Global funds shift away from AI stocks in emerging markets

Global asset managers are reducing their reliance on AI-linked technology stocks in emerging markets due to high valuations and risk concentration. Meanwhile, AI infrastructure spending is expected to reach $750 billion in 2026.

Scraper SystemJuly 12, 2026, 09:26 PM

Global funds shift away from AI stocks in emerging markets

Global asset managers have started reducing their exposure to shares of AI-linked technology companies in emerging markets. Concerns that valuations have become excessively high and risk concentration has increased are pushing funds to seek more balanced portfolios.

According to Bloomberg, investment funds such as J.P. Morgan Asset Management and Grantham Mayo Van Otterloo are diversifying their portfolios by turning to sectors like energy, electronic games, and consumer products. Interest in markets such as India and China is also increasing in this process.

The concentration in emerging markets is at striking levels. Taiwan Semiconductor (TSMC), Samsung Electronics, and SK Hynix alone account for more than 30 percent of the MSCI Emerging Markets Index, while the technology sector covers about 45 percent of the index. This makes emerging market performance overly dependent on a limited number of stocks.

The concentration has pushed volatility in emerging market stocks to its highest level in six years. Shares of chip manufacturers declined amid concerns that global spending on AI infrastructure has exceeded real demand. Investment managers say they are reducing risk by exiting semiconductor companies and shifting to areas less connected to artificial intelligence.

On the other hand, US restrictions on technology exports are keeping interest in Chinese technology companies alive. The domestic technology ecosystem developing under the leadership of firms like Huawei and SMIC offers an opportunity to invest in artificial intelligence while spreading risk.

AI infrastructure spending races toward $750 billion

Swiss Re Corporate Solutions, a Switzerland-based reinsurance company, predicts that spending by data center operators on AI technologies will reach $750 billion in 2026. This figure represents a major jump from last year's spending of about $500 billion.

According to Reuters, the company stated that this spending will increase risks associated with rapidly growing data centers and digital infrastructure, boosting demand for insurance services in many sectors. It is estimated that AI infrastructure spending could reach up to $1.6 trillion over the next five years.

While these massive investments support economic growth, they will also increase the need for risk coverage for physical and digital assets. However, they also have the potential to raise insurance costs by strengthening inflationary pressures.

Global funds shift away from AI stocks in emerging markets