The Great AI Reckoning is beginning for investors — profit checks are coming

Core Insights - The CEO of deVere Group warns that a significant shift in investor behavior regarding AI investments is beginning, with a focus on profitability and operational discipline expected to define the market by 2026 [3][5][11] Market Performance - AI-related stocks have experienced a decline, with notable companies like Oracle, Nvidia, and Micron seeing losses in premarket trading, extending a downward trend into a third consecutive session [4][5] - Oracle's stock fell approximately 11% after missing revenue expectations, contributing to a broader sell-off in AI stocks despite the overall market, including the Dow Jones and S&P 500, reaching new highs [5][10] Investor Sentiment - Investors are increasingly demanding evidence of sustainable earnings from AI investments, marking a shift from previous years where enthusiasm alone supported high valuations [6][9] - The recent sell-off indicates a rapid change in sentiment when expectations are not met, leading to a reassessment of investment timelines and return expectations [6][10] Sector Dynamics - There is a growing divergence within the technology sector, with some companies demonstrating effective spending control and clear links between AI initiatives and earnings growth, while others face shareholder pushback due to rising costs [9][10] - The market is witnessing a rotation away from technology stocks towards sectors with clearer cash flow visibility, indicating a recalibration of investor priorities [7][8] Future Outlook - By 2026, companies that can effectively manage spending in relation to revenue potential and demonstrate credible growth plans are expected to be rewarded, while those unable to articulate a clear path to profitability may struggle [11][12] - Geopolitical factors and policy considerations are increasingly influencing corporate strategies and investment plans, adding another layer of scrutiny to valuations and forward guidance [11][12]