The State of the AI Trade 10/9/26

The market's record run rests on concentrated AI/mega-cap spending and financing, making it vulnerable if hyperscaler capex or private AI funding falters.

• AI concentration risk: Only ~30% of S&P stocks have outperformed the index on a 3-year trailing basis, showing reliance on mega-cap AI names; hyperscaler capex seen rising from ~$1T in 2025 to $1.2-1.6T in 2026.
• NVIDIA's aggressive bets: Stephanie Link cites NVIDIA spending $24B on AI R&D, $18B on new architecture, $99B in equity investments (vs $7B prior year), and nearly $400B in supply agreements.

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