10 Bold Market Calls For 2026 From Bank Of America: AI Boom, Strong GDP, Lower Yields

Bank of America Global Research expects the global economy to enter 2026 with more momentum than investors anticipate, calling for stronger U.S. and China growth, continued AI-driven investment, and a shift in market leadership.

After a strong 2025 across U.S. and international markets, investors are questioning how much fuel remains in the rally.

"Despite lingering concerns, our team remains bullish on the economy and AI," said Candace Browning, head of BofA Global Research.

She said fears of an imminent AI bubble are "overstated" and projected U.S. and China GDP growth above consensus in 2026.

Below is a breakdown of Bank of America's 10 key calls for 2026.

See Also: 5 Reasons Why Small Cap Stocks Are Set To Soar In 2026: Bank Of America

1. US GDP Growth Above Consensus

Bank of America remains more upbeat than the broader market on U.S. growth in 2026.

Senior economist Aditya Bhave expects 2.4% annual GDP growth, driven by fiscal support from the One Big Beautiful Bill Act, restored Tax Cuts and Jobs Act incentives, friendlier trade policy, stronger business investment, and the lagged effects of Fed rate cuts.

In BofA's view, the macro backdrop is not as fatigued as many investors assume.

2. AI Boom Continues ? No Bubble in Sight

The investment bank believes the AI investment cycle will keep building rather than bursting. AI-related capex?data centers, chips, and automation?has already boosted GDP and should remain a strong driver in 2026.

Strategists see capital spending tied to data centers, semiconductor capacity, and automation remaining robust, contributing to productivity gains and supporting corporate earnings.

The iShares Semiconductor ETF has rallied over 40% year-to-date, and its up by 450% since OpenAI’s release of ChatGPT in November 2022.

3. Emerging Markets Benefit From A Friendlier Macro Mix

Emerging markets may see improved performance thanks to a weaker U.S. dollar, lower U.S. rates, and soft oil prices.

Bank of America’s emerging-market strategist David Hauner says this combination eases financing pressures and supports stronger capital flows into developing economies next year.

Year-to-date, the iShares MSCI Emerging Market ETF is up by 30%, outperforming the popular Vanguard S&P 500 ETF .

4. China's Growth Outlook Improves

BofA upgraded its China outlook. Chief economist Helen Qiao now expects 4.7% growth in 2026 and 4.5% in 2027, both above consensus.

“With positive signs emerging from recent trade talks and stimulus taking hold, risks to our forecast are skewed to the upside,” Qiao stated.

5. S&P 500 Earnings Strong, But Price Gains Limited

Bank of America’s equity analyst Savita Subramanian expects S&P 500 EPS to rise 14% in 2026 but sees only 4%?5% price upside, with a target of 7,100.

She believes the market may be transitioning away from a consumption-driven cycle toward one powered increasingly by capital expenditure, particularly in technology and infrastructure.

6. Treasury Yields Could Fall More Than Investors Expect

Investors may be overestimating how high Treasury yields will stay. While many expect the 10-year to end 2026 between 4% and 4.5%, BofA rates strategist Mark Cabana projects 4%?4.25%.

He expects Fed cuts in December 2025 and again in June and July 2026 to pressure yields lower.

Bank of America thinks investors may be underestimating the impact of Fed easing.

7. US Home Prices Hold Steady, With Upside Risks

BofA's securitized products team, led by Chris Flanagan, anticipates flat national home-price appreciation in 2026 coupled with an uptick in housing turnover. Regional divergences could widen depending on local supply conditions and affordability trends.

With mortgage rates expected to drift lower alongside Fed rate cuts, the risks to home prices appear slightly skewed to the upside.

8. Volatility Rises as AI's Impact Becomes Clearer

The bank expects volatility to pick up in 2026 as investors gain a clearer read on how AI reshapes economic fundamentals.

The reassessment of how AI affects GDP potential, inflation dynamics, and corporate capex cycles is likely to trigger sharper swings across asset classes.

BofA also cites fiscal dominance and the K-shaped recovery as additional sources of turbulence.

9. Private Credit Returns Moderate

Private credit returns may cool after a strong 2025. Strategist Neha Khoda sees total returns falling to about 5.4% in 2026 from roughly 9% this year.

That shift could push investors toward high-yield bonds or other income assets offering better relative value.

10. Copper Positioned For Another Strong Year

Despite a 35% year-to-date gain, copper ? as closely tracked by the United States Copper Fund ? could extend its gains into 2026.

Tight supply supported prices in 2025 despite weak construction and manufacturing activity.

BofA Metals strategist Michael Widmer expects supply constraints to persist, with easier policy and improved global demand adding further support.

Now Read:

• 5 Reasons Why Small Cap Stocks Are Set To Soar In 2026: Bank Of America

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