Investors Eye 2026 Growth Amid AI Bubble and Geopolitical Fears

By Nancy Torres

HARTFORD, Conn. – January 16, 2026 – Institutional investors are entering 2026 with a pronounced appetite for growth, yet their optimism is laced with a significant dose of caution, according to a new report from Corbin Advisors. The firm's quarterly Inside The Buy-Side® Earnings Primer® reveals a complex market sentiment where enthusiasm for artificial intelligence and easing interest rates is pitted against anxieties over frothy valuations, geopolitical instability, and a potential AI bubble.

The survey, which polled 67 institutional investors and analysts representing approximately $2.5 trillion in assets, found that 50% characterize their sentiment as Neutral to Bullish or Bullish. While still optimistic, this marks a slight pullback from 53% in the previous quarter. This tempered outlook stands in contrast to corporate leadership, with over 65% of investors observing executive tone as increasingly upbeat—the highest level recorded since the fourth quarter of 2024.

This growing divergence between management and investor sentiment is a pattern worth noting, according to Rebecca Corbin, Founder and CEO of Corbin Advisors. “After a strong three-year run for equities, investors are entering 2026 with optimism and a hankering for growth, but with a pinch of cautiousness,” she commented. “Our proprietary buy-side surveys show that following similar three-year bull market stretches, as we saw in 2012–2014 and 2019–2021, perceived management tone grows increasingly sanguine ahead of investor sentiment... Notably, sentiment has seen a pullback during those periods within one to two quarters’ time.”

A Decisive Pivot to Reinvestment

Underscoring the market’s growth-oriented mindset is a dramatic shift in capital allocation preferences. For the first time in over a year, reinvestment has surged to become the top preferred use of cash. A commanding 61% of respondents cited reinvestment as a top priority, a sharp increase from just 41% in the prior quarter.

This pivot comes at the expense of debt paydown, which has fallen to the third-most favored use of cash. Support for deleveraging is now at its lowest point since December 2021, a significant reversal from its dominant position over the past several years. Share repurchases remain a popular second choice, supported by 44% of investors.

This strategic change signals a clear mandate from the buy-side: after a period of defensive posturing, it is time for companies to invest in expansion, innovation, and long-term value creation. The preference for growth over margins remains strong at 64% to 36%, fueled by expectations that AI-driven productivity gains, lower interest rates, and benefits from infrastructure spending will propel the economy forward. Despite the reduced emphasis on paying down liabilities, balance sheet discipline remains a core expectation, with over 70% of investors still preferring a conservative net leverage ratio of 2.0x or lower.

“The tone of executives is cautious optimism. People think 2026 will be slightly better, tariffs are done, people can get on with growth,” commented one buy-side analyst with over $12 billion in assets under management. However, the analyst added a note of caution, stating, “I am more cautious because the valuations are quite stretched and a lot of that is already baked into the share price.”

AI: Engine of Growth or Impending Bubble?

Artificial intelligence stands at the center of this market paradox, simultaneously celebrated as the primary engine for future growth and scrutinized as a source of potential market froth. AI was the most cited topic of interest for upcoming Q4 earnings calls, narrowly edging out traditional concerns like demand and growth trends. However, investors are moving beyond the hype and demanding substance.

According to the report, the buy-side is seeking granular details on AI use cases, associated capital expenditures, and, most importantly, the tangible return on investment (ROI). This scrutiny reflects a growing apprehension about a “debt-fueled build-out” and “market fatigue” surrounding the topic. There is a palpable concern that some companies may be “chasing the trend without clear returns,” as Ms. Corbin noted.

This dual perception of AI—as both a revolutionary force and a potential bubble—highlights the challenge for corporate leaders. Investors are looking for comprehensive capital allocation frameworks and transparent communication that clearly articulates a company’s AI strategy, its financial implications, and its expected impact on productivity and growth. The pressure is on for executives to demonstrate they are not just participating in a buzzword-driven frenzy but are making strategic, value-accretive investments.

Geopolitics and Policy Remain Key Risks

While the market’s focus shifts toward growth, persistent macroeconomic and geopolitical risks continue to temper enthusiasm. Policy impacts and geopolitics were cited as the top unaided concerns among investors. This comes even as apprehension specifically related to tariffs has eased significantly quarter-over-quarter, with over half of investors now believing tariffs will remain stable in 2026 and expressing confidence in corporate mitigation strategies.

Looking globally, investor sentiment varies by region. India continues to attract the most positive outlook, followed by China and Southeast Asia. Notably, while a majority (66%) of investors still assign a high risk to companies with significant exposure to China, this figure is down from 79% two years ago, suggesting a slow thaw in sentiment.

On a sector basis, a notable shift is underway. Financials and Healthcare have surpassed Technology in terms of bullish sentiment. While most sectors are seeing more bulls and fewer bears compared to previous quarters, negative sentiment remains concentrated in Chemicals and REITs, highlighting the uneven nature of the anticipated recovery.