.

Digital assets are increasingly becoming embedded within the global financial architecture, much as the internet itself became embedded within the global economy.

The greatest investment risk in the second half of 2026 may not be inflation, geopolitical conflict or market volatility.

It may be failing to seek professional advice and failing to recognise that some of the most important structural transformations in modern financial history are no longer approaching. They’ve already arrived.