Market success will be much broader than it was last year, says BofA's Jared Woodard
Speakers
Jared Woodard
— Head of the Research Investment Committee at BofA Securities
Kelly
— Host, The Exchange
Summary
Jared Woodard of BofA Securities argues the 2026 market rally should broaden beyond AI leaders, with small caps and lesser-owned sectors benefiting. He defends AI valuations against bubble comparisons, citing profits moving with returns, expected rate cuts, and lower capex than the dot-com era. He also highlights AI's spillover into metals and mining, uranium miners, utilities, and real estate.
- Woodard says the market broadening trade is back for 2026.
- BofA is very bullish on small caps this year.
- He rejects AI bubble comparisons, citing profits, rate cuts, and capex.
- AI and industrial growth are seen affecting many sectors beyond tech.
- Named AI-adjacent beneficiaries include metals/mining, uranium miners, utilities, and real estate.
- Host notes strong year-to-date moves in precious metals, small caps, EM ex China, and convertibles.
- Hard economic data are described as strong, while surveys are weak.
- Tech companies may need to pay up for electricity and components to support AI buildout.
Ideas
Market strength broadens beyond AI leaders.
Woodard argues the long-hoped-for broadening trade is back: earnings and returns are broadening across the market, and BofA Research expects market success and strength to be a much broader story in 2026 than in 2025, with evidence already supporting that view.
Very bullish on small caps this year.
Woodard says BofA is very bullish on small caps this year, supported by the broadening out of AI and industrial growth, strong hard economic data, and a rotation into lesser-owned areas of the market.
AI lifts metals, uranium, utilities, real estate.
Woodard argues AI and broader industrial growth now affect almost every sector, not just tech, creating broadening opportunities in lesser-owned areas such as metals and mining companies, uranium miners, utilities, and real estate; tech companies also need to bring utilities and transmission along and are willing to pay higher prices for electricity or components.
AI is not a bubble.
Woodard pushes back on AI bubble concerns: stock returns are moving in line with profits, unlike the dot-com era; bubbles typically burst when central banks raise rates, not cut them; and AI capex remains below dot-com-era levels, so the AI trade remains supported.
