Some of the world's biggest investors are shifting their focus beyond the AI boom to longer-term spending by governments, tackling geopolitical, technological, and demographic pressures that will reshape markets over the next few years. According to Saira Malik, chief investment officer at U.S. asset manager Nuveen, equity gains are expected to broaden beyond the U.S. tech-heavy trade to cyclical sectors, small-caps, and value plays.
Mark Haefele, chief investment officer of UBS Global Wealth Management, notes that his firm is "investing thematically along with what governments are doing," diversifying into areas like power, resources, healthcare, and defense. The aerospace and defense index has surged almost 68%, showing that fiscal priorities are lifting defense and industrial plays despite the current AI-dominated market environment.
Malik sees opportunities in infrastructure, utilities, and waste management, describing them as resilient and effective hedges against inflation. Nuclear power, energy infrastructure, biotech innovation, and defense are industries that "cannot be ignored by the market," although concerns over ballooning fiscal debts are drawing attention.
Both UBS and Nuveen stress active management over passive bets, with Haefele saying, "It's less of a time for beta and more of a time for active investing." Antonio Cavarero, head of investments at Generali Asset Management, notes that "fiscal stimulus is always a big element of the performance of the financial markets".
