Artificial intelligence (AI) has cemented its role as a key sector for investors, but its path forward is shifting. Several catalysts, including sustained AI infrastructure spending and US Federal Reserve interest rate cuts, are poised to drive tech sector growth in 2026; however, massive capital expenditure digestion by hyperscalers, alongside increasing demands for a return on investment and persistent power supply limitations, are influencing a rotation in focus, with risks like high valuations and policy uncertainty potentially capping AI industry gains. Overall, experts are calling for the technology sector to navigate a delicate balance between aggressive expansion and necessary financial discipline in 2026, with AI at the heart of these matters. Capex digestion and AI verticalization AI capital expenditures by hyperscalers are projected to fuel demand for semiconductors, data centers and related infrastructure in the year head, as per Nicholas Mersch, portfolio manager at Purpose Investments. According to notes from…
