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‘Easy phase’ of the AI investing may be over, diversfiy beyond AI, warns analyst
Bank says artificial intelligence remains a long-term growth theme, but investors should broaden portfolios amid rising valuation, funding and concentration risks.
- PUBLISHED: Mon 6 Jul 2026, 9:44 AM
Investors should maintain exposure to artificial intelligence while broadening their portfolios to reduce concentration risk, as elevated valuations, rising capital expenditure and uncertain monetisation create a more challenging investment environment in the third quarter, according to Saxo Bank's latest market outlook.
The investment bank said AI remains one of the strongest long-term structural themes for global markets, but warned that the "easy phase" of the AI trade may be over as investors increasingly scrutinise earnings, returns on investment and funding costs.
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Charu Chanana, Chief Investment Strategist at Saxo Bank, said investors should stop treating AI as a single investment theme and instead distinguish between companies building AI infrastructure, businesses adopting AI to improve productivity and firms enabling lower-cost AI deployment.
"The AI story is not over. But the easy phase of the AI trade may be," Chanana said. "The message for investors is not to abandon AI. It is to keep exposure to the future while hedging the crowd."
According to the report, the next stage of the AI cycle will be judged less by enthusiasm and capital spending and more by companies' ability to generate sustainable revenue, improve profitability and deliver returns on invested capital.
Saxo noted that technology companies are still expected to deliver strong earnings growth during the remainder of 2026, but high market expectations leave little room for disappointment.
The report identified three key risks for AI investors during the third quarter.
The first is that businesses may become increasingly sensitive to the cost of AI as chief financial officers demand clearer evidence that AI investments are generating measurable productivity gains or revenue growth.
The second risk is higher funding costs. AI infrastructure requires heavy investment in chips, data centres, power, cooling systems and financing. If interest rates remain elevated for longer, financing large-scale AI expansion could become more expensive.
The third is that markets may become concerned if AI-related capital expenditure stops accelerating, even if spending remains historically high.
Beyond AI, Saxo said investors should continue monitoring inflation and monetary policy.
While a possible easing of geopolitical tensions in the Middle East could lower oil prices and ease inflationary pressures, the bank cautioned that services inflation, wage growth, tariffs and government spending could keep inflation above central bank targets, limiting the scope for interest-rate cuts.
Rather than attempting to predict a single market outcome, Saxo recommended building resilient portfolios capable of performing under different economic scenarios.
The bank suggested increasing exposure to quality defensive companies with strong pricing power and healthy cash flows, while also considering energy infrastructure, utilities, healthcare and income-generating assets.
Saxo also warned that passive investment strategies are becoming increasingly concentrated in a small number of mega-cap technology companies.
The bank said equal-weight investment strategies could help investors diversify their portfolios and reduce dependence on a handful of AI-related stocks without abandoning long-term exposure to technology.
"The point is not to hide from risk," Chanana said. "It is to own different kinds of risks."
