The index is a lie
It masks a brutal divergence between the architects of the new economy and the companies merely renting space in it. BlackRock Investment Institute just confirmed the shift. Passive investing is no longer a safe harbor. It is a collection of legacy risks. The sorting of winners and losers has moved from theory to balance sheet reality. We see it in the latest institutional positioning. We see it in the widening gap between margins. The era of the generalist is over. Active management is the only way to avoid the collateral damage of the AI disruption.
The market is currently bifurcated. On one side, we have the infrastructure giants. They own the silicon, the data centers, and the power grids. On the other side, we have the AI-washers. These are the companies adding ‘AI’ to their press releases without a corresponding increase in unit economics. According to recent Reuters analysis, the capital expenditure required to stay relevant in the generative space has increased by 40 percent year-over-year. Most companies cannot afford the entry fee. They are being sorted into the ‘loser’ category by the sheer weight of their technical debt.
The Infrastructure Divergence in Early 2026
The Energy Bottleneck and Sovereign AI
Power is the new gold. A data center is useless without a gigawatt of predictable electricity. This is where the sorting happens with the most violence. Companies that secured long-term power purchase agreements in 2024 and 2025 are now the gatekeepers of the digital economy. The rest are fighting for scraps in an increasingly expensive grid. As noted in Bloomberg’s morning briefing, the price of industrial electricity in tech hubs has spiked as the demand for LLM training clusters outpaces infrastructure development.
We are also seeing the rise of Sovereign AI. Nations are no longer content to outsource their intelligence needs to a handful of Silicon Valley firms. They are building their own domestic clusters. This shift creates a massive tailwind for hardware providers but a significant headwind for global software providers who face new localized regulations and data residency requirements. The latest SEC filings from major cloud providers show a significant pivot toward decentralized data center footprints to accommodate this trend.
Active investing thrives in this environment because the index cannot distinguish between a company using AI to cut costs and a company whose business model is being cannibalized by it. The ‘sorting’ mentioned by BlackRock is an admission that the broad-market beta is dead. Alpha is found in the granular details of the supply chain. It is found in the ownership of the physical assets that make the virtual world possible. If you are not looking at the power grid and the custom silicon pipelines, you are not investing. You are gambling on a ghost.
Watch the upcoming NVIDIA Q4 earnings call scheduled for February 25. The specific guidance on Blackwell B200 shipments and the commentary on ‘Sovereign AI’ demand will provide the next definitive data point on whether the infrastructure trade has another leg or if the sorting process is entering its final, most destructive phase.
