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The AI Investing Pulse

January 29th, 2026

In this Week’s Edition:

1. Analysis - Big Tech Earnings: The £500 Billion Signal

2. Stock Ideas - 3 AI Stocks That Will outperform Palantir in 2026

3. News - Deutsche Bank Sounds the AI Alarm

4. Startups - Self-Driving Startup Waabi Raises Up to $1 Billion

5. Trends - AI May Unleash the Most Entrepreneurial Generation We’ve Ever Seen

6. Other News - AI Pushing the Technology Sector Back Toward Junk Bonds

Big Tech Earnings: The £500 Billion Signal

This week, the market faced a pivotal test as some of the major AI spenders, Microsoft and Meta, opened their books. The message from earnings season is clear. The AI infrastructure build out is accelerating aggressively, regardless of short term stock volatility.

Microsoft triggered initial jitters when its shares dropped 6.5 per cent following its report. Despite beating revenue estimates, investors focused on a 66 per cent jump in capital expenditure to $37.5 billion this quarter, without a corresponding acceleration in Azure growth, which came in at 39 per cent.

Meta Platforms shifted the tone almost immediately. The company announced a capital expenditure outlook of $115 to $135 billion for 2026 to support its Meta Superintelligence Labs. In contrast to Microsoft, Meta’s stock jumped sharply post earnings, as its core advertising engine is generating sufficient cash flow to support this scale of investment.

Wall Street analysts now expect collective AI spending to exceed $500 billion in 2026.

Sector Watch: Interpreting the Signal

Recent AI Stack performance suggests capital has been building towards networks and core infrastructure over several weeks, rather than reacting abruptly.

Earnings have reinforced this trend. Connectivity and hardware, which sit directly downstream of hyperscaler capital expenditure, continue to attract interest, while the application layer remains more dependent on proving near-term monetisation, leaving relative uncertainty in that part of the stack.

Our stack-level framework provides context on capital flows within our universe of 173 AI stocks, with three names highlighted as representative examples rather than an exhaustive list.

Featured Stocks: Earnings Beneficiaries to Monitor

From this wider universe, we have highlighted three stocks that currently sit in different buckets within our internal framework: Watchlist, Momentum, and Fundamental. These are illustrative examples rather than a definitive list, and other names across the AI ecosystem may also meet similar criteria.

1. Seagate Technology $STX ( ▲ 19.14% )  

• Sector: Technology / Computer Hardware

• AI Stack Layer: Stack 1 (Hardware and Infrastructure), Data Storage

• Market Capitalisation: $96.5 billion

• Performance: +27.80 per cent (1 week) | +60.80 per cent (YTD)

• Ranking Status: Watchlist

The AI Angle:
AI models require vast volumes of training data, all of which must be physically stored. Seagate provides mass capacity storage solutions that are integral to large scale data centres.

Why It Stands Out:
Seagate was one of the strongest performers this week, reinforcing the idea that the AI cycle is broadening beyond GPUs into secondary infrastructure such as storage. Its current combination of high relative strength and strong fundamentals places it on our Watchlist, alongside other infrastructure names within our tracked universe.

2. Viasat, Inc. $VSAT ( ▲ 5.64% )  

• Sector: Technology / Communication Equipment

• AI Stack Layer: Stack 3 (Networks and Connectivity), Satellite and Remote Connectivity

• Market Capitalisation: $6.4 billion

• Performance: +7.60 per cent (1 week) | +38.10 per cent (YTD)

• Ranking Status: Momentum

The AI Angle:
Viasat provides satellite and wireless networking solutions that support AI use cases at the edge, particularly in locations where fibre infrastructure is not viable.

Why It Stands Out:
Viasat currently shows extremely strong price momentum, reflected in a Relative Strength score of 99. While its lower fundamental score keeps it outside the Watchlist category, the stock serves as a useful example of how momentum can emerge within connectivity, a theme that includes many other names across our AI coverage list.

3. Arista Networks Inc. $ANET ( ▲ 2.36% )  

• Sector: Technology / Computer Hardware

• AI Stack Layer: Stack 3 (Networks and Connectivity), High Performance Networking

• Market Capitalisation: $189 billion

• Performance: +8.50 per cent (1 week) | +14.60 per cent (YTD)

• Ranking Status: Fundamental

The AI Angle:
Arista supplies the high speed Ethernet switching equipment that connects thousands of GPUs within hyperscale data centres.

Why It Stands Out:
Microsoft’s confirmation that a large portion of its capital spending is directed towards compute reinforces the importance of high performance networking. Arista’s strong financial quality and high fundamental score position it as a more established infrastructure name, alongside other fundamentally robust companies in our broader AI universe.

Final Take

Microsoft and Meta have confirmed, in hard numbers, that AI is entering a more capital-intensive phase. Near-term volatility among hyperscalers is likely, but the scale and visibility of spending increasingly shifts focus down the stack towards storage, networking and connectivity.

The three stocks highlighted serve as reference points for how this theme is emerging across our AI universe, as markets continue to digest what a £500 billion AI investment cycle implies.

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Find Your Retirement Timeline

_{Disclaimer - This content is provided for informational purposes only and does not constitute investment advice, personal recommendations, or an invitation to engage in any investment activity. The information presented is derived from publicly available sources and should not be solely relied upon for making investment decisions. Always consult with a qualified financial professional before making investment choices. Past performance is not a guide to future performance.}

^{About AIIP - The AIIP Index tracks 173 AI-focused public companies across the full AI stack, serving as our benchmark for sector performance. All scores are proprietary and calculated using data from Finbox (powered by S&P Global Intelligence). AIIP Total Score (0–100) combines metrics for sales and EPS growth, financial quality, and valuation to assess overall business strength. AIIP Relative Strength (RS) Score measures a stock’s price performance relative to the AIIP 173 AI stocks. Ranking Status is based on score combinations: Fundamental: Total Score ≥ 70, RS < 80. Momentum: RS ≥ 80, Total Score < 70. Watchlist: Total Score ≥ 70 and RS ≥ 80}

TOP AI STOCKS PERFORMANCE

TOP AI ETFs PERFORMANCE

AI STOCKS IDEAS

3 AI Stocks That Will Outperform Palantir in 2026 – The Motley Fool
Three AI stocks are projected to outperform Palantir Technologies in 2026. While Palantir maintains strong growth potential, concerns around valuation are pushing investors toward alternative AI opportunities.

Pelosi’s Bullish 2026 Buy List: AI, Power & Dividends – Yahoo Finance
Nancy Pelosi’s 2026 investment strategy focuses on dividend-paying financial stocks, AI exposure, and leveraged tech positions.

These 2 Energy Stocks Are Powering the Future of AI – The Motley Fool
Enphase Energy and Fluence Energy are positioned as stronger alternatives to Tesla Solar, supported by accelerating demand in renewable energy and storage markets.

AI STOCKS & ETFs NEWS

Deutsche Bank Sounds the AI Alarm – Investor Daily
Deutsche Bank warns of rising distrust in AI by 2026, citing a growing gap between AI demand and sector capacity.

Tesla Beats Fourth-Quarter Expectations as Musk Pivots Toward Physical AI – Investing.com
Tesla surpassed Q4 2025 earnings expectations with non-GAAP EPS of $0.50, despite a 3% decline in full-year revenue.

Meta Stock Climbs on Q4 Earnings Beat, Plans Massive AI Build-Out – Yahoo Finance
Meta reported Q4 2025 revenue of $59.89 billion and plans to invest $115–$135 billion in AI by 2026.

Microsoft Edges Past Cloud Growth Expectations – Investing.com
Microsoft posted FY25 Q4 revenue of $76.4 billion, up 18% year over year, driven by strong Azure and AI demand.

AI STARTUPS

Self-Driving Startup Waabi Raises Up to $1 Billion, Partners With Uber – Fortune
Waabi raised $1 billion and partnered with Uber to deploy 25,000 robotaxis, expanding beyond autonomous trucking.

Scalable AI Business Models: How High-Growth AI Startups Monetize Innovation – Vocal Media
High-growth AI startups are rapidly monetizing generative AI applications, with some reaching $100 million ARR in their first year.

TRENDS

2026 Prediction: AI May Unleash the Most Entrepreneurial Generation We’ve Ever Seen – eSchool News
AI may reduce traditional corporate roles while empowering a new generation of entrepreneurs.

The CEO AI Gamble: Why Half of Business Leaders Believe Their Jobs Depend on Getting AI Right – Bernard Marr
Half of business leaders believe AI mastery is essential for job security, underscoring the need for strong strategic foundations.

OTHERS

Is AI Pushing the Technology Sector Back Toward Junk Bonds – ARC Advisory Group
Rising AI investment is driving increased bond issuance and raising credit risk concerns across the tech sector.

Human Traders Remain Relevant in an AI-Driven World, Experts Say – The Trade
Experts emphasize that human judgment and relationships remain critical despite rapid AI adoption.

_{Disclaimer - The information contained on this newsletter does not constitute investment advice or a personal recommendation, nor is it an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all. The information presented is based on publicly available data and sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Market conditions can change rapidly, and the information provided may no longer be up to date. This content is for informational purposes only and should not be construed as financial, legal, or tax advice. Data sources: S&P Global Market Intelligence}