It's not just about AI. From GLP-1s to prediction markets, here are BofA's top themes for investors to watch.
- - It's not just about AI. From GLP-1s to prediction markets, here are BofA's top themes for investors to watch.
Naomi BuchananFebruary 15, 2026 at 3:30 AM
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Polymarket emerges as a dominate prediction market player alongside Kalshi.Maria Wurtz/WWD via Getty Images -
Bank of America is watching 10 key themes with implications for markets this year.
AI and the data center buildout top the list, but there are many others for investors to be watching.
Prediction markets, tax refunds post-OBBBA, GLP-1s, and the K-shaped economy also made the list.
It might seem like it's AI all the time in markets, but there are other themes investors should be tracking as well, accordig to Bank of America.
The stock market is off to a shaky start in 2026, with the S&P 500 down about 1%. Bank of America shared 10 key themes within their analysts' coverage as investors are looking for guidance during AI-disruption fear-fueled sell-offs, a rotation away from tech into cyclical sectors, and a crypto winter.
Here are 10 themes BofA says investors should be watching.
1. An M&A revival
Mergers and acquisitions are expected to pick up in 2026.
"M&A activity is set to accelerate, supported by regulatory change, stable rates, and pent‑up demand," Bank of America analysts wrote.
The so-called "M&A super cycle" is set to benefit banking, biotech, and media industries, specifically as evolving tech, supply chain changes, lower volatility interest rates, and consolidation fuel accelerated deal-making.
Morgan Stanley and Goldman Sachs are among the analysts' top picks to benefit from increased M&A activity.
2. The AI build-out hits a midway point
The market is the "mid‑cycle of a multi‑year AI buildout" that kicked on in 2023, according to Bank of America analysts.
"Greater scrutiny of AI returns and hyperscaler cash flows could keep stocks choppy, offset by newer/faster LLM builders and AI factories serving enterprise and sovereign customers," they said, noting "We believe consensus under-appreciates the mission critical, offensive and defensive nature of capex investments being done by the largest and best funded tech companies."
The firm highlighted opportunity for investors in cloud, memory, optical, and semiconductor capital equipment. Nvidia, Broadcom, and Marvell are some of the stocks spotlighted as winners in the mid-cycle AI build-out.
3. Momentum in manufacturing fuels industrials
Industrials are set to benefit as demand in the US improves, Bank of America analysts said.
"U.S. manufacturing is returning to expansion, short‑cycle demand is accelerating. Ongoing capex, reshoring, easier credit conditions support an earnings‑driven upswing," the note reads.
The US manufacturing PMI, a popular measure of industrial activity, rose above the metric indicating a contraction, which is historically followed by the industrials sector outperforming the S&P 500.
Pharmaceutical reshoring, chip fabs, data centers, and energy grid build-outs are some of the manufacturing projects to watch.
4. Winners of growing defense spending
Countries across the world are hiking their defense spending, leading analysts to question which will secure growing funds.
"Global defense spending is entering a sustained upcycle toward 2030, driven by geopolitics and higher NATO budgets. Large defense primes could benefit."
Bank of America flags Northrop Grumman, Raytheon, and L3Harris Technologies as winners in the defense sector.
5. GLP-1 pill to make a splash
The introduction of weight-loss drugs in oral pill form is expected to make GLP-1s accessible to a wider market, amplifying their impact.
Novo Nordisk's Wegovy pill is already on the market, and Eli Lily's pursuing FDA approval.
It's not the pharmaceutical industry itself that Bank of America flags as being impacted by GLP-1 pills, but pharmacy benefit managers (PBMs), food and beverage players, restaurants, and medical device makers.
6. Tax refunds will boost consumer stocks
Bank of America expects larger tax refunds and less significant tax payments to US households' cash due to Trump's One Big Beautiful Bill Act.
"Tax season stimulus is expected to average ~$1,000 per household, providing a near‑term boost to GDP. Non-discretionary and discretionary likely boosted fairly equally and while tax benefits skew mid/higher income, lower income more likely to spend," the analysts said.
They name Dollar General, Walmart, and Costco as companies that could see outsized consumer spending from tax season stimulus.
7. AI to weigh on energy affordability
The midterm elections are coming up, along with most states in the US facing gubernatorial elections, and the impact of data centers on Americans' utility bills is a hot-button issue.
"Affordability concerns may shape where data centers are built, but are unlikely to slow AI‑driven expansion. Speed‑to‑power, storage, grid investment remain dominant forces."
The analysts say Clearway, Shoals, and Generac are some of their top stock picks tied to the theme.
8. Commercial real estate supply in focus
The commercial real estate market is expected to face supply headwinds in 2026, Bank of America's real estate team said.
"Nationally, Apartment, Industrial and Self Storage REITs are poised for a meaningful slowdown in supply after outsized deliveries in 2024 and 2025."
9. Bet on prediction markets in headlines
Prediction markets booming, with Polymarket and Kalshi dominating Super Bowl ads and running free pop-up grocery stores in NYC.
Bank of America says the new betting markets could change the game for existing players like DraftKings and FanDuel.
"Rapid innovation in prediction markets and new entrants are creating near‑term uncertainty. Legal ambiguity and pricing risks remain an overhang for Online Betting."
The analysts highlighted Robinhood as an early leader in the space among publicly traded companies.
10. K-shaped economy to fuel luxury beauty rebound
The beauty industry is one to watch with the sector in today's K-shaped economy.
"The group sits at the intersection of staples and discretionary and we expect revenue growth to nearly double versus 2025 levels. China is the biggest driver of improvement."
The analysts are bullish on a recovery in luxury names fueled by high income shoppers while they're more cautious on low-income consumers. They reiterate Estée Lauder Companies as a top pick, noting the recent post-earnings dive is an opportunity for investors to buy the dip.
on Business Insider
Source: “AOL Money”
