Institutions rotate into AI

Institutional investors are adding to artificial-intelligence winners while pairing those bets with income-producing assets such as selective real estate investment trusts and dividend strategies. (blackrock.com) BlackRock said on April 20 that spending by the “hyperscaler” tech companies leading the AI buildout is rising faster than expected, with their capital-expenditure estimates through 2030 up 25% since October. The firm said it remains overweight U.S. stocks and is focusing on AI beneficiaries as the S&P 500 and Nasdaq hit record highs. (blackrock.com) In its 2026 outlook, iShares said AI remains a “high conviction theme,” but warned that concentration risk is rising as the 10 largest companies in the S&P 500 now make up more than 40% of the index’s market value. The same report said the need for income is pushing investors toward dividend stocks, securitized assets and options-based income strategies. (ishares.com) That mix shows up in listed property, where portfolio managers told Nareit in January that public real estate investment trusts entered 2026 with healthy balance sheets, limited new supply and roughly 4% dividend yields in parts of the sector. They also said demand tied to AI and digital infrastructure is reshaping capital flows inside real estate. (reit.com) Morgan Stanley said on February 18 that investors were rotating away from paying any price for mega-cap tech and toward “earnings achievability and quality,” including AI adopters in other sectors. The bank said the equal-weight S&P 500 had outperformed the cap-weighted index year to date, a sign that gains were broadening beyond the largest technology names. (morganstanley.com) BlackRock’s second-quarter 2026 outlook made the same case in broader terms: portfolios need a “plan B” as AI and geopolitical shocks collide, and there is “no neutral stance” when a small number of structural forces are driving markets. The firm said rising energy prices have also reduced expectations for Federal Reserve rate cuts this year. (blackrock.com) InvestmentNews, citing BlackRock’s spring 2026 report on April 24, said the asset manager still favors large-cap and growth exposures tied to AI but also sees value strategies as a stabilizer. The report said traditional hedges such as long-duration bonds and gold had recently fallen alongside equities, forcing investors to look harder for diversification. (investmentnews.com) The result is a barbell: growth money goes to companies showing real AI-linked earnings and spending power, while defensive money goes to assets that can still throw off cash if rate cuts arrive slowly. That is less a retreat from AI than a rewrite of how institutions are funding it. (ishares.com)