Wizard layout form behavior..best practice question

I have a form on my UI. Some fields in there are mandatory. The user needs to enter these fields and click next to proceed to the next sent of fields..basically a wizard layout.

What is a better experience among these two:

  1. When the user tabs out of an unfilled mandatory field, highlight it by turning it red. Disable the Next button until the user enters all the mandatory fields.
  2. Let the user click the Next button, and show notification banner at the top telling them to fill in the mandatory fields..while also highlighting the fields by turning them red.