LIVE MARKETS-AI in 2026: Facing reality after the hype

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AI IN 2026: FACING REALITY AFTER THE HYPE

After years of excitement, 2026 is expected to be a tough year for artificial intelligence, according to the Deutsche Bank Research Institute. The initial excitement is fading as reality sets in, and three key themes are shaping the conversation: disillusionment, dislocation, and distrust.

The research institute says 'disillusionment' is growing as many companies now realize that AI is far from perfect. Most business leaders aren't seeing major revenue gains. Still, executives were adamant that they had to spend to keep up with demand for AI computing power.

Real-world accuracy is messy, and most firms lack the data, systems, and staff needed for effective adoption, especially in sensitive sectors like finance and healthcare.

Deutsche Bank highlights that 'dislocation' is about rising demand and capacity, prompting major hyperscalers to ramp up investment in data centers—a move that's drawing attention to the increasing strain on electricity and water resources needed for cooling.

However, BlackRock BLK.N said earlier this month that investors looking at AI opportunities in 2026 are shifting focus toward energy and infrastructure providers, which stand to benefit most from soaring demand and are emerging as key enablers—amid AI's expansion.

Shortages of key materials like high-bandwidth memory are driving up prices, while restrictions on rare earth minerals and political decisions can disrupt progress, the brokerage adds.

AI companies are raising large funds — OpenAI secured $22.5 billion from SoftBank, xAI secured $20 billion, and Anthropic agreed to $10 billion in funding — but investors will soon expect results, making 2026 a make-or-break year.

Deutsche Bank says 'distrust' is growing as people worry about job losses, privacy, and how AI might be misused. Lawsuits and new rules are popping up, and countries like the U.S. and China are racing to be the leaders in AI.

(Kanishka Ajmera)

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