NEW YORK — U.S. equity funds drew about $16.9 billion in net inflows in the week ended Dec. 31 as investors kept buying U.S. stocks into year-end. The jump reflected enthusiasm around an AI-fueled rally and a brighter profit backdrop for 2026, even as smaller-stock funds lagged, Jan. 6, 2026.
U.S. equity funds finish the year with big-cap strength
Flow data from LSEG Lipper reported by Reuters show U.S. equity funds have now posted two straight weeks of inflows, following roughly $18.3 billion of net buying the prior week. In the latest week, large-cap equity funds pulled in about $16.87 billion, while small-cap funds shed about $1.42 billion and midcap funds lost roughly $269 million.
Sector funds logged $116 million in net sales, led by health care outflows of $502 million and financial outflows of $290 million. Bond funds had $2.09 billion in net outflows, while money market funds drew $83.71 billion as some investors stayed defensive.
The S&P 500 rose 16.39% in 2025, the Nasdaq gained 20.36% and the Dow climbed 12.97%, all ending the year higher for a third consecutive time — a run powered in large part by AI-linked megacaps.
AI rally meets a stronger earnings forecast
Analysts are also penciling in faster profit growth. FactSet’s S&P 500 CY 2026 earnings preview puts expected earnings growth at 15% for the year. Reuters, citing LSEG data for 2,784 large- and mid-cap companies, said analysts expect earnings to rise about 15.13% in 2026, up from a 12.92% growth forecast for 2025.
Still, the 2026 playbook may be less straightforward than simply riding tech higher. A separate Reuters look at 2026 positioning notes some strategists expect investors to hunt for value in cheaper corners of the market as AI valuations climb. “This environment is ripe for active investing,” strategists at BlackRock Investment Institute said.
What investors will watch for U.S. equity funds in 2026
For U.S. equity funds, the next test is whether money begins rotating into smaller stocks and more sectors, or whether flows stay concentrated in a narrow group. An Investopedia roundup of Wall Street’s 2026 stock outlook flags the same tension: optimism on earnings, but growing concern over concentration and valuations.
History suggests swings can be sharp. A 2023 Reuters report on AI-themed ETF flows showed how rate fears cooled the early AI trade, and in late 2024 investors pulled $50.2 billion from U.S. equity funds ahead of a Fed decision, Reuters reported. A week later, flows snapped back to $20.56 billion of inflows on cooler inflation and a holiday rally, according to another Reuters tally.
For now, U.S. equity funds enter 2026 with momentum — and with markets still treating AI as both an earnings engine and a valuation risk.
