The money isn't getting cold on AI — it's getting hotter, even as global supply chains flirt with chaos.
The Summary
- Tech remains the preferred sector for investors, with AI infrastructure driving continued capital allocation despite broader market uncertainty
- Institutional appetite for AI exposure shows no signs of cooling, according to Principal Asset Management's chief global strategist
- The bullish tech thesis carries a caveat: Middle East shipping disruptions could expose vulnerabilities in the AI hardware supply chain
The Signal
Seema Shah at Principal Asset Management isn't calling a top on AI investment. She's calling the opposite. Technology is "likely to continue to be the favorite" in markets, she told Bloomberg, with investors actively building positions rather than taking profits. The trade isn't crowded yet. It's still filling up.
The language matters here. Shah uses "want to build up exposure" and "want to keep creating this buildup." Present tense. Active voice. This isn't about what happened last quarter. It's about what's happening now and what funds are planning for next.
"People want to build up exposure, they want to keep creating this buildup in AI technology."
The subtext: institutional money sees AI infrastructure as underweight in portfolios, not overweight. That's a different market psychology than we saw in late 2023, when everyone feared they'd missed the wave. Now the wave looks like a decade-long tide, and the smart money is still loading the boat.
But Shah adds a geopolitical asterisk. Middle East conflicts that disrupt shipping lanes pose "vulnerability" to the tech trade. She's not talking about oil prices or inflation. She's talking about the physical supply chain for chips, servers, and the hardware stack that makes the agent economy possible.
Consider what that means:
- Nvidia chips still move on container ships
- Data center components cross the Suez Canal
- AI infrastructure buildout depends on physical logistics, not just capital
The Implication
If you're running an AI company or building agent infrastructure, the Principal thesis validates your sector but warns you to map your supply chain vulnerabilities. Where do your critical components ship from? What's your Plan B if Suez or Hormuz close for a month? The money will keep flowing, but the hardware might not.
For individual investors, the message is simpler: institutional capital is still in accumulation mode on AI. The smart money isn't looking for an exit. They're looking for more entry points. That creates a floor under AI equities and makes near-term volatility a feature, not a bug. Trade accordingly.