Investors Shift Capital from AI Giants to Small-Cap Stocks
Investors are executing a Great Rotation by moving capital from large-cap AI stocks into small-cap and value-oriented assets.
Market investors are currently executing a strategic capital shift known as the Great Rotation, moving funds away from large-cap artificial intelligence stocks and into small-cap and value-oriented names. This movement is highlighted by the iShares Expanded Tech-Software Sector ETF, which fell more than 20% in early 2026, while consumer staples and industrial sectors recorded double-digit gains.
Despite the broad trend, analysts suggest that certain elite growth stocks remain viable, specifically those integrated into AI infrastructure and industrial digitization. Broadcom Inc. is benefiting from increased demand for custom AI ASIC and larger chip clusters, while Taiwan Semiconductor Manufacturing remains central to the ongoing AI buildout.
Further growth is expected among infrastructure firms utilizing government funding. Clearfield and Belden Incorporated are positioned to expand through the Broadband Equity, Access, and Deployment program, a federal initiative designed to fund broadband infrastructure and the digitization of industrial environments.
