INVESTMENT OUTLOOK ON MARKETS IN TRANSITION

American Century's second quarter outlook examines AI, the Fed and a shifting investment landscape amid geopolitical shocks such as combat in Iran

KANSAS CITY, Mo., March 19, 2026 /PRNewswire/ -- In its second quarter 2026 investment outlook, American Century Investments, a global asset manager with more than $325 billion* in assets under management, highlights how powerful long‑term forces – including artificial intelligence and a transition in U.S. monetary policy – are shaping markets amid persistent uncertainty and shifting global dynamics. Long‑standing assumptions about growth, inflation and policy are being tested as technological innovation accelerates, creating both opportunity and complexity for investors.

"It's important to maintain a long-term focus amid geopolitical shocks, such as the renewed military action in the Middle East. As markets digest immediate reactions and longer-term implications, investors willing to look beyond near-term noise can participate in trends unfolding over many years," said Victor Zhang, chief investment officer of American Century. "The most compelling investment opportunities often come during times of economic and market transition. And that's what we believe investors are experiencing today. A wave of long-term changes is shaping the global economy and financial markets, with the potential to create a real and lasting impact."

A nuanced AI reality beyond hype and doom

Artificial intelligence continues to stand out as a defining long‑term theme evolving in more complex and uneven ways than market narratives often suggest, leading American Century's chief investment officers to caution against framing AI in binary terms.

"Is AI massively overhyped, or is it an economic superpower about to make entire segments of the economy obsolete? We believe the truth probably lies somewhere in the middle," said Keith Lee, global growth equity co-chief investment officer of American Century. "In our conversations with companies, we observe clear signs of progress in implementing AI in software coding and digital advertising. However, the broader promise of productivity from 'agentic AI' has so far remained unfulfilled. Physical AI provides another way for this technology to boost productivity; however, we're still in the early stages of development and deployment."

"One by one this year, stocks of entire industries have tumbled as new applications and advances in AI appear to threaten broad business models. As we examine the situation, we find that the reality is more complex than these stock movements indicate," said Kevin Toney, global value equity chief investment officer of American Century.

Still, there are areas of real progress and genuine value. Beyond early innovations, more sectors are now demonstrating practical and profitable AI applications, reaffirming its significance for investors in this changing environment.

"AI remains a dominant theme despite increased scrutiny. The world's largest technology companies are increasing their AI-related capital expenditures, while a broader ecosystem of businesses reports growth driven by this technology," said Patricia Ribeiro, global equity co-chief investment officer of American Century, who cites construction, cooling, energy and certain manufacturers among the AI beneficiaries, and practical applications of AI such as improved diagnostics and content personalization.

"We're not ready to pick winners and losers in the AI race and await better opportunities," Charles Tan, co-chief investment officer for global fixed income, stated. Instead, American Century concentrates on indicators of sustainable value in its active investments.

"So far, Alphabet and Meta have reported some of the clearest signs of AI contributing meaningfully to their bottom lines," said Lee. "What we're looking for are broader signs of success and AI adoption resulting from this spending on model training and data centers/cloud computing. Such signs would help sustain investment in AI and ease investor worries about overspending. Identifying and validating these successes is a top priority for all our investment teams."

Monetary policy amid competing pressures

Alongside technological change, the outlook highlights how monetary policy and uncertainty surrounding it remain a central influence on markets.

"Relatively weak job conditions argue for lower rates, while above-target inflation suggests little or no further cuts. President Donald Trump's attacks on the Federal Reserve's (Fed's) independence and the nomination of a new Fed chair introduce additional uncertainty into the interest rate outlook," said Lee. "Tariffs, trade wars and a shock to labor supply from immigration policy all have potentially inflationary effects. High and rising national debt implies a greater government interest expense burden, pushing up rates and crowding out private investment."

American Century's CIOs write about the renewed focus the nomination of a new Fed chair has brought to the balance between inflation control and employment.

"It's a particularly tricky time for the Fed. Not just because of the president's unorthodox attempts to interfere with the central bank's independence, but because the Fed's dual mandate to maintain both full employment and price stability is truly being challenged," said Rich Weiss, chief investment officer of multi-asset strategies for American Century.

"The Fed's dual mandate of taming inflation and supporting the labor market recently triggered unusual division among policymakers. But after last year's series of Fed rate cuts, labor market conditions appear to be stabilizing. Accordingly, we expect inflation to reclaim center stage at the Fed. And given that the core inflation rate remains above the Fed's target, we don't expect much — if any — easing this year. Adding to the case for an extended Fed pause, economic growth is likely to pick up, potentially keeping inflation pressures mounting," said Tan.

The full American Century investment outlook contains insights on global macroeconomic outlook, U.S. equity outlook, global equity outlook, global fixed income outlook, multi-asset strategies outlook and sustainable investing trends.

"While their views may differ across regions, strategies and time horizons, they are all grounded in the same shared, disciplined framework: Staying invested in opportunities, allocating capital thoughtfully, and managing uncertainty through balance and diversification. This discipline is especially important during periods of geopolitical uncertainty," said Zhang.

About American Century Investments
American Century Investments is a leading global asset manager focused on delivering investment results and building long-term client relationships while supporting breakthrough medical research. Founded in 1958, American Century Investments' 1,400 employees serve financial professionals, institutions, corporations and individual investors from offices in Kansas City, Missouri; New York; Los Angeles; Santa Clara, California; Portland, Oregon; London; Frankfurt, Germany; Hong Kong; and Sydney. Jonathan S. Thomas is chairman, chief executive officer and president, and Victor Zhang serves as chief investment officer. Delivering investment results to clients enables American Century Investments to distribute 40% of its dividends to the Stowers Institute for Medical Research, a 500-person, nonprofit biomedical research organization with a focus on foundational research. The Institute is the controlling owner of American Century Investments and has received dividend payments of more than $2 billion since 2000. For more information about American Century Investments, visit www.americancentury.com.

*Assets under supervision as of 02/27/2026.

©2026 American Century Proprietary Holdings, Inc. All rights reserved

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

The opinions expressed are those of American Century Investments (or the fund manager) and are no guarantee of the future performance of any American Century Investments fund.

References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

CONTACT: Lisa Patterson, [email protected]

SOURCE American Century Investments