Barclays Warns Best of AI Trade May Be Over Amid Macro and Valuation Pressures

Barclays strategists warned that the best phase of the artificial intelligence thematic trade may now be over as the cycle matures. Head of European equity strategy Emmanuel Cau noted that tech and semiconductor indices face heightened selling pressure from hotter-than-expected U.S. CPI and PPI inflation reports, escalating Middle East tensions, and increased scrutiny over whether massive AI capital expenditures are generating adequate revenues. While fundamental demand remains supported by solid guidance from ASML and TSMC, Barclays attributed recent weakness to profit-taking and advised investors to diversify into lower-beta sectors and prioritize profitable tech firms with proven cash flows.