The alternatives platform projects modest S&P 500 upside, persistent inflation, and weaker consumer spending in late 2026.
iCapital’s midyear outlook anticipates slower economic growth in the second half of 2026, driven by persistent inflation, weaker U.S. consumer spending, and heightened scrutiny of artificial intelligence investments. The firm highlights that while S&P 500 earnings per share surged 25% year over year in Q1, a confluence of factors—including unresolved geopolitical tensions and AI monetization concerns—could dampen growth in Q3.
Earlier in 2026, strong earnings and AI-driven market outperformance buoyed equities, but iCapital warns that investor skepticism over AI’s profitability and concentration risks may curb further gains. The firm also expects interest rates to remain steady at 3.5% to 3.75%, limiting bond compensation for higher risk.
As a result, iCapital favors infrastructure over private equity and private credit in alternatives, projecting only modest upside for U.S. stocks in the coming months.