AI Trade Fractures as Investors Turn Selective

The global artificial intelligence trade is splintering as investors grow more selective, weighing soaring capital spending, rising debt and uncertainty over who will ultimately profit from the technology. After an initial surge that lifted nearly all AI-linked assets, markets are now drawing sharper distinctions across stocks, sectors and regions.

One clear divide has opened between hardware “picks and shovels” and software firms. Shares of enterprise software and data companies such as ServiceNow and Salesforce have fallen sharply, while chipmakers and data-centre suppliers have proved more resilient. Strategists say investors are increasingly differentiating between companies that enable AI and those whose business models could be disrupted by it.

The famed “Magnificent Seven” are also no longer moving in lockstep. Heavy spending announcements by Microsoft, Meta Platforms, Alphabet and Amazon have triggered mixed share price reactions, as markets focus less on scale and more on returns. Fund managers warn that spending without clear payoff is no longer rewarded.

Regionally, South Korea has emerged as a standout winner as investors pile into memory-chip makers tied to AI infrastructure. The rally in Samsung Electronics and SK Hynix reflects growing conviction that memory demand will be a critical bottleneck in AI expansion. Together, these trends suggest the AI trade is evolving from a broad theme into a far more discriminating market.