Global Economy: 2026 and Beyond

DoitDuit Portfolio; US policy supporting AI boom; Bull and bear case for the market; 2026 priority shift for companies in US and China.

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DoitDuit | Your Investing Friend
January 06, 2026

Key Summary

(1) AI Boom supported by US policy: No one is talking about 2 key policy in the "One Big Beautiful Bill Act", which offers 100% bonus depreciation and immediate R&D expensing. This tax relief is expected to reduce tax and increase cashflow, fueling a massive US$527 billion in CAPEX cycle.

(2) AI capability > Human ability to use AI: The market faces a "model overhang"—where AI capability outpaces human ability to use it—forcing a transition from building models to finding monetizable "killer apps" to justify the high costs.

(3) Geopolitical Divergence (US Lead, China Chase): China and existing Big Tech are pivoting towards AI inferencing and consumer applications. US companies may struggle to compete with China's aggressive adoption of AI for practical, consumer-facing solutions.

We covered what we think about Malaysia’s economy in 2026, and potential investment themes for Malaysia that will benefit in 2026. If you haven’t read yet, please read here: www.doitduit.com/p/malaysia-economy-2026-and-beyond 

Today we will cover our thoughts on the Global Economy in 2026.

If there are 3 words to summarise 2025 investment scene, it will be:

  1. Donald Trump;

  2. Tariff; and

  3. Artificial Intelligence.

If we use 2 phrases to summarise our view on 2026 investment scene, it will be:

  1. US lead, China chase, The rest follow; and

  2. AI as a sustaining technology;

AI continues to be the main focus of 2026

The world experienced huge change since the launch of ChatGPT in November 2022, and 2025 was the year when people and business start to really adopt AI technology.

Demand for AI was sky high, so AI companies are building aggressively to increase supply to keep up with demand, i.e. US Big Tech is expected to spend US$527 billion in 2026 (2025: US$394 billion; 2024: US$237 bil). This has led to huge concern of over-investment in this early stage of the new S-Curve.

And the Shiller PE ratio used to measure whether a market is “expensive” or “cheap”, is also near all time high achieved in 1999, aka the DotCom Bubble peak (40.30 current vs 44.19 max).

However, many people missed one big policy change in the US…

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