Markets vs. Geopolitics: Why 2026 Could Be a Turning Point for Investors
Will Geopolitics Derail the Market Rally in 2026? Insights from Neuberger Berman CIO Shannon Saccocia
Introduction: A Strong Rally Meets a Fragile World
Global stock markets are entering 2026 with solid momentum. Artificial intelligence (AI) continues to drive earnings growth, corporate balance sheets remain resilient, and investor risk appetite has recovered after years of volatility.
But one major question looms large: can geopolitics derail the market rally in 2026?
In a recent CNBC Pro Talks discussion, Shannon Saccocia, Chief Investment Officer at Neuberger Berman, sat down with CNBC’s Dominic Chu to explain how professional investors are thinking about AI, geopolitical risk, IPOs, and portfolio positioning in the year ahead.
Her message was nuanced but clear: geopolitics may not kill the rally—but it could fundamentally reshape it.
Markets in 2026: Why the Rally Still Has Support
Despite geopolitical uncertainty, Saccocia believes markets are not entering 2026 on weak footing.
Key Pillars Supporting the Rally
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Earnings growth, particularly from AI-driven productivity
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Healthier corporate balance sheets than in previous cycles
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Gradual stabilization in interest rates
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Strong institutional demand for long-term growth assets
Unlike previous speculative booms, the current rally is increasingly backed by real cash flows, not just expectations. That gives markets more resilience—even in the face of global shocks.
The AI Trade: From Hype to Hard Numbers
One of the central themes Saccocia highlighted is the evolution of the AI trade.
What Changes in 2026
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The market is moving beyond “AI hype”
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Investors are focusing on profitability, margins, and scalability
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Leadership is narrowing to companies with real execution power
AI is no longer just a tech-sector story. Its impact is spreading into:
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Industrials and automation
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Healthcare and diagnostics
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Financial services
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Defense and cybersecurity
In 2026, AI becomes a core economic driver, not a speculative side bet.
Can Geopolitics Upend the 2026 Market Rally?
According to Saccocia, history shows that geopolitics rarely ends bull markets outright. Instead, it changes their shape.
How Markets Typically React to Geopolitical Shocks
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Higher volatility
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Sector rotation rather than broad collapse
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Rising risk premiums
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Outperformance of defensive or strategic sectors
Geopolitics acts more like a speed bump than a brick wall—unless it triggers a major financial or energy shock.
Middle East Geopolitics: A Key Risk Channel for Global Markets
The Middle East remains one of the most critical geopolitical regions for investors going into 2026.
Energy and Inflation Risks
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Escalation involving major oil producers could push crude prices higher
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Higher energy prices may revive global inflation pressures
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Central banks could delay interest rate cuts, weighing on equity valuations
Capital Flows and Sovereign Wealth Funds
At the same time, Middle Eastern sovereign wealth funds are:
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Increasing investments in AI, infrastructure, and global equities
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Providing liquidity during periods of market stress
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Playing a stabilizing role in global capital markets
This dual role makes the region both a source of risk and opportunity.
IPO Market Outlook: A Selective Comeback in 2026
After years of subdued activity, Saccocia expects the IPO market to reopen, though not indiscriminately.
IPOs Most Likely to Succeed
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Companies close to or already profitable
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Clear exposure to AI or automation
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Strong institutional backing and governance
Geopolitical uncertainty may delay some listings, but pent-up demand from private markets remains strong.
How Professional Investors Are Positioning for 2026
Saccocia’s insights suggest a strategy focused on preparation, not panic.
Key Portfolio Themes
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Stay invested, but diversify across regions and sectors
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Expect volatility spikes rather than systemic collapse
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Focus on companies with pricing power and durable earnings
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Use geopolitical events as rotation signals, not exit triggers
In short, geopolitics is becoming a portfolio management variable, not a reason to abandon markets.
Frequently Asked Questions:
Will geopolitics crash the stock market in 2026?
A full market crash is unlikely unless geopolitical tensions trigger a major financial or energy shock. More likely outcomes include higher volatility and sector rotation.
What did Shannon Saccocia say about markets in 2026?
She emphasized that while geopolitical risks are rising, strong fundamentals—especially AI-driven earnings—continue to support markets.
Is the AI trade still worth investing in?
Yes, but selectively. Investors should focus on companies with real earnings, scalability, and long-term competitive advantages.
How does the Middle East affect global markets?
The Middle East influences markets through oil prices, inflation expectations, and capital flows from sovereign wealth funds.
Will IPO activity increase in 2026?
Yes, but selectively. High-quality, profitable companies—especially those linked to AI—are most likely to succeed.
Final Takeaway: Risk Will Shape the Rally, Not End It
As Shannon Saccocia explains, 2026 will not be about avoiding risk—it will be about understanding it.
Geopolitics may bend the market’s path, increase volatility, and shift leadership. But innovation, disciplined capital allocation, and selective growth—especially in AI—suggest the rally still has room to run.
For investors, the challenge is not predicting every geopolitical headline—but building portfolios resilient enough to absorb them.
