I would be more selective rather than outright trimming or chasing.
The key observation is that if inflation really is re-accelerating while AI-related stocks continue to rally, it suggests investors believe AI earnings growth is large enough to offset higher discount rates. That is a powerful signal, but it also raises concentration risk.
My current hierarchy would be:
Still bullish: AI infrastructure, power, data centres, networking, optical communications, memory.
Neutral: Mega-cap AI leaders that already trade at demanding valuations.
Cautious: Highly speculative AI names with little earnings support.
If inflation stays elevated and the Fed remains hawkish, the biggest risk is not necessarily AI demand collapsing. It is valuation compression. A company growing earnings 40% can still see its stock fall if investors decide to pay 25x earnings instead of 35x.
For someone already holding AI exposure, I would not aggressively add at today's prices. I would continue holding core winners while keeping cash available for volatility-driven pullbacks.
The AI capex cycle still looks intact. The question is no longer "Will AI spending grow?" but "How much of that growth is already priced in?"
My bias for H2 2026:
AI capex narrative wins over the medium term.
Inflation and rates create sharper corrections along the way.
Buy quality AI infrastructure on pullbacks rather than chase euphoric rallies.
In other words: ride the AI trend, but with a larger cash buffer than in 2023-2024. The easy money phase is likely over; stock selection and entry price matter much more now.
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