AI Shortages to Define 2026 for Markets – CEO
AI hardware shortages are set to define markets in 2026 as pricing power shifts and volatility rises, warns the CEO of global financial advisory giant deVere Group.
The warning comes as the AI boom is rapidly evolving from a growth story into a supply-shock story, and it is shaping up to be one of the defining investment themes of next year.
Nigel Green comments: “The pace of AI infrastructure expansion is colliding with physical limits in global supply chains, creating shortages of critical components and forcing markets to confront a new reality.
“This imbalance is already pushing up prices, concentrating market gains, and raising the risk of volatility.
“In 2026, this dynamic is likely to move from background noise to centre stage for investors.” The buildout of data centres, cloud capacity, and AI computing power is driving intense demand for advanced chips, high-bandwidth memory, networking hardware, and power systems.
“Supplies of several of these components are tight, with prices for advanced memory and specialised silicon rising sharply as manufacturers prioritise large AI customers.
“This is where the AI story turns hard-edged.
“It becomes about bottlenecks, allocation, and who controls supply,” he explains. Those bottlenecks are already altering behavior across markets. Hyperscalers and enterprise buyers are locking in long-term supply agreements and committing capital well in advance, effectively reserving capacity for themselves.
This enhances revenue visibility for some suppliers but leaves others exposed. “When scarcity appears, pricing power moves instantly,” the deVere chief executive notes.
“The companies sitting on essential components can protect margins and dictate terms. Everyone else absorbs the pressure.” Equity markets are responding in kind. A small group of hardware and infrastructure firms is capturing a growing share of returns, while large parts of the tech universe struggle to keep pace.
Index performance increasingly rests on a narrow base, masking weakness elsewhere. “This concentration matters,” says Nigel Green. “Markets look stronger on the surface, but underneath they’re becoming increasingly fragile.”
The impact does not stop with AI specialists. Consumer electronics producers rely on many of the same components now being diverted into data centres.
Smartphone makers, laptop manufacturers, and device producers face higher input costs and constrained supply, increasing the likelihood of price rises for consumers.
For markets, this tension matters because it distorts signals. Falling headline inflation encourages expectations of easier financial conditions, but rising tech costs squeeze margins for manufacturers and slow upgrade cycles for consumers.
It creates earnings risk in parts of the tech sector even as macro indicators appear supportive. “In 2026, this divergence is likely to be more pronounced as AI-related demand scales further and supply constraints persist.
“Investors may face an environment where inflation looks under control in aggregate, yet pricing pressure remains intense in precisely the sectors driving capital expenditure and market leadership.”
The implication is a shift in how risk should be assessed. The classic assumption that tech benefits broadly from innovation cycles no longer holds in the same way when hardware scarcity dominates.
“AI is not lifting all boats,” Nigel Green says. “It is selecting winners and losers.” Capital spending trends reinforce that distinction. Global investment in AI infrastructure remains elevated, with committed spending stretching years into the future.
Those commitments support revenue strength for suppliers that secured early positions in the supply chain. They also increase vulnerability if demand forecasts prove too optimistic or if alternative technologies reduce dependence on certain components.
“This raises the stakes,” Nigel Green notes. “When markets are built around constrained supply, miscalculations get priced in faster.”
Volatility is likely to rise as 2026 approaches. Earnings surprises tied to delivery delays, pricing changes, or capacity expansions will move stocks more sharply than macro headlines. Investors will need to pay closer attention to contract structures, supply visibility, and inventory dynamics.
“The days of vague AI exposure are over,” he explains. “Precision matters.” The deVere CEO concludes: “AI demand is real and durable, but scarcity, among other factors such as performance over hype, will now be driving the market narrative.
“Investors ignoring that shift do so at their own risk.” Ellah Lakes Rallies on Positive Investors Sentiment
