The research addresses two dominant concerns currently shaping investor sentiment. The first is whether AI will disrupt incumbent businesses, particularly in capital-light software sectors. The second relates to whether physical constraints — especially power generation, permitting, and grid capacity — may slow the rollout of AI infrastructure and temper expectations embedded in current market valuations.

According to the firm's analysis, both concerns warrant careful consideration. Power generation remains capital-intensive and time-consuming, suggesting that AI deployment is likely to progress unevenly rather than in a linear fashion.

At the same time, the scale of capital investment underway is unprecedented. Large technology companies have outlined plans for an estimated US$600–700billion of AI-related capital expenditure in 2026, with a significant portion directed toward data centres, chips, servers, and supporting infrastructure. These commitments reflect their belief that AI will become a core input across the global economy.

The research argues that for equity investors, the more consequential question is not whether AI adoption will continue, but how it will reshape competitive advantage among incumbent businesses.

Recent market volatility has highlighted increasing scepticism toward established software companies, particularly those operating capital-light, subscription-based models. However, Point Hope cautions against assuming widespread displacement. Large software incumbents that possess entrenched enterprise relationships, network effects, and proprietary data, are likely to also have high switching costs for their customers, particularly in regulated or mission-critical environments.

Furthermore, the research notes that technological adoption does not necessarily imply wholesale reinvention. In many cases, AI is expected to reinforce incumbents' competitive positions rather than undermine them.

This durability-focused perspective underpins Point Hope's long-term equity investment approach, which emphasises resilience to disruption, cash-flow generation, and the ability to compound value across market cycles.

"We view earnings and cash-flow durability as the ultimate arbiters of value," says Guan Zhen Tan, Chief Investment Officer of Point Hope. "That perspective encourages patience during periods when market narratives move faster than fundamentals."

Point Hope's research concludes that while markets will ultimately resolve these questions through earnings releases in the coming months, periods of heightened narrative-driven volatility may reward patient investors willing to prioritise fundamentals over short-term themes.
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