Deglobalisation and AI: the flip side of the coin

Expectations for AI are high. Companies and investors hope that AI will increase labour productivity and lead to cost savings, thereby boosting the profitability of businesses using AI. However, these high expectations also carry challenges. Firstly, investors might begin questioning if AI can actually deliver on its promises. Secondly, there is uncertainty about whether the AI models themselves can become profitable.  

In our base-case scenario, we do not anticipate a major correction in AI-related stocks. However, if investors start doubting AI’s prospects, they may no longer see the current (high) equity valuations as justified. This would result in a drop in the prices of these stocks, leading to lower valuations. Such a correction would not only negatively impact equity markets. A sharp decline in AI-related stocks would also have broader economic repercussions. AI investments, which currently contribute to economic growth, would decrease. Additionally, when prices of AI stocks fall, investors holding these stocks will see a decline in wealth – potentially reducing consumer spending. This challenge is particularly relevant in the US, but could also affect the global economy.  

The massive expenditures governments are planning also have a downside. To finance large-scale investments in their defence apparatus, domestic infrastructure, and AI, countries will have to take on even more debt. Investors are becoming increasingly uneasy about this. Their concerns are not solely about the announced investments in defence, AI, and infrastructure. The debt levels of some countries have been a longstanding worry. In Europe, France’s fiscal situation remains a particular concern among investors, as the French government’s ability to act is limited by its fragile political climate.

This brings us to a shorter-term challenge: the independence of the Fed is under threat. In his efforts to lower interest rates, Trump is working to appoint Fed officials who are sympathetic to his views and who, like him, favour aggressive rate cuts. 

In our base-case scenario, we expect the Fed to remain largely independent. However, there is a chance that Trump will succeed in increasing his influence over the Fed’s board. The Federal Reserve’s board consists of seven Fed governors. These governors are also responsible for appointing members to the Federal Open Market Committee (FOMC), the decision-making body of the Federal Reserve.1 During his first presidential term, Trump appointed two Fed governors; in his current term, a third has been added. A fourth governor who is not aligned with Trump is facing fraud charges and may be replaced. In this scenario, Trump could secure a majority of four out of seven Fed governors who are more or less loyal to him. 

Such a majority could significantly influence the composition of the FOMC in 2026. If more dovish members are appointed to the FOMC, the Fed’s policy might shift towards more aggressive rate cuts. Initially, this could boost the US economy. But eventually, it might lead to a sharp rise in inflation, forcing the Fed to raise rates again. 

If Trump achieves his goal and the Fed aggressively lowers rates, this will also have consequences for Europe. A lower rate would likely weaken the dollar and strengthen the euro. This would harm Europe’s competitiveness as an export region, because a stronger euro makes European products more expensive. The timing of such an outcome would be particularly unfortunate, as European exports are already under pressure due to US import tariffs.  

Both rising government debt and Trump’s attempts to influence Fed policy are challenges that could affect investor sentiment in 2026. Concerns about these issues could lead to volatility in government bond markets. Throughout 2025, we have therefore become increasingly cautious about government bonds.  

Deglobalisation can also have a disruptive effect on supply chains. Both the US and Europe fear that China is copying critical technologies developed in the Western world. A recent example of this was Nexperia, a Chinese chip manufacturer headquartered in the Netherlands. Since there were indications that Nexperia was attempting to transfer technological knowledge to China, the Dutch government placed the company (temporarily) under supervision. Beijing responded by suspending exports of Nexperia chips from China. This disrupted the supply chain for these chips, which are essential for industries such as automotive manufacturing.  

When countries view each other not as trade partners but as rivals, supply chain disruptions may occur more frequently. This is another challenge we foresee for 2026. Trends offer opportunities – but the deglobalisation trend also comes with friction.