BlackRock says the AI trade is back with 3 key tailwinds

The Nasdaq Composite touched record highs on April 22 as investors rotated back into technology shares, a move supported by a new BlackRock report suggesting the artificial intelligence trade has significant momentum for three key reasons.

"That's one of the themes that have been with us for over three years now, and we think that that's going to continue to drive earnings growth," Gargi Pal Chaudhuri, head of investment strategy at BlackRock's iShares, said in an interview with Business Insider this week.

The tech-heavy Nasdaq gained 5.2 percent for the year through April 17, completing a 13-day winning streak, its longest since 1992, according to data from the Motley Fool. The move came after a period of volatility where investors shifted away from growth stocks toward safer assets, concerned about conflict in the Middle East and whether the AI spending cycle could be sustained. The rebound coincided with a slight easing in oil prices and a stable U.S. dollar index (DXY), while the 10-year Treasury yield remained a focal point for equity investors.

BlackRock believes the landscape has shifted back in favor of AI firms, arguing that investors who rotated out made a "costly mistake." The asset manager sees the theme broadening beyond U.S. megacaps to include semiconductor and infrastructure players in emerging markets, creating new opportunities for allocation.

Valuations Cheaper, Earnings Outlook Improves

A primary reason for the renewed bullishness is simple price action. The first-quarter pullback, driven by macroeconomic fears, disproportionately affected high-growth technology stocks, bringing their valuations down from recent highs.

"While broad market valuations declined to multi-year lows in March, cheapening was especially pronounced in technology names exposed to the AI theme," wrote a team led by Kristy Akullian, Head of iShares Investment Strategy for the Americas, in the firm's Spring 2026 outlook. "And while prices have grown more attractive, the earnings outlook has improved."

This sentiment counters the narrative from earlier in the year that questioned the sustainability of AI-related capital expenditures. Tech giants are expected to spend nearly $700 billion this year on the build-out, fueling demand for everything from Nvidia's chips to Amazon's cloud services.

AI Trade Broadens Beyond Megacaps

While the "Magnificent 7" have been the primary beneficiaries of the AI trade, BlackRock strategists see the opportunities expanding. Akullian noted the strategy is expanding to emerging markets, such as South Korea and Taiwan, that are “central” to the AI buildout. This includes a vast supply chain of semiconductor suppliers and manufacturers like Taiwan Semiconductor Manufacturing.

The expansion also includes "picks and shovels" plays. Pal Chaudhuri highlighted energy security as a structural trend, noting the immense power requirements for AI data centers will create sustained demand for energy infrastructure.

BlackRock's own funds reflect this deep, varied exposure. The BlackRock Science & Technology Term Trust (BSTZ), for example, holds not only public giants like Nvidia but also significant positions in private, pre-IPO companies such as the data platform Databricks and quantum-computing firm PsiQuantum, according to public filings. This illustrates a strategy that captures value across the entire technology lifecycle, from venture-stage growth to public market dominance.

This article is for informational purposes only and does not constitute investment advice.