AI Infrastructure Buildout Is Broadening the Stock Rally Beyond Tech

Carol Schleif says the market’s AI trade has become broader than the familiar concentration story. The immediate setup is clear enough: the Nasdaq 100 has posted six straight weeks of gains, investors are anticipating major IPO activity, and AI infrastructure remains the dominant market narrative. But Schleif’s point is that the move in markets has support from earnings, revenue, and margins, not just enthusiasm around the theme.

Earnings, in her view, are doing important work. The latest reporting season showed double-digit growth in both revenue and earnings, and she emphasized that this was “not just among tech.” Pulling Bloomberg data the morning of the interview, she said eight of the 11 sectors had double-digit revenue and earnings growth. That matters because it challenges the idea that the index is being held up only by a tiny group of AI-linked companies.

The tension is not that investors are uniformly comfortable. Schleif said some BMO clients are nervous: they “don’t want to get off the bus,” but they also struggle to reconcile all-time highs with short-term headlines, including geopolitical risk and energy-market concerns. Her answer is not that those risks are irrelevant. It is that the earnings base and the capital-spending cycle are strong enough, for now, to keep investors engaged.

The anticipation around large deals adds to that dynamic, but Schleif kept the issue separate from any single IPO. Ed Ludlow framed the market as entering a “pre-IPO anticipation” phase, mentioning Cerebras and SpaceX. Schleif said that anticipation keeps attention on AI and the broader index, while adding that if very large deals arrive later in the year, the question will be how much investor appetite there is and how much the market can absorb.

Caroline Hyde pressed the central distinction: short-term issues can be real at the same time that the long-term AI infrastructure build remains intact. Oil, helium, chips, the Strait of Hormuz, and energy availability may all create bottlenecks. But Hyde framed the deeper AI issue as a supply-side constraint, not a lack of demand.

Schleif agreed. She said BMO had been writing to clients about “this next phase” of the market, built around the scale of capital infrastructure investment. Her argument is that investment on this order tends to support productivity and GDP, and that some of the effect is beginning to appear in the numbers. The market’s move, she said, has revenue, earnings, and margin support behind it.

The capacity constraint is physical. Schleif pointed to the practical limits around turning infrastructure into operating capacity: the market is not pricing a future of “dark data centers,” she said, except in the narrow sense that data centers cannot run if energy is unavailable. That is why the AI trade reaches into power availability, chips, memory, materials, and the infrastructure needed to support compute.

Bloomberg Intelligence framed the concentration risk sharply: “AI is swallowing the world — everything else is just holding on.” The visible excerpt said AI is increasingly “eating the global earnings cycle,” with Silicon Valley hyperscalers, Seoul memory-chip companies, and Taiwan’s semiconductor supply chain doing much of the work for global profit growth while much of the broader market struggles to keep pace.

That Bloomberg Intelligence framing sits in contrast with Schleif’s broader-market evidence. The graphic describes global profit growth as dependent on a narrow group of AI-linked companies; Schleif argues that the earnings and revenue support underneath the market is already wider than that. Her answer is not to deny the importance of hyperscalers, memory, or Taiwan’s chip supply chain. It is to say the market is signaling that AI-linked demand is “a lot bigger” than the most visible companies and is spreading into adjacent industries.

Even with oil issues tied to the Strait of Hormuz and Southeast Asia, Schleif said stocks exposed to the AI supply chain were rallying. Her phrase for the moment was less analytical and more visceral: investors are “grabbing the tiger by the tail and just hanging on for the ride.” But she insisted that the ride has fundamental underpinnings, not just momentum.

SpaceX brought the infrastructure thesis into more speculative territory: can investors believe an “orbital data center” story as part of what Ed Ludlow framed in his question as the biggest IPO of all time?

Schleif separated the IPO question from the broader space theme, saying that “the IPO aside,” clients like to discuss space and the market wants to lean into long-term stories. She pointed to the Artemis mission as an example of a space narrative that was pushed aside in the short term because it coincided with increased hostility in the Middle East, while still fitting the market’s appetite for longer-duration infrastructure themes.

Her larger point was that AI is becoming one part of a wider infrastructure cycle rather than a discrete technology theme. Energy, space, supply chains, materials, and reconstruction all become potential “second and third tier knock-on industries.” Investors who have benefited from the first-stage winners, she said, should consider trimming gains and looking across those adjacent industries rather than simply adding to the most obvious AI names.

That advice reflects BMO’s broader positioning. Schleif said the firm has been growth-biased for some time, did not buy into recession fears in 2022, and did not believe tariffs would substantially derail companies, though she acknowledged that businesses have had to adapt. Her portfolio message was not to go to cash ahead of a major IPO, but to rebalance strategically: trim losers where appropriate, take some profits from winners, and keep portfolios aligned with intermediate- and longer-term opportunities.

The infrastructure thesis also extends beyond AI and space. Schleif pointed to the possibility of major rebuilding after conflicts in Russia, Ukraine, and the Middle East, and to companies rethinking where and how they build supply chains. In that framing, the AI stampede is not just a software or semiconductor story. It is part of a broader capital-expenditure cycle involving power, logistics, production, and resilience.

Companies have been reassessing their dependence on China for years, and Caroline Hyde tied that reassessment to President Trump’s expected meeting with President Xi in China. The on-screen graphic listed technology and business leaders expected to join Trump: Tim Cook of Apple, Elon Musk of Tesla, Sanjay Mehrotra of Micron, Cristiano Amon of Qualcomm, Jacob Thaysen of Illumina, Dina Powell McCormick, and Chuck Robbins of Cisco.

Schleif said BMO has been watching a geopolitical and “geo-economic” pivot for about a year and a half. Her framing was that the U.S. and China remain the two major players, and that China was the only primary country able to push back against U.S. tariffs and briefly engage in a trade war.

The supply-chain asymmetry is central. China has leverage through rare earths and critical supply-chain positions. The U.S., Schleif said, has its own critical issues around energy and materials. Both sides want control over certain domestic manufacturing priorities, but they also need a workable commercial relationship.

The executive delegation fits that framing because, as Schleif put it, the administration is focused on business deals, “hence bringing a lot of those companies with.” For clients, the meeting belongs to the same unresolved market question as AI capacity and infrastructure: whether the next investment cycle can be built with enough power, materials, rare earth access, supply-chain control, and political room for companies to keep investing.