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2 hours ago
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September 11, 2026
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By
Jenna Ross
The following content is sponsored by MSCI
How AI Companies Are Reshaping Markets in 2026
Despite wars, energy shocks, and geopolitical uncertainty, AI has become the biggest force shaping markets in 2026. But as some AI companies thrive while other parts of the market face disruption, AI’s impact has been far from uniform.
This graphic, created in partnership with MSCI, takes a closer look at the divide AI is creating across markets.
AI companies: Driving highs and lows in public markets
AI companies focused on infrastructure drove public market performance in the first half of 2026, with semiconductors leading all industries. Compared to the benchmark MSCI ACWI Index, semiconductor performance was five times higher.
| Index | Return |
|---|---|
| Semiconductors and semiconductor equipment | +55% |
| MSCI ACWI® Index | +11% |
| Software and services | -18% |
Source: MSCI index data (gross total return, USD). Total return from December 31, 2025 to July 1, 2026. Past performance — whether actual, backtested, or simulated — is no indication or guarantee of future performance.
Meanwhile, software was the worst-performing industry, as investors’ fears grew that AI agents will break software’s per-seat model.
How could the megacap IPO wave affect investor exposure?
MSCI modeled a hypothetical U.S. IPO wave, including those of large AI-adjacent companies. The results were less dramatic than headlines suggest.
- Add less than 2% to U.S. market cap
- Result in less than 2% industry weight changes
- Lower concentration in the 10 largest stocks
Simulated inclusion of the ten largest constituents of the MSCI All Country Venture-Backed Private Company Index in the MSCI USA Index, based on 25% free-float assumption. Industry groups follow the Global Industry Classification System (GICS®). Weights renormalized post-inclusion. GICS is the Industry-classification standard jointly developed by MSCI and S&P Dow Jones Indices.
Not all software is created equal
The AI divide is also visible in private markets. For instance, buyout portfolios holding legacy software underperformed in the first quarter of 2026.
| Buyout | Venture capital | Direct lending | |
|---|---|---|---|
| U.S. | -7.9% | 3.0% | 2.0% |
| Europe | -3.6% | 2.6% | 1.5% |
Source: MSCI Private Capital Solutions. Returns represent Q1 2026 time-weighted rate of return for holdings-level indexes for the MSCI Buyout, Venture Capital and Direct Lending Indexes. U.S. figures are USD-denominated; European figures are EUR-denominated. “Software” refers to the MSCI software sub-industry classification within information technology.
On the upside, AI-native venture capital portfolios commanded premium valuations. Direct lending also delivered positive returns as software borrowers continued servicing their debt.
Stock returns are under pressure
Strong valuations of AI companies and relative high real rates have reduced investors’ reward for taking on stock market risk, a term known as the equity risk premium.
| Date or time period | Forward equity risk premium |
|---|---|
| March 31, 2026 | 0.41% |
| December 31, 2001 (dot-com era) | 0.01% |
| December 31, 1999 (record low since at least March 1984) | -3.90% |
| Historical average, Mar. 1984-Mar. 2026 | 4.39% |
Data from March 31, 1984, to March 31, 2026. MSCI’s forward ERP reflects the expected return premium needed to reconcile market prices with macro fundamentals. A low premium corresponds to high market prices relative to future cash flows and suggests both lower long-term returns and a higher risk of a near-term market correction. Traditional valuation measures like the price-to-earnings ratio also indicate that valuations are high, but accounting for changing growth expectations and higher real rates significantly amplifies the signal. For more details, refer to The MSCI Macro Finance Model.
Importantly, the equity risk premium is at a low last seen during the dot-com era, making stocks more vulnerable to a correction.
A balancing act for markets
Strong earnings from AI companies have supported stock prices so far, but high valuations and real rates leave little room for disappointment. If earnings growth falls short of expectations, stock prices could come under pressure.
Explore the midyear outlook from MSCI for a deeper look at what’s shaping markets for the rest of 2026.
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