Risk-On Returns: AI, Gilts and Gold in the Second Half of 2026

​With the Strait of Hormuz reopening and the war premium unwinding, markets have swung back to risk-on. Henry Cobbe and Hoshang Daroga discuss what the AI capex cycle, a fragile gilt market and a repriced gold trade mean for portfolios into the second half of 2026.

Why the AI Trade Still Looks Early: Our Mid-2026 Markets View

Our latest markets discussion covers the shift back to a risk-on footing as geopolitical tension eases. Hoshang Daroga sets out why the AI trade still looks early rather than late, why real earnings separate it from the dot-com bubble, and why dispersion across winners and losers creates a role for active positioning. We also cover a sticky inflation backdrop with 2% as a floor not a ceiling, a UK gilt market now carrying emerging-market style risk, and a gold price driven less by geopolitics and more by real yields. This is market commentary for professional advisers and discretionary managers. It is not a recommendation and does not constitute personal advice.

Is the AI rally a bubble like the dot-com era?

The discussion's view is no, or at least not yet. The key difference is earnings. The leaders in this cycle are generating real cash flow and real earnings growth, where late-1990s valuations ran far ahead of profits. On the figures cited, Nvidia trades at roughly 20x forward earnings against a Cisco that reached 40 to 80x at the dot-com peak. Strong earnings growth is pulling multiples down over time, not up.

Do the SpaceX, OpenAI and Anthropic IPOs signal the top of the market?

Not in our reading. A flurry of high-profile listings tends to mark the start of a cycle rather than its peak, much as the mid-1990s internet IPOs ran for several years before the bubble formed. The view is that we are nearer the beginning of the AI era than the end of it.

What is the outlook for UK gilts?

Cautious. Renewed political instability, persistent inflation risk and questions over debt sustainability mean some bond investors now treat gilts with emerging-market style caution. The stated preference is short-dated bonds, emerging-market bonds and inflation-linked exposure over duration risk in gilts.

Why did gold fall during the recent conflict?

Gold appears to be tracking real yields more than geopolitics. With positive real yields available on US inflation-linked bonds, the inflation safety role has rotated towards TIPS, and some of last year's retail euphoria unwound as gold was used as a source of funding. The structural case stays intact, supported by ongoing central bank buying, and gold keeps its place as a risk-based diversifier.

Where does oil sit now?

The directional insurance trade has played out with the strait reopening and Brent back near where it started the year. Looking further out, a higher floor of around $65 to $70 looks reasonable as importers rebuild reserves and a risk premium stays priced in. From here oil is held for diversification rather than as a hedge.