AI-Driven Market Momentum and the Case for Tech Exposure in a Fed-Easing Climate

The intersection of artificial intelligence (AI) and capital markets has never been more dynamic. As Big Tech firms pour record sums into AI infrastructure and the Federal Reserve signals a shift toward rate cuts, investors are faced with a compelling case for tech exposure. This analysis argues that AI-capable equities-particularly those powering the AI revolution-offer a high-conviction opportunity in 2026, driven by surging capital expenditures, outperformance in AI-linked stocks, and a macroeconomic backdrop favoring growth assets.

The AI Capex Surge: Big Tech's All-In Bet

Big Tech's commitment to AI is no longer aspirational-it is operational. By 2025, Amazon, Microsoft, Alphabet, and Meta are projected to collectively spend over $320 billion on AI infrastructure, a staggering figure that underscores their strategic urgency. Amazon leads the pack with $100–105 billion in planned capex, up from $77 billion in 2024, while Microsoft allocates $80–93 billion to bolster its cloud ambitions. Alphabet, long seen as a laggard, is now investing $75 billion to close the gap. Meta, under Mark Zuckerberg's aggressive AI roadmap, has committed $60–65 billion to integrate AI into its products.

This spending is not merely about scale but about survival. The Jevons Paradox-where efficiency gains in AI lead to increased demand rather than reduced usage-explains the relentless push for more compute power. According to reports, however, the costs are steep: rising electricity consumption, infrastructure depreciation, and operational complexity. Yet, for Big Tech, these are manageable trade-offs in a race to dominate the AI era.

AI-Linked Equities: Outperformance in the Supply Chain

The beneficiaries of Big Tech's AI spending are not limited to the hyperscalers themselves. Semiconductor and infrastructure providers are reaping outsized rewards. NVIDIA reported $57 billion in revenue for Q3 2026, a 62% year-over-year jump. Its Data Center segment alone accounted for $51.2 billion, driven by insatiable demand for GPUs in AI training. With a 73.4% gross margin, and a $100 billion partnership with Brookfield to expand AI infrastructure, NVIDIA's trajectory remains unshaken.

Broadcom (AVGO) is another standout. Its AI-related semiconductor revenue surged 74% in the latest quarter, with CEO Hock Tan forecasting near-doubling compared to 2024. Marvell Technology (MRVL) has also capitalized on the AI boom, with data center revenue rising 69% year-over-year to $1.5 billion. These companies are not just suppliers; they are enablers of the AI revolution, and their stock performance reflects their critical role.

Fed Easing: A Tailwind for Growth Assets

The Federal Reserve's pivot toward rate cuts in 2025-2026 adds another layer of optimism. Goldman Sachs Research anticipates 25 basis points of cuts in December 2025 and further reductions in early 2026, bringing the terminal federal funds rate to 3-3.25% by midyear. J.P. Morgan Global Research echoes this, forecasting double-digit gains for AI-linked sectors as accommodative monetary policy amplifies earnings growth.

Lower rates reduce the discount rate for future cash flows, inherently favoring high-growth tech stocks. This is particularly relevant for AI equities, which are capital-intensive and rely on long-term reinvestment. As BlackRock notes, AI adoption and fiscal stimulus are key drivers of market resilience, creating a virtuous cycle of capex, earnings expansion, and equity appreciation.

Strategic Positioning: High-Conviction Plays Ahead of 2026

For investors, the convergence of these trends presents a rare alignment of fundamentals and macroeconomic tailwinds. NVIDIA's dominance in AI chips, Broadcom's custom ASICs, and Marvell's data center solutions are not just growth stories-they are structural plays on the AI revolution. Meanwhile, the Fed's easing cycle reduces the cost of capital for AI-driven capex, further accelerating returns.

However, risks persist. Debt-fueled data-center expansions have already triggered sector volatility, as seen in Broadcom's 5% selloff following debt concerns. Yet, these corrections are likely to be short-lived in a landscape where AI demand is outpacing supply.

Conclusion

The case for tech exposure in 2026 is anchored in three pillars: Big Tech's all-in AI bets, the outperformance of AI-linked supply chains, and the Fed's pivot toward easing. For investors with a high-conviction approach, positioning in AI-capable equities-particularly those with direct exposure to AI infrastructure-is not just prudent; it is essential. As the AI revolution accelerates, the winners will be those who recognize the inflection point and act accordingly.