2026 Predictions

The Setup

We are now three years into the AI trade, and the question everyone is circling is ROI. We are unlikely to get a clean, definitive answer in 2026. In a skittish market, stocks will move on what investors believe are the best leading indicators.

• Historically, the market focused on the “I” side of the equation - Nvidia revenue as a proxy for AI investment. That focus is quietly shifting to the “R” side - OpenAI’s revenue / ARR / funding rounds, at least until we have other sizable, trackable sources of AI revenue.

This matters. The market increasingly wants proof that AI is not just capex-heavy, but revenue-generating.

2026 may also be the first year the AI trade meaningfully splits into AI infra vs. AI applications. Clear winners on the application side should continue to get bid up. Losers, or companies where AI raises terminal-value risk, may keep getting punished.

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Big Themes and Catalysts Into 2026

1. Self-Driving

I am biased :). But 2026 feels like a breakout year:

• Waymo could ~2-3x its fleet with ~50% cost reductions; Aurora could scale to hundreds of fully driverless trucks, again with ~50% cost reductions; Tesla Robotaxi may finally prove itself.

• Self-driving is one of the largest AI applications by potential rev and economic impact. It also matters to everyone, not just white-collar workers.

• Implications for mobility, logistics, and service providers?

2. Multimodal AI

Been listening to Demis on this: “Built from the ground up multimodal”; “Chatbots are a temporary UI”; “Truly multimodal includes touch”; “AI that creates interactive simulations, not just video”, etc.

• I may still be underestimating this, but at a minimum we may get: AI-generated video gets longer (1 hour?)? AI-generated short or tailored videos to explain long-form content? Localization becomes dramatically cheaper?

• Meta and Google (and Tesla?) have uniquely advantaged multimodal datasets. Their progress here is critical to watch.

• Expect much more discussion around “world models.”

• Short-form, AI-assisted video to take share from traditional long-form entertainment?

3. Edge AI

• Apple finally shows its hand with an AI-powered Siri launch in the spring

• Expect louder debates around edge compute vs. hyperscaler capex

4. Enterprise AI Adoption

OpenAI is shifting more aggressively toward enterprise in 2026.

• What does rising vertical specialization and agent adoption mean for incumbents?

• If Google and OpenAI both push hard here, what happens to Microsoft Office?

• Is SaaS structurally a winner, or getting completely disintermediated?

5. Space

• A potential SpaceX IPO (per public reporting) could ignite enthusiasm for the space theme. This could create both long and short opportunities

• Would not be surprised to see “space” crowd out other retail-favored themes (energy, quantum, crypto, etc.)

6. Agentic Commerce

Both GPT and Gemini are pushing here.

• How much GMV can agentic commerce realistically capture?

• How does Amazon respond? Now that Shopify and Walmart are already “in it”

• What happens to the ads revenue pool as commerce workflows change?

Agentic Commerce | Deep Dive (I)

Agentic Commerce | Deep Dive (II)

7. AI in the Real Economy

Quoting our friends at TMT Breakout:

On average, every 1% reduction in labor costs for the S&P 500 implies ~2% upside to EPS. Healthcare, consumer staples, and consumer discretionary benefit more than the index on average.

Importantly, many S&P 500 companies are now quantifying AI’s impact, not just talking about it.

AI beneficiaries | Non-tech

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Other Themes/ Catalysts to Watch

• IPOs or IPO prep: SpaceX, OpenAI, Anthropic (based on public reporting)

• Prediction markets: With the 2026 World Cup in the US, how much share can prediction markets take from traditional sports betting?

  Prediction Markets | Impact

• Robotics and world models: Possible policy announcements, plus early attempts to put robots into homes in 2026

• Rate-cut beneficiaries

• China:

  • Potential IPOs like MiniMax or Unitree (per media)?

  • Possible Trump visit; US-China diplomatic developments?

  • Creative consumer AI applications from China?

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AI Model Progress Into 2026

• KEY: Monitor performance improvements from models trained on Blackwell (1H26)

• Coding and Agents

  • Longer-form tasks completed end-to-end

  • Some labs (e.g. Anthropic) openly aiming to replace low-end developers in 2026

• Potential Buzzwords on the Frontier Research

  • World models

  • Continuous learning

  • Infinite context windows

  • Multi-agent systems

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Macro Backdrop

Positives

• Rate cuts, potentially accelerated under a new Fed chair

• Fiscal stimulus (OBBB, likely 100bps+ equivalent)

• Early signs of AI-driven productivity gains (still debatable)

• US midterm election dynamics

Risks

• A shrinking labor pool and rising jobless data

• Stickier-than-expected inflation

Tech vs. Non-Tech
Historically, roughly every four years, non-tech outperforms tech. Non-tech tends to win when: Rates rise; Inflation or reflation shows up; Commodities and industrials lead; Valuation mean reversion or Markets risk-off

Tech vs. Non-Tech Returns

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The Open Debates

• Can Tesla actually succeed with robotaxi?

• Does Apple’s new Siri surprise to the upside, or disappoint?

• Can Meta produce a true SOTA model?

• Where does multimodal development ultimately lead?

• How much does Blackwell really move the model performance curve?

• Will ASICs meaningfully challenge GPUs?

• Is digital advertising zero-sum?

  • Even if Google has a tier-1 model, does it still lose share as OpenAI and TikTok enter?

• Can OpenAI successfully build ads and commerce businesses? Can the model companies maintain high growth rates?

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