Yang Delong: Investment Themes for the Capital Market in 2026

How do fluctuations in AI and U.S. tech stocks influence the nerves of A-share markets?

Although the recent market adjustment was driven by external risks, it is expected that the A-share market in the Year of the Horse will continue this slow and steady bull run. The main investment themes will shift somewhat compared to last year. Last year’s typical approach was a “dumbbell strategy,” with one end being the technology innovation sector, representing economic transformation and direction, which performed exceptionally well. The other end was high-dividend sectors, especially banks. This year, investment will become more challenging, which can be called a “new dumbbell strategy,” with the technology innovation sector still on one end, but now showing signs of differentiation.

Many tech stocks had already seen significant gains last year. This year, they will enter a performance verification phase. Some truly competitive tech stocks capable of technological breakthroughs may see further gains. However, stocks that are only riding on concepts without substantial R&D capabilities or those unable to deliver performance may decline. During this market adjustment period, it’s evident that many tech stocks that surged last year experienced substantial pullbacks, with profit-taking pressures increasing.

The other end of the dumbbell this year is represented by sectors characterized as “HALO assets.” “HALO assets” is a term emphasized recently by major firms like Goldman Sachs and Morgan Stanley. It is an abbreviation of “Heavy Assets” and “Low Obsolescence.” These industries are unlikely to be eliminated in the AI era because they require large amounts of electricity, metals like copper and aluminum, chemical products, railway logistics, and more. These are heavy-asset industries with long construction cycles and require approvals, making them difficult to build quickly. As a result, they serve as safe havens for capital. Especially amid international turbulence, countries are increasingly aware of the importance of resource acquisition, which has driven up the value of “HALO assets.”

Since the beginning of this year, sectors like petrochemicals and non-ferrous metals have performed well. Overall, these two investment themes are: one benefiting from AI, as AI accelerates development in tech innovation sectors such as humanoid robots, semiconductors, computing algorithms, quantum technology, and biomedicine; the other comprising heavy-asset industries unlikely to be replaced by AI. These two themes are likely to be the main investment focuses in the Year of the Horse, 2026.

At the end of last year, I predicted in my “Top 10 Predictions for 2026” that the U.S. stock market might peak and then decline, with risks of a bubble burst in AI technology. Recently, I had a conversation with renowned Wall Street figure Rogers. His view was very pessimistic, believing that the U.S. tech bubble would burst this year, leading to the most severe decline in history, and he explicitly stated that he had already liquidated all his U.S. stocks.

Earlier this year, I participated in a New Year’s program with famous investor Dan Bian and CCTV host Yao Zhishan to discuss this year’s U.S. stock market outlook. Bian’s view was more optimistic, believing that AI development has just begun and there is still much room for growth. My view is more moderate: I believe the U.S. stock market will not see a sharp rise or a collapse this year, but rather a valuation correction. Currently, many AI tech stocks have already accumulated large gains and are gradually entering a performance verification phase.

Whether AI applications will meet expectations and ultimately deliver the anticipated results remains uncertain. Technology is constantly advancing—can industry leaders like NVIDIA sustain their monopolistic advantages? Will the practice of stacking chips be replaced? These uncertainties can cause stock price volatility.

The recent decline in U.S. stocks partly reflects investor concerns over overvalued valuations. Warren Buffett has always been cautious. He typically reduces his holdings before the market peaks. According to Berkshire Hathaway’s recent annual report, Buffett made final adjustments before retiring at the end of last year, significantly reducing his U.S. stock holdings. Currently, Berkshire’s cash reserves amount to $370 billion, exceeding its market value, indicating that its stock positions are below 50%. This suggests Buffett has begun large-scale de-risking ahead of a potential market correction.

Over the past decade, I have attended Buffett’s annual shareholder meetings in Omaha seven times, aiming to promote value investing principles and discourage chasing highs and frequent trading. This May Day, I will return to Omaha to attend the 2026 Berkshire Hathaway shareholder meeting. I will share the event’s highlights with everyone, hoping that value investing can take root and flourish in the A-share market.

Many worry that a major collapse of the U.S. AI tech bubble this year could negatively impact China’s tech stocks, as some of the key supply chains are based in the U.S. For example, if NVIDIA’s stock plunges, its industry chain stocks may also decline; similarly, a sharp drop in Tesla could drag down related A-share stocks. Thus, U.S. tech stock declines might influence A-shares in the short term. However, the long-term performance of A-share tech stocks mainly depends on their own earnings growth. Many of these stocks are not solely supporting U.S. tech companies but are also targeting the domestic market. If domestic demand and orders increase, they will have opportunities to perform. Still, we must be cautious of the impact of a U.S. tech stock crash. If such a situation occurs, it’s advisable to reduce positions to hedge risks and then look for high-quality tech stocks that have been unfairly sold off once the market stabilizes.

2026 is also the start of the 14th Five-Year Plan, which continues to emphasize key areas of technological innovation. These sectors remain the focus of future development, without doubt. While maintaining a positive outlook on technological directions, investors should be aware of two risks: one is the sudden collapse of U.S. tech stocks, which may warrant some risk avoidance; the other is that some tech stocks may be driven more by concept hype than real performance, and without substantial earnings support, they could face significant declines this year. These are the two main risks in this year’s investment landscape. (For reference only, invest cautiously. Image source: internet)