Which industrial and 'real economy' categories — automation, aerospace & defense, power equipment, and shipping — are experts most and least constructive on heading into 2026?

Experts are most constructive on sectors directly enabling the artificial intelligence buildout, particularly automation-related capital goods and power equipment. A fierce competitive dynamic between the US and China is expected to fuel continued rapid AI-related capital expenditures irrespective of broader market performance , . This has created a clear market bifurcation where investors strongly favor the **"picks and shovels"** plays of this technological race . Companies involved with data centers, semiconductors, and critically, power infrastructure, are seen as primary beneficiaries with strong investor demand and a clear narrative for accessing public markets , . The positive outlook for power equipment is further reinforced by a major secular trend, as the International Energy Agency projects industrial electrification will be the single largest driver of global electricity demand growth through 2030 .

The aerospace and defense sector also has a constructive outlook heading into 2026, driven by geopolitical imperatives rather than commercial cycles. Analysts point to significant shifts in national security policies, such as Japan's expected increase in defense spending, which is anticipated to create new opportunities for defense and technology firms . Concurrently, China's industrial policy remains focused on technological and military upgrading, with its shipbuilding and satellite production capacity being monitored as key indicators of its power projection capabilities , . This suggests sustained state-led investment in advanced military and dual-use hardware, providing a durable tailwind for the sector globally.

The outlook is more nuanced and comparatively less constructive for shipping and general industrials, which face significant cross-currents from a slowing global trade environment and Chinese industrial policy. The US freight market entered 2026 after a **three and a half year** recession, and while one expert forecasts an inflection point with rising rates during the year, another sees no guaranteed catalysts for a significant change in the supply-demand balance , , . Broader industrial activity is being distorted by China's massive industrial overcapacity, a direct result of its supply-side economic strategy , . This overcapacity is being exported, creating deflationary pressures and provoking protectionist responses from other nations, complicating the landscape for manufacturers , , . While Wall Street projects a respectable 15% earnings growth for the S&P 500 Industrials sector, this figure lags the growth expected from Technology and Materials, reflecting the mixed outlook .