Hello,

After a sustained period of technology stocks leading equity markets, last week saw a rotation into traditional sectors like Consumer Staples, Energy, Industrials and Materials. These quieter corners outperformed as confidence in high-growth tech softened. A key factor is rising concern about the scale of investment needed to sustain AI growth.

Fourth-quarter earnings season made it clear that major tech companies are spending much more than expected. Amazon’s results illustrated the point: although the company posted a modest earnings miss for the December quarter, the share price reaction was driven by its $200 billion capital expenditure plan for 2026, a 50% increase on last year. Rising debt and questions over returns on capital, execution risk and timing of AI profitability are now back in focus.

Elon Musk’s SpaceX agreed to acquire his AI venture xAI in a transaction valued at around $1.25 trillion. The deal consolidates SpaceX’s aerospace capabilities with xAI assets, including the Grok chatbot and the X platform, ahead of a potential public listing later this year.

As always, if you wish to discuss anything in this newsletter in further detail, please do get in touch.

If you’d like to discuss any of this in the context of your own portfolio or pension, book a consultation or call 01 253 3242.

Smart Financial Insurance Limited trading as Smart Financial is regulated by the Central Bank of Ireland. Past performance is not a reliable guide to future performance. The value of your investment may go down as well as up.