This Is Where the Smart Green Tech Money Is Heading in 2026

(Bloomberg) -- This year will be a formative one for climate tech investors, after a surprising — and at times, unsettled — 2025. 

President Donald Trump’s tax bill has cut support for many green technologies, but it’s also provided clarity for investors. Coupled with the Fed’s recent interest rate cuts, climate tech backers are planning to write more checks in 2026. They also have a clear idea of where to place their bets.

Trump’s policies, the rise of artificial intelligence and electrification — all trends that influenced the 2025 investment landscape — will again hold sway over 2026. Startups looking for funding will also have to make a strong business case that goes well beyond cutting carbon.

“The bar for climate tech investment is higher than ever before,” said Sean O’Sullivan, founder and managing partner at SOSV, one of the most active venture capitalists in the sector. “Emissions reduction is not sufficient to justify investment.”

But as climate tech investors crowd into a handful of bright spots, soaring valuations in sectors like the sizzling-hot nuclear industry are giving some funders pause. Other factors, such as intensified natural catastrophes, are driving funders to consider backing companies focused on adaptation, a long-overlooked sector. 

Equity investment and value of mergers and acquisitions in the US climate tech sector amounted to roughly $42 billion during the first nine months of last year, according to the latest available data from BloombergNEF. With worries of an AI bubble on the horizon, this year will test how durable the climate tech investing sector is. Bloomberg News spoke with over a dozen investors about where they think smart green money should — or shouldn’t — head to this year.

Bullish

Clean energy

Despite AI bubble speculation, almost every investor Bloomberg News spoke with said that they still see companies serving data center energy demand as good bets. That list ranges from next-generation geothermal startups to renewable energy project developers and software firms working on energy efficiency improvements.

US data center energy demand is projected to increase 130% by 2030 from 2024 levels, according to the International Energy Agency. Even if just half of the projected growth materializes, it is still a “huge opportunity,” said Rajesh Swaminathan, a partner at Khosla Ventures.

The AI boom isn’t the only reason investors are excited about energy-related startups. The growing adoption of electric vehicles and heat pumps is also spurring energy demand, as is the Trump administration’s push to revive domestic manufacturing.

Another reason to be bullish: There are growing opportunities to buy out clean energy companies that have seen valuations dip, according to Hans Kobler, founder and managing partner at Energy Impact Partners. Although several US-based wind and solar firms went under in recent years, amid higher financing costs and shifting political winds, the economics of renewable energy “fundamentally makes sense” in many places, Kobler said.

Grid tech

The Nasdaq’s main grid index outpaced other major stock indexes with nearly 30% gains in 2025. But even after such a good run, investors say they simply can’t get enough of grid tech stocks.

Beyond growing power demand, overdue infrastructure upgrades are likely to help the rally continue this year and beyond. “We see the opportunity to compound returns and have outsized returns in grid technology over the next 10 years,” said Chat Reynders, chief executive officer at Reynders, McVeigh Capital Management, a Boston-based investment firm. 

US grid investment reached $115 billion — about a quarter of the global total — last year, and that figure is projected to climb to more than $128 billion over the next two years, according to BNEF. That will benefit companies ranging from hardware makers to software developers and utility-scale energy storage providers.

“We want an energy system which is affordable, reliable and cheaper, and that comes with having a reliable grid,” said Bala Nagarajan, managing director at S2G Investments. “All of those factors give me comfort that 2026 will continue to be a pretty robust year for grid tech.”

Disaster readiness

There's going to be “more appetite” for funding adaptation projects as climate change makes extreme weather worse, said Jens Peers, chief investment officer of sustainable equities at Mirova US.

His firm is looking to invest in public companies serving communities facing substantial climate risk, Peers said. Those services can be as diverse as post-disaster clean-up and building infrastructure like artificial islands to protect the coastline against storm surge.

In the US, disaster readiness and recovery are already big business. An index of about 100 large public companies working on disaster preparedness and response has outperformed the S&P 500 by 6.5% a year from October 2015 to October 2025, according to Bloomberg Intelligence.

Divided

Nuclear power

Nuclear startups received about a fifth of all climate venture funding during the first nine months of 2025, and publicly-traded nuclear firms enjoyed a stock rally, driven in large part by the technology’s promise to meet AI energy demand. But investor sentiment is mixed about whether the sector remains a good opportunity in 2026.

The surge in valuations for nuclear companies has some investors on the fence. Small modular reactor company Oklo Inc., for instance, saw its shares gain more than 200% last year, despite generating no revenue and having a long way to go before commercial operations. 

As the fundamentals of many nuclear stocks cannot justify their valuations, the need to “pivot away is pretty obvious,” said Garvin Jabusch, chief investment officer at Green Alpha Advisors.

Kobler of Energy Impact Partners also urged caution. While his firm has invested in nuclear energy before, he said it’s unlikely to again due to the sector’s capital-intensive nature and a long (and possibly bumpy) journey to monetize the technology.

But some of the largest climate tech investors remain committed to the sector, particularly fusion. Tech billionaire Chris Sacca’s venture firm is raising a new fund earmarked for nuclear fusion. Swaminathan from Khosla Ventures said that his team will also “double down” on nuclear investment in 2026. While acknowledging that the sector has become red hot, he said, “the valuation today is very, very reasonable” given the potential.

The flourishing industry has also lured in some unexpected newcomers. Trump Media & Technology Group Corp., the company behind the president’s social media platform, announced in December that it would merge with nuclear fusion startup TAE Technologies in an eyebrow-raising deal valued at more than $6 billion.

Bearish

Alternative proteinsUS-based alternative protein companies saw a major investor pullback in 2025, with venture funding for cell culture technology down about 90% compared to a year ago, according to Pitchbook. And it’s unlikely they’ll see a change of fortune this year.

“So far, too few companies in alternative proteins have lived up to the promise of increasing affordability while reducing emissions,” said O’Sullivan of SOSV. Despite years of efforts, most startups working on growing meat from animal cells still struggle to compete with the status quo on their product’s cost, taste and appearance. That problem is only compounded by slow progress in winning regulatory approval for commercial sales.

“It is a challenging place to invest in,” said O’Sullivan, whose firm has bankrolled a stable of alternative protein makers but become increasingly cautious to support more.

Sustainable agriculture

Some agtech subsectors, such as automation and precision farming, are likely to see investor support thanks to a persistent labor shortage and farmers’ desire to cut costs. But the funding environment is “really challenging” for many others in sustainable agriculture, said Josh Posamentier, managing partner and cofounder of Congruent Ventures.

One case in point is climate-resilient crops. While it’s vital to develop new crop varieties that can withstand intense heat or tolerate pest attacks, “there is no capital for that right now because there is no exit environment,” Posamentier said.

Mergers and acquisitions for US crop farming plunged to zero in the first nine months of 2025 from $38 million a year ago, according to BNEF. That came after the sector’s M&A deals already plummeted by nearly 97% in dollar terms in 2024 from the 2023 levels.

“It has really put a freeze on that space,” Posamentier said, a reality that he said won’t change unless the exit environment improves.

©2026 Bloomberg L.P.