Peter Boockvar, Chief Investment Officer of OnePoint BFG Wealth Partners, a $12 billion investment firm, is sounding the alarm on the AI investment trade that has dominated Wall Street in recent years. Despite the market’s continued bullish sentiment on artificial intelligence, Boockvar warns that investors need to diversify beyond AI stocks and avoid “blindly relying” on the sector for returns.
The warning comes as major AI players have stumbled in early 2026, with tech giants like Nvidia, Meta Platforms, and Microsoft experiencing significant setbacks. Boockvar argues that the explosive growth the AI sector delivered in 2025 is not sustainable and that the industry’s days of market dominance are numbered. Speaking on CNBC, he stated that the AI tech trade is “losing some steam in terms of its dominance” in 2026.
Boockvar points to several red flags that suggest investor fatigue with AI stocks. The market’s lukewarm response to Nvidia’s recent earnings report and the punishment of Meta for excessive AI spending indicate shifting sentiment. He also highlighted Oracle’s lackluster Q3 earnings, which raised concerns about AI overspending across the industry, and CoreWeave, a stock that surged 90% in 2025 but continues to face scrutiny over excessive debt and questionable profitability.
The CIO’s bearish thesis centers on surging capital expenditures in 2025, which were almost entirely focused on data center construction. Boockvar argues that this concentration of investment is unsustainable and that companies need to diversify their spending beyond AI infrastructure. He expressed hope that tax incentives for immediate expensing in 2026 will encourage investment in other parts of the economy.
Crucially, Boockvar emphasizes that the AI market is becoming more differentiated, with clear winners and losers emerging. Rather than treating AI as a monolithic investment opportunity, he advises investors to be highly selective about which AI companies they back. While he acknowledges that growth opportunities still exist within the AI sector, he believes other market segments offer better risk-adjusted returns for 2026 and beyond.
Key Quotes
Investors need to not just blindly rely on that AI tech trade as the leadership group, and understand that there are a lot of other parts of the market that can do well now.
Peter Boockvar, CIO of OnePoint BFG Wealth Partners, emphasizes the need for portfolio diversification beyond AI stocks, suggesting that the sector’s dominance as a market driver is ending and other opportunities deserve attention.
I do think in 2026 the AI tech trade is losing some steam in terms of its dominance. We’ve seen the market response to Nvidia’s report a couple of months ago. We’ve seen the market punish Meta for its excessive spending.
Boockvar points to concrete market reactions as evidence of shifting investor sentiment, highlighting how even industry leaders are facing increased scrutiny and negative consequences for AI-related decisions.
I think that entire trade is becoming more differentiated, that we’ve reached a point where investors are realizing they’re going to be winners and they’re going to be losers.
The CIO signals a maturation of the AI investment landscape, where blanket enthusiasm is giving way to more discriminating analysis that separates viable AI businesses from those unlikely to succeed.
All the capex growth in 2025 was the data center building. Hopefully in 2026, with the tax incentives in terms of immediate expense, other parts of the economy can take that baton.
Boockvar identifies the concentration of capital expenditures in AI data centers as unsustainable and expresses hope for broader economic investment diversification in 2026.
Our Take
Boockvar’s warning represents a significant departure from the AI euphoria that has characterized markets since ChatGPT’s launch. His perspective is particularly noteworthy because it comes from an institutional investor managing substantial assets, not a contrarian commentator seeking attention. The emphasis on differentiation within AI investments is especially astute—the AI sector has indeed matured to a point where not all players will succeed equally. The concerns about data center capex concentration echo historical technology bubbles where infrastructure buildout preceded demand, leading to overcapacity and financial distress. However, it’s worth noting that previous predictions of AI investment slowdowns have proven premature. The key question is whether 2026 truly marks an inflection point or merely a temporary correction in an ongoing transformation. Investors would be wise to heed the call for selectivity while recognizing that AI’s long-term impact remains profound.
Why This Matters
This warning from a major institutional investor signals a potential turning point in AI investment sentiment that could reshape market dynamics in 2026. After years of unprecedented capital flowing into AI companies and infrastructure, concerns about overspending, profitability, and sustainability are finally gaining traction among sophisticated investors.
The implications extend beyond stock prices. If capital begins rotating away from AI infrastructure projects, it could slow the pace of AI development and force companies to demonstrate clearer paths to profitability rather than relying on growth narratives alone. This shift could particularly impact data center construction, chip manufacturers, and AI startups that have benefited from seemingly unlimited investor appetite.
For businesses and workers, a more selective AI investment environment could mean greater scrutiny of AI projects and increased pressure to demonstrate ROI. Companies may need to justify AI spending more rigorously, potentially leading to more practical, revenue-generating applications rather than speculative moonshots. This maturation of the AI investment landscape could ultimately benefit the industry by separating viable business models from hype-driven ventures.
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Source: https://www.businessinsider.com/ai-stocks-prediction-data-centers-capex-stock-market-outlook-2026-1