For investors, this environment reinforces the importance of a diversified and forward-looking approach.
2026 has gotten off to a seemingly calm start, with the S&P 500 essentially flat year-to-date after three years of strong AI-fueled gains. But beneath the surface, there have been notable shifts in market leadership as a new chapter of the AI story emerges—one defined less by the mega-cap leaders investing in AI and more by the broader set of industries potentially reshaped by AI.
Markets reprice disruption risk
Software companies have been at the epicenter of this shift. The rapid rise of AI agents, systems that can autonomously execute complex workflows, has raised questions about the demand for traditional software. If AI agents can perform tasks that previously required teams of employees, companies may need far fewer software licenses, compressing the per-seat subscription models that have underpinned SaaS valuations. At the same time, lower barriers to entry could invite new competition, and corporate IT budgets are increasingly being redirected toward AI infrastructure.
The scrutiny has spread beyond software. In legal services, the release of AI-powered research plugins sent shares of established providers down by double digits. In logistics, a bold, unproven claim of AI-powered automation from a micro-cap newcomer triggered sharp declines across the sector, with the world’s largest freight brokerage and logistics technology platform falling as much as 24% intraday1. Similar pressure has surfaced across financials, business services and real estate, where investors are grappling with how to value companies whose competitive positioning could look very different in a few years.
The increased need for infrastructure
But before any such disruption can fully play out, the underlying infrastructure needs to keep pace. Agentic AI is dramatically increasing the intensity of computing required. One automated task can trigger dozens of inference calls, and scaling these systems across an enterprise requires substantially more memory bandwidth, custom silicon and data infrastructure than what exists today. In the case of memory, prices surged in 2025 with capacity at major producers essentially sold out through 2026.
This means the timeline for disruption may be more gradual than recent price action suggests, and that the infrastructure buildout, from power and energy to semiconductors and networking, should remain a durable part of the AI investment story.
Positioning for disruption
Does all of this mean AI will ultimately displace established companies and the services they provide? It is a difficult question that requires some humility. We think some repricing makes sense, as AI introduces new competitive dynamics across industries and valuations should reflect that uncertainty. That said, there has also likely been some over-extrapolation.
Companies, in software and elsewhere, will need to demonstrate meaningful revenue acceleration with the help of AI-driven products and show real operating leverage through their own adoption of these technologies. Until that evidence materializes, volatility in both directions is likely to persist.
For investors, this environment reinforces the importance of a diversified and forward-looking approach. AI disruption adds a new dimension of risk, but it also creates opportunities, particularly during periods of aggressive repricing, to identify companies that are truly embracing innovation.