AI Boom Shifts From Hype to Hard Infrastructure

The artificial intelligence boom is entering a new phase as investment shifts from speculative software plays to the physical infrastructure powering the technology’s expansion — creating opportunities for selective investors while raising concerns over stretched valuations in some corners of the market.

AI leadership is broadening beyond mega-cap technology stocks into semiconductor enablers, power suppliers, networking equipment, and automation companies, according to T. Rowe Price’s 2026 Global Market Outlook.

Within AI, the industry has entered a period of “existential investment” where major technology companies must invest heavily to safeguard their long-term value, according to the report. The buildout spans data centers, semiconductor manufacturing, energy grids, and industrial capacity.

The AI chip market alone could grow from roughly $200 billion in 2025 to $1 trillion by 2030, according to AMD estimates cited in the outlook. That expansion is driving demand across the supply chain, from chipmakers to cooling systems to power generation.

But rapid capital deployment has pushed valuations to elevated levels in key sectors. Companies are increasingly tapping debt markets to fund expansion, adding pressure to demonstrate clear monetization strategies.

Active Strategies Navigate Complexity

Active managers can tactically recognize change and disruption to capture opportunities while managing concentration and valuation risks, according to T. Rowe Price’s analysis of its Technology ETF strategy.

The firm’s framework for technology investing seeks companies selling mission-critical technologies in secular growth markets with improving fundamentals and reasonable valuations, according to the analysis. This approach allows managers to look beyond traditional information technology classifications to find opportunities in communication services, financial technology, e-commerce, and digital payments.

The T. Rowe Price Technology ETF (TTEQ) applies this strategy to a concentrated portfolio of 40 to 50 stocks, including both public and private technology companies globally.

Within the U.S., attention is shifting from cloud platforms toward companies building AI’s physical backbone, according to the outlook. Semiconductor equipment makers, power infrastructure providers, and networking specialists may see stronger earnings growth than currently reflected in stock prices.

The reports also highlight sectors applying AI to industry-specific challenges — healthcare diagnostics, financial services automation, and manufacturing optimization represent areas where earnings potential may be underappreciated.

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