Markets reach the end of 2025 with a notable degree of confidence after the stock market rally, and with the consensus anticipating that the increases will continue next year. A scenario of inflation at moderate levels, stable growth and strong artificial intelligence (AI) is anticipated, conducive to equities maintaining their rise and intensifying it. However, AJ Bell warns that the path is not free of obstacles and that Several sources of tension could jeopardize the continuity of the rally next year.
The firm’s investment director, Russ Mold, remembers that the history of the markets is full of cycles of euphoria and correctionand consider that 2026 could be a turning point if any of the risks it identifies end up materializing. Among them, the pressure on the big players in artificial intelligence, the growing doubts about private credit, the decisive role that the yen could play, the actions of central banks and the growing importance of the British market as a generator of profitability stand out.
Investment in AI enters critical point: hyperscalers must demonstrate return
AJ Bell emphasizes that the so-called artificial intelligence hyperscalers —such as Amazon, Alphabet, Meta, Microsoft and Oracle— They face a decisive exam in 2026. After spending record amounts on data centers, chips and computing capacity, the debate over whether or not the sector is in a bubble has gained intensity, fueled by voices such as that of investor Michael Burry.
Investors have so far rewarded massive spending on AI, but there are already signs of fatigue
So far, investors have rewarded massive spending. But AJ Bell remembers that signs of fatigue are already observed: Meta’s latest budget expansion was met with suspicion, and questions about falling free cash flow, financing and visibility of returns are starting to grow. Hyperscalers are coming in a dynamic of increasing investments and, for the first time, competing head-on with each other. This change in model increases the risk if the results are not consistent.
Private credit and venture capital: a sector that is no longer untouchable
The analysis also focuses on the private credit and venture capitaltwo areas that have enjoyed a very favorable cycle but are now facing growing doubts. The bankruptcies of several companies, provisions for fraud in US regional banks and corporate structures that are difficult to decipher have set off alarm bells. AJ Bell recalls that these assets concentrate three elements that have historically preceded financial crises: leverage, complexity and opacity. If the economic cycle weakens, the effects could spread to the broader financial system. Key indicators such as the S&P Listed Private Equity index or the evolution of Ares Management point to a notable deterioration in confidence compared to a year ago.
The yen, possible epicenter of global volatility
Although the dollar is the reference for world trade and reserves, AJ Bell warns that The yen will be the currency to watch in 2026. Its strong weakness has fueled carry trade operations that are financed in cheap yen to invest in risky assets around the world.
The yen will be the currency to watch next year
The problem is that, If the Bank of Japan accelerates rate hikes To curb inflation and respond to debt market pressure, the yen could appreciate strongly. This movement would force positions to be liquidated abruptlywould affect Japanese holders of US Treasury bonds—Japan is the largest foreign holder, with $1.1 trillion—and could generate an episode of global volatility.
Central banks remain the key factor
Despite numerous 2025 rate cuts, investors continue to wait for more stimulus measures by 2026. There is even debate about whether the Federal Reserve (Fed) could expand its balance sheet again to provide liquidity to the system, a policy similar to ‘quantitative easing’. This has strengthened demand for gold, silver and other safe-haven assets, which have set new highs.
Abundant liquidity can inflate dangerous bubbles
But AJ Bell warns: abundance of liquidity can inflate dangerous bubbles. If central banks are too accommodative, volatility could skyrocket; If they brake excessively, they could puncture the rally. The balance will be delicate.
The British stock market, a silent source of profitability
One last element that AJ Bell highlights is the surprising performance of the British market. Despite its lack of technology companies and the transfer of several companies to other markets, the Ftse 100 is recording its best year since 2009. The data is conclusive: close to 80 billion pounds in dividends and 57 billion pounds in buybacks in 2025. By 2026, payments are expected to remain solid. Although there is a risk of a slowdown if the economy weakens, AJ Bell emphasizes that the composition of the index – with a heavy weight of banks, commodities and cyclicals – could turn it into a relative refuge if big tech or AI suffer a correction.
