2026年资本市场展望报告 2026 Capital Markets Forecast Economic Experimentation Trade,Labor,and Debt Under the Microscope

2026

CapitalMarketsForecast

Economic

Experimentation

Trade,Labor,andDebtUndertheMicroscope

2026

03

Cr

Cryptocurrency

03

D

Diversification

03

G

Gold

02

Hy

Hyperscalers

01

Tr

Trade

02

I

Immigration

03

Ir

Interestrates

CapitalMarketsForecast

01

Ai

Artificial

intelligence

02

Te

Technology

04

S

Smallcap

01

C

Cybersecurity

04

P

Portfolio

01

Ta

Tariffs

5

15

23

33

THEME01

THEME02

THEME03

CONCLUSION

TheReshoringExperiment

TheLaborExperiment

TheDebtExperiment

TheOutlook

TariffsandSmart

ReplacingWorkers

Investingina

FromLabto

Manufacturing

withAI

DebtCycle

PortfolioReality

04

O

Outlook

02

L

Labor

03

De

Debt

TonyRoth

WilmingtonTrust

InvestmentAdvisors,Inc.

InvestinginaPeriodof

EconomicExperimentation

Successfulinvestinginvolvesbothartandscience.Theformeristhe“jenesaisquoi”thatcomesfromaneffectivemixtureofexperience,intuition,andhumility.Youare

luckyifyouhaveitand,ifyoudon’t,thereislittleyoucandotoacquireitanytimesoon.

Thescienceofinvesting,bycontrast,isavailabletoallthroughthecarefulstudyof

eventsandtheirantecedents.Fortunately,historyrhymesandthroughthethoughtfulframingofkeyeconomicfactorsandstudyoftheireffects,wecangainaclearersenseofwhateconomictrendsmayholdinthefuture.

Experimentationisnormal

Periodically,thereisadeviationfromeconomictrendsorpolicychangessosignificantthatitcanbeanalogizedonlytoeconomicexperimentation.Wefindourselvesinsuchatimetoday—makinghistorylessrelevantandcallingonadeeperunderstandingof

macrotheoryandcurrentobservationstopredictwheretheeconomyandmarketsmaybeheaded.

Criticaltoourinquiryisappreciatingthatexperimentationisafeature—notabug—ofanevolvingeconomy.Muchlikescienceitself,therecannotbeprogresswithout

testingnewcombinationsofelementsandinteractionsamongvariables.

Historyislitteredwithexamples.ThesenotablyincludewithdrawingtheU.S.fromthegoldstandardin1971;creatingtheeuroin1999;foundingtheWorldTradeOrganization(WTO)in1995andgrantingChina’smembershipin2001;bailingoutbanksduringtheglobalfinancialcrisis;andtheFederalReservetakingdecisiveactionintimesofcrisissuchasthepandemicthatencompassedrock-bottominterestrates,balance-sheet

expansion(i.e.,quantitativeeasing),andtheFed’sroleaslenderoflastresort.

Manyeconomicexperimentshaveelevatednations,movedfinancialmarketsforward,andevensavedlives.Butaswithscience,notallexperimentsyieldanticipated—or

evenpositive—results.Someoffernomaterialadvancement,whileotherscangoverywrong.Often,theresultsareknownonlywiththebenefitofmanyyearsofcareful

observation.

Whiletheparadigmofscientificexperimentinvolvescontrolledtestsandtheisolationofoneexperimentalvariableatatime,therealworldisnotalaboratory.Economic

experimentsimplicatetheunpredictabilityofhumanbehaviorandplayoutina

dynamicarenaofinfinitevariables.Isolatinganysinglefactoratatimeissimplynot

possible.Wemustcombinethescienceofobservationwiththeartofinterpretationtobestestimatehowtoday’seconomicexperimentswillcontinuetounfold.

Themesfor2026

Our2026CapitalMarketsForecastdivesintosomeoftheeconomicexperiments

occurringtoday,offersourinsightsandobservations,anddrawskeyconnections

toinvestmentstrategy.Weplacenonormativejudgmentonthemeritsofthe

hypothesesbeingtestedtoday,butratherstrivetodraweconomicconclusionsandidentifyinvestmentopportunities—wherewebelievewehavesufficientobservationaldatapointstodoso.

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.2

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.3

01

Ta

Tariffs

02

L

Labor

03

De

Debt

04

O

Outlook

AhistoricallyconcentratedU.S.equitymarketcould

meanrecommittingtobothathoughtfulallocationto

activemanagementanddiversificationacrossallassetclasses.

Ourfirstthemetakesontheexperimentoftariffsatthehighestratesinthepost-

WWIIperiod,intendedtoredirectglobalsupplychainsbacktotheU.S.forpurposesofeconomicprosperityandnationalsecurity.Weanalyzethetariffpolicy’scurrentandpossiblefutureimpactonmanufacturingactivity,jobs,andbudgetaryrevenuewhile

highlightingsomeoftheinvestmentopportunitiesweseeassociatedwiththenewtraderegime.

Thesecondthemelooksattheshrinkingofthelaborforce.Demographics,immigrationpolicy,andcorporateinvestmentinartificialintelligenceformapowerfulconcoction

withpotentiallysignificantimplicationsforlong-termeconomicgrowthandtomorrow’sstock-marketleaders.

Third,wetackleafamiliartopic:theU.S.debttrajectory.Thisexperimenthasbeenyearsinthemakingandshowsnosignsofchanging.CantheU.S.borrowfarabovecurrentdebtlevels,asisprojected,withoutunleashingdisastrousconsequences?Howcaninvestorsattempttohedgeagainstsuchrisks?

Finally,wepullthesestrandstogetherwithwhatwebelievemattersmostto

ourclients:adiscussionofhowtheexperimentsareinformingourinvestment

anddiversificationstrategiestostartthenewyear.Andasitrelatestoportfolioconstruction,werecognizethattheequitymarket’scurrentconcentrationinthesharesofAI-relatedcompaniesisanexperimentinandofitself.

Toreiterate,webelievethatexperimentationisnotinherentlynegative,butthat

ittakesusintounfamiliarterritory,addingriskand,potentially,volatilitytothe

investmentlandscape.Italsocancreateagreaterneedfortheartofinvesting,i.e.,experienceandinferencetohelpanticipatewhichinvestmentsmayprovetobe

successfuldiversifiersinthefuture.

Thescientificmethodatworkinportfolios

Webegin2026recognizingthattheresultsofsomeeconomicexperimentswillbecomeclearintheyearahead,butmanywilltakemoretime.

WeexpecttheU.S.economytorecoverfromitsfourth-quarterslowdown,butit

couldtakethebalanceoftheyearbeforeweseegrowthreturntoa2%annualizedtrend.Consumerslikelywillcontinuetooperateinatwo-speedeconomywhereinhigh-incomeconsumerscontinuetospendbutlow-incomeconsumersfacestrain.

Overall,weseetheU.S.expansioncontinuingin2026.

Fromourthemes,weseektoidentifycompellinginvestmentopportunitiesinareassuchasindustrialcapitalgoods,technology,andprivatemarkets.1However,alonginvestmenthorizonisnecessary—andcautioniswarrantedintheshortterm—as

certainareasofthemarketaretradingatfrothyvaluations.

Diversificationagainstglobalfiscalrisksmaybepartiallyachievablewithopportunisticadditionstopreciousmetalsandevencryptocurrency.

Thelattermaynotbeappropriateforallinvestors,particularlytheriskaverse.

Finally,ahistoricallyconcentratedU.S.equitymarketcouldmeanrecommitting

tobothathoughtfulallocationtoactivemanagementanddiversificationacrossallassetclasses.

THEME01

TheReshoringExperiment

TariffsandSmartManufacturing

01

A

Automation

01

C

Cybersecurity

01

01

Sm

Smart

manufacturing

01

Pm

Private

markets

Ai

Artificialintelligence

01

Tr

Trade

01

P

Productivity

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.5

THEME01

01

Ta

Tariffs

TheReshoringExperiment

TariffsandSmartManufacturing

TheU.S.drivetoreshoremanufacturingactivityandjobsviatheuseoftariffsisan

experimentthat,ifsuccessful,wouldunwinddecadesofmovementtoaglobally

integratedproductionandsupplychainsystem.Importantly,thecommonnarrativedescribesmanufacturingjoblossesasasimplezero-sumgameinwhichonecountrylosesajobandanotheraddsthatjob.Thetruth,though,isthatmuchofhistorical

manufacturingjoblossesstemfromtheongoingautomationofmanufacturingprocessesthatincreaseproductivityandreducetheneedforlabor.

Thatsaid,overcomingthehighrelativecostofU.S.laborisamajorchallenge.Inaddition,higher-skilledlaborisnecessarytooperateever-more-sophisticatedproductionmethods.

Aswestart2026,ourscientificobservationindicatesthattheuseoftariffsasthe

maintooltospurmanufacturingreshoringdoesnotyetappearsuccessful.Inthenearterm,wecontinuetoseemoreeconomicrisksthanrewardsfromthesetariffsasfirmsandtradingpartnersstruggletoadjustinanenvironmentofcontinuinguncertainty.

Overthelongerterm,ifheightenedtariffsremaininplace,weexpectthemto

encouragesomegainsindomesticproduction,thoughnotenoughtoovercomethe

labor-costdisparityandgeneratemanufacturingjobgrowth.Instead,weseeincreasedproductioncomingfromacceleratedcapital-intensivemethodsusingAI,robots,andsmartmanufacturing1techniques,allofwhichpresentinvestmentopportunities.

Figure1

Tariffhikesin2025amongthelargestshocksinU.S.history

Largestfederaltaxincreasesas%ofGDP

RevenueActof1942

RevenueActof19412.2%

RevenueActof19511.5%

RevenueActof19501.3%

CurrentTaxPaymentActof19431.2%RevenueandExpenditureControlActof19681.1%TaxEquityandFiscalResponsibilityActof19821.0%

5.0%

ExcessProfitsTaxof1950RevenueActof1940

1.0%

0.9%

Tariffs2025

0.9%

SecondRevenueActof19400.7%

0.6%

0.6%

OmnibusBudgetReconciliationActof1993

TaxAdjustmentActof1966

0.5%

0.5%

0.5%

CrudeOilWindfallProfitTaxActof1980

OmnibusBudgetReconciliationActof1990

RevenueActof1943

Sources:TaxFoundation,WilmingtonTrust.DataasofOctober31,2025.

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.6

Figure2

Manufacturingjobshitbyoutsourcingandproductivity

U.S.manufacturingjobsandrealoutput

$2,700

20,000

ChinajoinsWTO

18,000

$2,200

16,000

$1,700

Added1.3millionjobs

14,000

$1,200

Lost

5.9millionjobs

12,000

$700

10,000

196019701980

1990

200020102020

Jobs(thousands)(left)

ManufacturingGDP(billions)(right)

Sources:BureauofEconomicAnalysis,BureauofLaborStatistics,WilmingtonTrust.DataasofNovember30,2025.

Tariffimpactsin2026

TariffscreatedadragontheU.S.andglobaleconomiesin2025andcontinuetoposeathreattofurtherexpansionin2026.IfthetariffsannouncedbyPresidentTrumpintheRoseGardenonApril2,2025hadbeenfullyimplemented,itwouldhaveamounted

toaneye-watering30%effectivetariffrate—upfrom2.5%onJanuary1andsufficienttopushtheeconomyintorecession.

Foravarietyofreasons(e.g.,postponements,tradeagreements,voluminous

productexclusions,implementationlags,reroutingofshipmentsthroughlower-

tariffedcountries,noncompliance),theeffectivetariffratereachedjust11%bythefourthquarterof2025.2Thatisstillasubstantialtaxhikeofroughly$275billionperyear—equaltoabout0.9%ofgrossdomesticproduct(GDP)andamongthelargestpeacetimetaxhikesinU.S.history(Figure1).

ThetariffhikesaresomewhatmitigatedbytaxcutsfromtheOneBigBeautifulBillAct(OBBBA).Corporatetaxescouldfallby$137billionin2026,withthemanufacturing

sectorasthelargestbeneficiary.3Thatsaid,firmswithsubstantialimportsandlowcapitalinvestmentlikelywillseefarlessbenefit.Consumershavebeenstungby

higherpricesonimportedgoods,leadingtoaslowdowninspending.

Weexpecttariffstocontinueweighingongrowththisyear.OBBBAincludedpersonalincometaxcutsthatcouldhelptosoftentariffs’impact.Thebulkofthesecutsonlymakeexistingtaxratespermanentanddonotaffectcurrentincome.Thenewcuts(e.g.,higherdeductionforseniors,deductionforautoloaninterest,notaxontipsorovertimepay,andahigherdeductionforstateandlocaltaxes)amounttoroughly

$30billionperyear.4

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.7

Newmanufacturing

Automationandthelaborcostchallenge

techniquesrequirehighly

Figures2and3illustratethechallengesfacingthisexperiment.Domestic

skilledworkers,andthe

manufacturingjobstookahitjustafterChinajoinedtheWTO(Figure2),asmany

U.S.’shighdomesticlabor

labor-intensive,low-valueindustries(suchasapparel)outsourcedtheirproduction

costsareadisincentiveforfirmstoreshore.

overseas.TheU.S.lostnearlysixmillionjobsover10yearsandtworecessions,andhasaddedabout1.3millionafterthelossesbottomedoutin2010.

However,manufacturingoutputrosesteadilyovertheserecentdecades,revealingashifttomorehighlyvaluedindustriesaswellashigherproductivityforthesector.

Totaloutputforthesectorincreased17%from2000to2024evenwiththedramaticreductioninjobs.5

Remarkably,theturntohigherefficiencyandproductivityalsohasoccurredinChina,whichhasreportedmorethan15millionjobslostingoods-producingsectors—

includingmanufacturing—overthepastdecade,whilealsoraisingoutput.6

Thesedramaticincreasesinproductivityarenotunprecedented.Onehundredyearsago,about25%ofU.S.workerswerefarmers.Yetevenasthatnumberhasshriveledto1.5%,foodproductionhasmorethanquadrupled.7Wedonotexpectmanufacturingproductivitygainstoreverse,whichwouldmakethereshoringofjobschallenging.

Newmanufacturingtechniquesrequirehighlyskilledworkers,andtheU.S.’shighdomesticlaborcostsareadisincentiveforfirmstoreshore.OnlySwitzerlandandNorwayhavehighertotallaborcostsinthesector8(Figure3).

Figure3

HighU.S.laborcostsahurdleforreshoring

$109,273

Totalmanufacturingcostsperemployee(annual,USD)

$86,629

$86,506

$81,133

$80,769

$70,049

$69,751

$68,416

$67,834

$66,842

$66,594

$63,281

$62,966

$60,978

$59,882

$50,991

$50,478

$45,012

$44,181

$38,447

$32,820

$27,555

$25,364

$23,010

$22,556

$22,555

$21,812

$20,209

$18,458

$17,474

$16,841

$11,983

$11,743

$15,594

$15,496

$11,491

$11,275

$9,459

$8,732

$6,760

$4,813

Switzerland

Norway

UnitedStates

Belgium

Denmark

France

Netherlands

Ireland

Germany

UnitedKingdom

Austria

Australia

Finland

Canada

Sweden

Italy

Japan

SouthKorea

Spain

Singapore

Slovenia

Taiwan

Greece

SlovakRepublic

Estonia

CzechRepublic

Portugal

Lithuania

Latvia

Croatia

Hungary

Poland

SouthAfrica

Romania

China

Brazil

RussianFederation

Turkey

Bulgaria

Mexico

India

Sources:BureauofEconomicAnalysis,BureauofLaborStatistics,WilmingtonTrust.DataasofNovember30,2025.

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.8

Figure4

Labor-intensiveproductsmorechallengingtoreshore

Equatingproductioncostsforshoesandsemiconductors

Shoes

Overhead

RawmaterialsLabor

Tariff

$70

$33Total$63

$21

$60

$50

$40

$30

$20

$10

$0

Tarifftoequatecost

Total$30

$12

$15

111%tariffrequiredtoequatecostbetween

U.S.andinternationalproduction

$30

$12

$3

InternationalDomestic

Semiconductors

$350

$91Total$301

$229

$300

$250

$200

$150

$100

$50

$0

43%tariffrequiredtoequatecostbetween

U.S.andinternationalproduction

$140

Total$210ertist

$66

$4

$66

$6

InternationalDomestic

Sources:WilmingtonTrustandreferencesnotedinendnotes9,10,11,and13.DataasofOctober31,2025.

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.9

Thereshoringexperiment

Wedonotobserveorexpectthattariffsalonewillsufficetoinduceasignificantshiftofproduction,especiallyformorelabor-intensiveproducts.Figure4isastylized

examplecomparingproductioncostsforapairofsneakersmadeintheU.S.versusinVietnam,andthesameforaleading-edgelogicchip,acriticalsemiconductordevice.

Theformerisanexampleoflabor-intensivetextilemanufacturingthatcontributestolarge-scaleoffshoreproduction.Muchofsneakerproductioniseitherfullyautomatedormachineassisted,butlaborstillplaysasignificantrole.

Shoeslikethismayretailfor$100butcostfarlesstoproduce(around$30whenaccountingformaterials,wages,andothercostssuchasadministrativeexpensesandprofitmargins).9Tariffsareleviedbasedontheimportvalueoftheitem,andinthiscasewouldapplytothe$30costthattheU.S.firmpaysattheshippingdock.

Thecurrent(asofNovember2025)20%U.S.reciprocaltariffrateonVietnamwouldaddanother$6,bringingthetotalcostto$36,stillwellbelowtheestimatedU.S.

productioncost.

LaborcostsarethecriticaldifferentiatingfactormakingproductionintheU.S.moreexpensive.Theyhavebeenreportedatbetween$1and$2anhourfortextileworkersinVietnam,whileU.S.wagesare10timeshigher10—bringinglaborcoststo$30inthisexampleandincreasingtheU.S.productioncostto$63,or$33higherthanwhen

outsourced(Figure4).Thisimpliesthata111%tariffwouldberequiredtoequalizethecostofmanufacturingapairofshoesintheU.S.andVietnam.

Itwouldtakea100%tarifftomakereshoringprofitableonaper-unitbasis,evenbeforeconsideringthehigherfixedcostsassociatedwithconstructionofU.S.

productionfacilities.Atareciprocaltarifflevelof20%withVietnam,itmakesmoresenseforimporterstopaythetariffsuntilthecostandscaleofautomatedsolutionsforthelabor-intensivestepsofproductionareeconomicallyviable.Untilthen,

thesetariffsmainlyserveasasourceofgovernmenttaxrevenueattheexpenseofcorporateprofitsandU.S.consumers.

Liketextiles,semiconductorsareaheterogeneouscategorythatincludes,for

example,logicprocessors,memorychips,andanalogcomponents,eachproducedatvaryingscalesandfordistinctapplications.Forillustrativepurposes,theexamplereflectstheproductionoflogicchips,whichtodayoccursprimarilyinTaiwan,

especiallyforthemostadvanceddesigns.

Manufacturingadvancedsemiconductorsishighlyautomatedandrequiresmore

skill,withsmallerwagedifferentialsbetweencountries.Forinstance,production

staffatTSMC,aleadingchipproducer,reportedlyearnabout$30,000peryearin

Taiwan,whilejobpostingsforrelatedrolesatTSMC’sU.S.foundryinArizonapaycloseto$50,000.11ThesenumbersplaceU.S.wagesatroughly67%morethanthosein

Taiwan—amuchsmallerdifferencethanthe10xwagegapinthetextileexample.

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.10

Whenallcostsarefactoredin,manufacturingsemiconductorsintheU.S.ismore

expensivethaninTaiwan,butthedifferentialislesspronouncedthaninthecaseof

textiles.AGoldmanSachsanalysisfoundthatoperatingexpensesare18%higherin

theU.S.comparedtoTaiwan,andall-inexpensesare44%higherwhenfactoringin

otheritems,particularlythecostofcapitalexpenditures(capex).12Useoftariffscouldbesufficienttotiltthebalanceofcostsinfavorofdomesticproduction,particularlyifcombinedwithcapexincentives.13

Thecalculusforwhethersuchaninvestmentisrealistichingesonmorecomplex

factors(notablythewealthofspecializedknowledgethatTaiwanhasaccumulatedoverdecadesofproducingthemostadvancedchips,plustheextensivenexusof

supplychainsdevelopedtosupportit).Itispossibleforasimilarindustrytobe

builtintheU.S.,butitlikelywouldbeamulti-year,multi-stageprocessthatrequiresbusinessestofeelrelativecertaintyaboutthepolicyframeworkgoingforward.

Basedontheforegoing,productswithveryintensivelaborinput,suchassneakers,

probablywillremainimportedgoodsandprovidetaxrevenue.Therearemorecapital-intensiveproductsthatcouldbereshored,butwethinkitwouldtakenewinvestmentsinsmartmanufacturingtechniquesandotherinnovationstoovercomethelabor-costdifferential.Wealsoexpectreshoringtobeagradualprocessovermanyyearsas

technologydevelopsandfirmsreplaceexistingcapital.

Lastly,wemustnotoverlooktheimpactthatfuturetariffuncertaintycouldhaveoncorporatedecisionmaking.Aswithmostexperiments,iftheobservedresultsarenotconsideredfavorable,theexperimentmaybeterminated.Thispossibility,whether

withinthetimeframeofthecurrentadministrationorbeyond,alsohasastronglydepressiveeffectoncorporateAmerica’sinterestinreshoringmanufacturing.

Figure5

Globalizationhassupportedmarginexpansionformanufacturers

S&P500manufacturers’andallothers’netprofitmargins1952–August2025

20%

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

2015

2018

2021

2024

ManufacturersManufacturers(ex-technology)Therest圜Recessionperiod

Source:EmpiricalResearchPartners.DataasofAugust30,2025.

Excludesfinancials,realestateinvestmenttrusts,andutilities.Basedontrailingfour-quarteraggregatedatasmoothedonatrailingsix-monthbasis.Thelarge-capstockuniverseisusedpriorto1977.Graybarsrepresentrecessions.

©2026M&TBankanditsaffiliatesandsubsidiaries.Allrightsreserved.11

Smartmanufacturing,productivity,andprofitability

Manufacturers’netprofitmarginshaveaccretedoverthecourseofdecadesof

globalization(Figure5).Weexpecttheclearingofregulatoryandlabor-costobstaclesforU.S.-domiciledmanufacturingtodependheavilyonsmartmanufacturing.Such

technologieshavetakenahugeleapforwardwithgenerativeandagenticAI.The

latterbuildsonthepowerofgenerativeAI’slargelanguagemodels(LLMs)byaddingtheabilitytolearn,adapt,andbemoreproactiveinaccomplishinggoals.Thesearenecessaryskillsformanyenterpriseapplications.

Thepotentialimprovementsinpredictivemaintenance,qualitycontrol,and

cooperativeworkbetweenhumansandcollaborativerobots(cobots),sometimeswithoutanyhumanoversight,couldyielddouble-digitproductivitygainsforthe

industryovertime.14KPMGresearchprojectsa20%reductioninproduction

01

Cr

Collaborative

robots

01

IoT

Internetof

Things

downtime,15%increaseinproductquality,and25%reductionindefectratesformanufacturersutilizinggenerativeAI.15

However,investorsmayneedtobepatient.Researchershavedocumenteda

productivityJ-curve—i.e.,wheninitialinvestmentsresultinadipinmarginsbeforegrowthreaccelerates—thatespeciallyplaguesmanufacturingcompanies.16

UsecasesofAIandroboticsinsmartmanufacturing17

Collaborativerobots(cobots)workalongsidehumanworkerstoenhance

productivityandsafetywhilehandlingrepetitiveorphysicallydemandingtasks.

InternetofThings(IoT)generatesdatafromsensors,programmablelogic

controllers,deeplearning,18andAIalgorithmstoconstantlyupdatethedigitalmodelwithlivedataandperformpredictivemaintenance.

Sensorscanperformqualitycontrolwithnewprecision.

AgenticAIcanmanagesupplychainsandinventory,andschedulesystemoptimization.

01

S

Sensors

01

A

AgenticAI

Weexpecttoseethegreatestbenefitfromsmartmanufacturingaccrueto

companiesthathavehighcapitalintensity(i.e.,spendmoreonfixed-asset

investment)orhighlaborcostsandcomplex,customizableproducts.Ithelpsto

alreadyhaveproductionfacilitiesintheU.S.thatcouldbeexpandedtoincreasespaceandexpertise.Deepbalancesheetsareamustaswell.Ifcompaniescanprofitably

bringmanufacturingsupplychainsbacktotheU.S.,consumerscouldbenefitfrombetter,U.S.-madequalityandlowershippingcosts.

Figure6

Sophisticated,high-costindustriesleadinsmartmanufacturingadoption

Percentadoptionofsmart

manufacturingacrossindustries

Automotive

Electronics

Pharmaceutical

Consumergoods

Aerospace

Textile

Foodandbeverage

Source:

2025SmartManufacturing

andOperationsSurvey:Navigating

challengestoimplementation

,

DeloitteInsights,May1,2025.

Thegreatestadoptionofsmartmanufacturinghasbeenintheautomotive,

electronics,andpharmaceuticalindustries(Figure6).Nationalsecurityobjectivesinthepharmaceutical,energy,chemicals,andrareearthssectorscouldprovide

additionalincentivetomanufacturedomestically.

Investinginindustry5.0

Thereareseveralinterestinginvestmentopportunitiesassociatedwiththesmartmanufacturingthemethatweareimplementinginclientportfolios.

Industrialcapitalgoodsproviderspresentacompellingavenuetoinvestin

automation,robotics,andsmartbuildingsolutionsassociatedwithupgradeddomesticmanufacturing.Infact,industrialcompaniesmaybeintheearlystagesofamulti-yearsupercycle.Valuationsforthesectorarenotcheap,butindustrialsaretradingata

narrowerhistoricalpremiumtotheoverallmarket(Figure7).

AIsoftware,specificallyinferenceapplicationsthatfocusanddirectthecomputingpowerofwell-trainedLLMs,hasthepotentialtostreamlineinefficienciesinthe

productionprocess.AgenticAIcouldusherinarealboosttomanufacturingproductivity.

WhilegenerativeAImodelscreatecontentbasedonlearnedpatterns,agenticAImoreproactivelyappliesmodeloutputtoaccomplishinggoalsorcompletingmorecomplextasks.Forexample,anLLMcouldcreateatravelitinerary,butanagentic

AImodelcouldbookthetrip.Inthecontextofmanufacturing,agenticAIhastheabilitytoautonomouslyadjustschedules,diagnosesupplychainissuesandproactively

rerouteinventory,and