The AI Stock Rotation That May Play Out In 2026
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TD Wealth5.08K FollowersFollow5ShareSavePlay(11min)CommentsSummaryThe economics of AI should continue to work in 2026, though there are risks.We may see a thematic shift to software, away from semis and grid infrastructure.Expected revenue levels may continue to support AI stock valuations.
Getty Images Artificial intelligence has been a key driver of the recent market rally. While much of the focus has been on semiconductor and power-related equities, Jeff Evans, Vice President, Director, and Lead for Empirical Research and Portfolio Management Support at TD Asset Management, saysThis article was written byTD Wealth5.08K FollowersFollowTD Wealth is an integral part of the TD Bank Group, which has approximately 24 million customers worldwide, 85,000 employees and CDN $1 trillion in assets on April 30, 2015. In Canada, TD Wealth services customers through: · TD Direct Investing which provides clients access to the information, tools and support that empower them to invest for themselves with confidence. · TD Wealth Private Client Group, which provides discretionary wealth management for high net worth clients and businesses. · TD Wealth Private Investment Advice provides full service brokerage for investors who want a high level of tailored advice and solutions. · TD Wealth Financial Planning develops and implements a financial plan for individual clients. At TD Wealth, whether you invest yourself or benefit from the knowledge provided by your advisor, you gain access to some of the industry's most highly regarded investment analysts, economists and market strategists.Quick InsightsHow sustainable is hyperscaler AI CapEx growth through 2030?Projected cumulative CapEx of $3.2T appears achievable if hyperscalers leverage their balance sheets and tap private credit, but funding constraints and credit market pressures remain key risks.What return profile can investors expect from large-scale AI investments?AI investments could generate a 10% return on $3T CapEx by 2030—sufficient but below hyperscalers’ historical 20–30% ROE, potentially tempering investor enthusiasm.How is AI market leadership rotating across sectors, and what should investors monitor?Leadership is shifting from chips to power infrastructure and now software; investors should monitor if companies can meet lofty 15% annual earnings growth expectations amid bubble concerns.Recommended For You