Global investment funds have begun reducing their heavy reliance on AI technology stocks in emerging markets. Concerns over overvaluation and the concentration of risks in a few large companies are pushing funds to build more balanced portfolios.
According to Bloomberg, major funds such as J.P. Morgan Asset Management and Grantham Mayo Van Otterloo are diversifying their investments by turning to areas like energy, electronic games, and consumer goods. Interest in markets such as India and China is also increasing in this process.
The concentration in emerging markets has reached striking levels. Taiwan Semiconductor (TSMC), Samsung Electronics, and SK Hynix alone account for more than 30 percent of the MSCI Emerging Markets Index. The technology sector as a whole makes up about 45 percent of the index.
This excessive concentration has pushed volatility in emerging market stocks to its highest level in six years. Shares of chip manufacturers lost value amid concerns that global spending on AI infrastructure has exceeded real demand. Investment managers say they are exiting semiconductor companies and shifting to sectors less tied to AI in order to spread risk.
On the other hand, US restrictions on technology exports are keeping investment interest in Chinese tech companies alive. The domestic technology ecosystem led by firms like Huawei and SMIC offers new opportunities by spreading risk in the AI field.
AI infrastructure spending races toward $750 billion
Swiss Re Corporate Solutions, a Switzerland-based reinsurance company, forecasts that spending by data center operators on AI technologies will reach $750 billion in 2026. This figure represents a major leap compared to last year's spending of around $500 billion.
According to Reuters, the company stated that this rapidly growing spending will increase risks associated with data centers and digital infrastructure, boosting demand for insurance services across many sectors. Total AI infrastructure spending over the next five years is estimated to reach up to $1.6 trillion.
While these massive investments support economic growth, they will also increase the need for risk coverage for physical and digital assets. However, they also carry the potential to strengthen inflationary pressures and raise insurance costs.
