BlackRock has kept U.S. equities overweight in its Q4 2026 outlook as AI-linked earnings remain firm even while government borrowing and data-center financing push capital costs higher.
Summary
- BlackRock stays overweight U.S. equities as AI-linked earnings support stocks despite higher global bond yields.
- BlackRock estimates U.S. financing demand could exceed $7.5 trillion annually by 2030, led by AI.
- The Federal Reserve raised rates to 3.75%-4.00% on September 16 as inflation remained elevated nationally.
- BlackRock prefers short-term bonds over long-duration government debt as issuance and refinancing pressures rise globally.
- Emerging-market equities were upgraded to overweight, with BlackRock citing earnings, valuations and AI infrastructure opportunities.
BlackRock Investment Institute said its Sept. 15 outlook centers on three themes: AI scarcity, durable income and investment opportunities that cut across traditional asset-class categories. The firm sees the AI buildout lifting economic activity and corporate earnings while consuming more capital, power, materials and balance-sheet capacity.
BlackRock sees AI spending tightening competition for capital
BlackRock said the AI investment cycle is creating a funding challenge alongside heavy sovereign borrowing. Its Q4 report says both forces are competing for the same pool of capital, raising financing costs even as spending on computing infrastructure supports growth.
A Sept. 21 follow-up put a number on that pressure. BlackRock estimated that annual U.S. financing demand ācould exceed $7.5 trillion by 2030,ā driven mainly by capital needs tied to AI. The firm said AI and data-center issuers account for roughly 14% of U.S. investment-grade bond issuance this year, compared with 5% in 2025 and 1% over the previous decade. BlackRock cautioned that its 2030 estimate is forward-looking and may not materialize.
Debt markets are already financing large computing projects. AIās expanding role in investment-grade bond issuance as hyperscalers rely on public debt, private credit and operating cash flow to fund data-center construction.
BlackRockās outlook focuses on the bottlenecks created by that spending. The firm identifies power, electricity grids, memory, chips and data centers as areas where limited supply can constrain deployment, forming the basis of its āAI scarcityā theme.
BlackRock keeps U.S. equities overweight
Despite higher yields, BlackRock remains overweight U.S. equities. The firm said earnings expectations continue to rise and AI-linked companies account for a large share of expected year-ahead growth.
BlackRock said that earnings strength has helped equities absorb higher bond yields better than they did during 2022. Its analysis uses S&P 500 company filings and an MIT-based AI-adoption framework to group companies according to their exposure to artificial intelligence.
The asset manager has not treated the entire technology sector as a single trade. Its stated preference centers on companies and infrastructure tied to areas where demand is pressing against supply, including power, chips and data-center capacity. BlackRockās positioning remains an investment view and does not guarantee future equity returns.
Emerging-market equities received a stronger rating in the Q4 update. BlackRock upgraded the category to overweight, citing solid earnings and cheaper valuations. It said parts of Asia and Latin America provide different routes into AI infrastructure and related supply constraints.
The firm remains neutral on China while identifying selected opportunities in physical AI. BlackRock said cheaper open-source AI could increase adoption, though higher usage does not necessarily translate into stronger profits for AI providers.
Higher yields push BlackRock toward shorter bonds
BlackRockās bond view has become more selective as government yields moved higher through the summer. The firm prefers short- and medium-term government debt over long-term bonds because longer maturities carry more interest-rate sensitivity and exposure to changes in term premiums.
Its Q4 outlook says higher yields have restored income opportunities across fixed income, but heavy issuance and inflation risks make long-duration government bonds less attractive within BlackRockās framework. The institute is underweight long U.S. Treasuries while remaining neutral on short Treasuries, where it sees stronger risk-adjusted income.
The firm takes a similar view on long-term investment-grade credit. BlackRock prefers shorter maturities because companies refinancing debt issued at much lower rates now face higher borrowing costs. Its research says the pressure extends into AI infrastructure and private markets, where project economics depend heavily on financing structures and cash generation.
Data-center asset-backed debt is one area under scrutiny. BlackRock compared issuance with changes in five-year Treasury yields and said refinancing at current rates can pressure projects financed when borrowing costs were lower.
Crypto-linked infrastructure companies have tapped large funding packages during 2026. Galaxy Digital pursued a $3.5 billion data-center bond sale for its Texas campus, whileTeraWulf explored roughly $3.5 billion of AI financing for an Anthropic-linked project in Kentucky.
Fed rate hike reinforces BlackRockās higher-rate outlook
The Federal Reserve raised its target range by 25 basis points to 3.75%-4.00% on Sept. 16, one day after BlackRock dated its Q4 outlook. The central bank said economic activity was expanding at a solid pace, capital investment remained robust and inflation was still elevated.
The increase passed by a 12-0 vote. The Fed raised the interest rate paid on reserve balances to 3.90% and set the primary credit rate at 4.00%, effective Sept. 17.
BlackRockās Sept. 21 market commentary reported that two-year and 10-year Treasury yields rose after the meeting, with the 10-year returning to roughly 5%. The firm said markets took a hawkish reading from the post-meeting remarks, while BlackRock argued that solid growth and firmer Fed credibility could still support risk assets.
Competition for capital is not confined to the United States. In related coverage, crypto.news reported that Japanās 10-year bond yield climbed above 3%, giving Japanese investors stronger domestic returns. BlackRock has said higher Japanese yields could reduce demand for U.S. Treasuries as some capital stays at home.
The Q4 outlook says U.S. labor supply remains constrained while wage growth and underlying inflation stay elevated. BlackRock believes those conditions leave the Fed with less room to ease and preserve the possibility of āfurther tighteningā if price pressures remain persistent.
BlackRockās next scheduled data checkpoints include U.S. business activity and inflation expectations. Its Sept. 21 commentary identified flash purchasing managersā indexes and final University of Michigan consumer sentiment data as indicators to watch while borrowing costs remain elevated.
