AI moves into the real economy
June 2026, On the Horizon
AI continues to be a powerful driver of market performance, but the opportunity set is changing. While capital expenditure (capex) remains durable and strategically unavoidable, the focus is shifting from the scale of hyperscaler spending to where that spending flows, which companies benefit, and how broadly the earnings impact spreads.
The current phase is defined by the magnitude and urgency of this investment cycle. Hyperscalers have ramped up spending, accelerating AI capabilities and reinforcing demand across the broader ecosystem (Figure 1). This intensity has concentrated investor attention on a narrow group of companies seen as the most direct beneficiaries.
These companies have been high quality and clear beneficiaries, but elevated expectations, broad ownership, and demanding valuations make it increasingly difficult for them to keep driving market leadership at the pace seen earlier in the AI trade. As a result, investor focus is shifting toward parts of the supply chain where incremental spending can still translate into differentiated earnings upside.
At the same time, the AI capex opportunity set is broadening meaningfully to less obvious beneficiaries. Incremental dollars are increasingly flowing beyond silicon into power, data center infrastructure, electrical equipment, cooling, connectivity, construction, and services, driving activity across the real economy. In that context, AI is no longer just a technology story; it is becoming a broader industrial and infrastructure investment cycle.
This shift is already visible in earnings dynamics. Hyperscalers are recycling operating cash flow back into infrastructure investment, while industrial and hardware technology companies downstream are seeing greater demand, stronger operating leverage, and growing potential for positive earnings surprises.
The implication for positioning is clear: being “long AI” remains compelling, but the next phase of the cycle is likely to reward selectivity over simple participation. The most attractive opportunities increasingly sit with companies that can monetize complexity, power intensity, connectivity, and execution, rather than simply benefiting from backlog growth or AI enthusiasm.
Investment implications
- AI‑related upside is broadening beyond the most obvious beneficiaries to industrial and hardware technology companies enabling the physical infrastructure build-out.
- Power intensity, connectivity, infrastructure complexity, and execution are becoming increasingly important sources of differentiated earnings growth as AI capex expands.
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202606-5513003
Jason Adams
Portfolio Manager
Strategies to Consider
June 2026
On the Horizon
Concentration makes way for dispersion
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