2026 Stock Market: Bulls Face Mounting Risks from AI, Inflation, Geopolitics

• US stocks are highly valued, with market leadership concentrated in a few mega-cap tech stocks, increasing downside risk if profit growth slows.
• Overenthusiasm for AI carries risks of slower adoption, disappointing pricing power, and unfulfilled capex, potentially leading to sharp earnings revisions.
• Persistent inflation from AI spending or tariffs could force the Fed to keep rates higher, challenging lofty valuations and increasing rate volatility.
• Tensions (US-China), supply chain disruptions, and trade policy shifts pose latent threats, potentially triggering abrupt market volatility and drawdowns.
• Concerns about consumer resilience, bank balance sheets, and potential cuts in fiscal spending could lead to weaker earnings and broader de-risking.

Why It Matters: Despite positive momentum, 2026 stock market faces significant risks from AI, inflation, geopolitics, and valuations.