Each year, Wall Street designates a new favorite trade — a realm where money is said to move fast and momentum gathers in big waves that early-acting investors can ride before things cool off. And, per Bank of America, the “run-it-hot” trade of 2026 does not take you to tech stocks, crypto or any of the usual hype cycles. It’s in a corner of the market that keeps heating up every quarter: assets geared directly at America’s surging growth story.
Analysts at Bank of America have been watching something move underneath. The economy is hotter than it was expected. Consumer spending hasn’t cracked. Business investment is holding steady. Supply chains are normalizing. And parts of the market, rather than cooling off, are riding the heat instead of pulling back from it. It’s recap of why the bank thinks cyclical sectors — those that benefit when growth accelerates —might be the most intelligent place in which for investors to deploy risk in 2026.
This is not a call based on vibes or desire. It comes down to the data: rising productivity, solidifying labor markets, stabilized inflation and a corporate sector that has spent the last three years streamlining operations and expanding margins. When businesses strip down and demand surges, profits take off. And it’s the cyclical assets, above all else, that tend to react the fastest — industrials, energy-linked plays and manufacturing-heavy names as well as companies related to raw materials and infrastructure.
Bank of America believes this setup appears a lot like the way that investors usually miss a classic “hot economy” moment: They’re so fixated on recession fears, which never fully develop, that they forget about the good times. It’s the sort of backdrop where the stocks tied to real world economic activity have their turn barnstorming ahead of those smooth, glossy mega-cap tech names for a bit. Not forever — for just long enough to allow smart investors who get in early enough to make real money.
A further piece of the argument derives from little-noticed global rotation. Nations are funneling billions into infrastructure, reshoring efforts, energy transition projects, AI-driven manufacturing, data center developments and national security buildouts. Those aren’t short-term spending cycles. They are multi-year investment phases, and they are exactly what Bank of America sees as the perfect grist for the “run-it-hot” mill. Cyclicals have a tendency to shoot higher when governments and companies around the world turn on the spending tap.
Meantime, investors are waking up to the notion that mega-cap tech may finally be too crowded to carry gains of an outsized nature over the short-term. Not that this is necessarily a bad thing: It’s not as if the companies are sluggish or weak — it’s just that everyone’s already there. The upside gets limited when the positioning becomes that extreme. Meanwhile, companies that fell behind during the AI boom have not yet absorbed much of the good news on its way.
Bank of America is essentially saying to investors, you can’t fight the heat so you may as well ride it. Rail behind them instead of trying to guess the timing on a cooldown that markets have been calling — incorrectly — for years. In other words, don’t step on the brakes when the engine is revving. You lean in.
What makes their call interesting is that it’s not some exotic, complicated trade. It’s old-school market logic. When growth broadens, cyclicals outperform. When the economy does, indeed, run hot, some of the biggest gains tend to be in sectors that investors shun while they’re all frothing at the mouth about the next flash tech story. And when rates do eventually begin to come down — Bank of America forecasts we might see it in 2026 sometime — these companies can enjoy another wave of upside.
The message is clear: If you want to play offense in 2026, look where the heat is building, not where it has already peaked. Next time, Bank of America believes that the market’s next big run isn’t likely to come from Silicon Valley: this time it will be stoked by those parts of the economy that produce, ship, build, drill, refine and make geegaws in addition to moving around the world around us.
And for traders with a high tolerance for heat, those could be the trades that matter most in the year ahead.
