Investors are tiptoeing into 2026 like diners at a three-star restaurant: hungry, optimistic, and just nervous enough to keep an eye on the fire exits. The consensus is bullish on profits, AI, and a gentler Federal Reserve, but not so euphoric that anyone is willing to leave before dessert.
Cautious bulls in designer seatbelts
Bank of America’s (BA) latest fund manager survey shows the “AI bubble” fear is down from 45% to 38%, yet it still ranks as the top tail risk on investors’ worry lists. That is Wall Street’s version of progress: people are less terrified of the same thing, but they remain united in believing it will be the thing that ruins their weekend.
Strategists talk about 2026 as an “unstable but upward” environment, a kind of bull market with a mild anxiety disorder. Earnings growth, AI-driven productivity and lower rates form the upbeat chorus line, while sticky inflation and lofty valuations handle the heckling from the balcony.
The AI supercycle gets a chaperone
The market’s newfound restraint is less about turning bearish on AI and more about demanding that the math show up to the party. Investors now want profit pathways, not just poetry about disruption, which explains why survey clients tell BofA that the recent cooling in AI exuberance actually makes the space more attractive again.
Even the more sober outlooks concede that AI’s economic impact is likely to be significant, while warning that overenthusiasm can inflate valuations faster than earnings can catch up. The result is a peculiar equilibrium: AI is simultaneously the engine of the bullish narrative and the leading candidate to spoil it.
NVIDIA: still the poster child
At the center of this tension sits NVIDIA (NVDA), the company Wall Street now treats as both a stock and a sentiment survey. Strong AI capital spending remains one of the pillars supporting the 2026 bull case, and NVIDIA’s leadership in data center accelerators keeps it wired directly into that thesis.
Yet this success comes with the kind of valuations that even optimists admit already price in a generous slice of tomorrow’s growth. NVIDIA has become the market’s Rorschach test: to the bulls it is the infrastructure of a new economic era, to the skeptics it is a beautifully engineered justification for taking some profits.
Nokia’s AI glow-up
One of the more intriguing side stories of the AI trade is Nokia (NOK), a name more associated with the ringtone era than with next-generation compute — until NVIDIA showed up with a $1 billion investment and a vision for AI-native mobile networks. That deal, involving NVIDIA taking roughly a 2.9% stake via newly issued shares, sent Nokia’s stock surging and recast the company as a contender in AI-powered 5G and future 6G infrastructure.
Nokia’s quarter did its part too, with revenue and earnings topping expectations and management leaning into an “AI supercycle” to justify a higher profit outlook for 2025. Analysts note that the real earnings boost from AI-driven networks may not arrive until closer to 2030, but in a market that rewards credible optionality, being on NVIDIA’s dance card is not a bad way to pass the time.
Positioning for an “unstable uptrend”
Across Wall Street, the guidance for 2026 sounds less like a victory lap and more like instructions for flying business class in turbulence: enjoy the ride, keep your seatbelt buckled. Asset allocators talk about broadening beyond mega-cap tech, adding “bolt-on” AI plays in areas like utilities, industrials, and non-U.S. technology, while quietly trimming exposure to more cyclical pockets like energy.
For now, the working assumption is that the bull market survives, helped by AI, lower rates and solid profits — just not in a straight line and not without the occasional reality check. In that sense, NVIDIA and Nokia capture the mood perfectly: one is the emblem of AI’s present, the other a call option on its future, and both sit in a market that is bullish enough to believe, but disciplined enough to bring a calculator.
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