The Great Broadening: Why Investors Should Shift from AI Enablers to AI Adopters in 2026

The investment landscape in 2026 is undergoing a seismic shift as artificial intelligence (AI) transitions from a speculative buzzword to a foundational driver of productivity and innovation. While the "AI enablers"-megacap tech firms supplying infrastructure and tools-have dominated headlines, a more compelling opportunity lies in the "AI adopters": companies across industrials, software, and financials that are embedding AI into their core operations. This shift, driven by sector rotation dynamics, valuation trends, and regulatory tailwinds, positions adopters to outperform enablers in the coming year.

Citi's 2026 Sector Rotation: A Blueprint for AI-Driven Growth

Citi's 2026 sector rotation strategy underscores the transformative potential of AI in financials, healthcare, and technology. In financials, fintech is poised for a rebound fueled by embedded finance, digital assets, and generative AI, supported by accommodative monetary policy and robust secondary markets according to Citi's analysis. For healthcare, Citi Research anticipates optimism despite challenges like tariffs and drug pricing, citing clearer regulatory environments and increased M&A activity in biopharma and MedTech, where AI is enhancing medical devices and workflows. Meanwhile, the AI ecosystem is maturing, with infrastructure spending exceeding $400 billion annually, though monetization hurdles persist.

This evolution signals a broader trend: AI is no longer confined to tech labs but is reshaping entire industries. Investors must now pivot from enablers-whose valuations have already absorbed much of the AI hype-to adopters, who are leveraging AI to unlock operational and strategic value.

Valuation Trends: AI Adopters Outpace Enablers

Valuation trends from 2025 to 2026 reveal a stark divergence between enablers and adopters. While enablers face scrutiny over monetization challenges, adopters in industrials, software, and financials are demonstrating tangible ROI. For instance, 72% of companies in these sectors reported AI adoption rates in 2025, up from 50% in 2020–2023. In financial services, 92.1% of businesses noted measurable results from AI, including fraud detection and compliance automation. Similarly, industrials are leveraging AI for predictive maintenance and supply chain optimization, yielding cost savings and operational efficiency.

However, the transition from pilot projects to enterprise-wide scaling remains incomplete. Only 30% of organizations have fully integrated AI into their operations, with most still in the experimentation phase. This gap creates an asymmetric opportunity: adopters that successfully scale AI will see disproportionate gains in EBIT margins and market share.

Earnings Revisions: AI-Driven Revenue Gains

Recent earnings reports highlight the earnings power of AI adopters. In industrials, Caterpillar's Q3 2025 sales hit $17.6 billion, driven by surging demand for power generators tied to data center infrastructure. Cummins and Rolls Royce are similarly capitalizing on AI-driven demand for backup power systems. In software, Microsoft's Azure AI services and NVIDIA's data center GPU sales accelerated revenue growth, underscoring the sector's AI-driven momentum. Financial institutions like Northern Trust and TransUnion are integrating AI into compliance and customer service, further boosting margins.

These results contrast with enablers, where revenue growth is increasingly tied to infrastructure spending rather than direct monetization. For example, NVIDIA's data center GPUs remain critical for AI development, but their value is contingent on adopters' ability to commercialize AI applications.

Regulatory Tailwinds: A Catalyst for Sector Rotation

Regulatory developments in 2026 are reshaping the AI landscape, favoring adopters who prioritize governance and compliance. The EU AI Act and UK's pro-innovation framework emphasize transparency, accountability, and risk-based regulation, creating structured environments for AI deployment. In industrials, software-defined automation and agentic AI require compliance with data sovereignty and model transparency standards according to IDC analysis. Enterprises that embed governance into their AI strategies-such as investing in hybrid cloud infrastructure and localized deployment-are better positioned to navigate these regulations according to InfoTech research.

For software adopters, AI-native infrastructure and governance systems are becoming table stakes. As AI accounts for 12–15% of IT budgets, companies that align with regulatory expectations will gain a competitive edge. This shift is already influencing sector rotation, with resources reallocating toward AI governance, data security, and infrastructure modernization.

Strategic Reallocation: From Megacap Tech to Diversified Adopters

The case for shifting from enablers to adopters is clear. While megacap tech firms remain critical to AI's infrastructure, their valuations are inflated by speculative bets on future monetization. In contrast, adopters in industrials, software, and financials are delivering measurable value through operational efficiency, revenue growth, and regulatory compliance.

Citi's emphasis on financials, healthcare, and tech underscores this trend. Financials are leveraging AI for autonomous compliance and fraud detection, while healthcare benefits from AI-driven M&A and medical innovation. Meanwhile, industrials and software are reaping rewards from agentic AI and smart manufacturing according to Deloitte research.

Conclusion: The Great Broadening Begins

The "Great Broadening" in 2026 is not merely a sector rotation-it is a fundamental realignment of value creation in the AI era. By shifting focus from enablers to adopters, investors can capitalize on industries that are actively transforming their operations, driven by valuation trends, earnings momentum, and regulatory tailwinds. As Citi and industry experts project, the winners of this transition will be those who integrate AI not as a peripheral tool but as a core driver of innovation and growth.