---
title: "The markets already picked its AI winners. That’s the risk, not the opportunity"
description: "There are three questions we think investors need to be asking as we move into the back half of 2026. The AI question. The valuation question. And the one everyone's gone slightly numb to: what a higher for longer oil price does to rates, inflation and growth, with Iran still running what the US won't call a war."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Sponsored Content"
author: "Ninety One"
author_url: "https://www.dailymaverick.co.za/author/ninety-one/"
canonical_url: "https://www.dailymaverick.co.za/article/2026-09-10-the-markets-already-picked-its-ai-winners-thats-the-risk-not-the-opportunity/"
published: "2026-09-10T20:22:19"
lang: "en-ZA"
word_count: 666
---

# The markets already picked its AI winners. That’s the risk, not the opportunity

> There are three questions we think investors need to be asking as we move into the back half of 2026. The AI question. The valuation question. And the one everyone's gone slightly numb to: what a higher for longer oil price does to rates, inflation and growth, with Iran still running what the US won't call a war.

By Ninety One · Published 10 September 2026, 22:22 SAST

## Content

Start with AI, because the markets have already made their mind up. They've stacked their bets and taken very strong views on where the winners and losers sit. What we don't think investors are asking enough is whether subtle changes to those expectations could produce very large changes in prices. We've had enough evidence this year that they do.

The valuation story backs this up. The S&P 500 is richly valued on any measure you want to use, comfortably more than one standard deviation above its long-run norm\*, and history isn't kind to returns from levels like that. The gains of the last decade came from markets moving from cheap to expensive. That's the rear view mirror. It doesn't tell you much about the road ahead, and it certainly doesn't mean the passive, low risk, track-the-index option stays low risk if the shape of returns changes.

Then there's the money being spent. Some companies are producing very strong growth, but there's a widening gap opening up between the capital going in, the cash flows that capital is actually generating, and the earnings being reported. That disconnect is close to unparalleled in market history, and the new argument doing the rounds is that you don't need quality profits anymore, because the size of the investment is the competitive advantage now, not whether it ever pays back. We've heard that tune before.

If you want to see where this gets dangerous, look at semiconductors. Companies that were losing money as recently as 2022, SK Hynix, Samsung Electronics, Micron among them, are now worth more than a trillion dollars because the market has decided that a compute shortage makes them a structural growth story rather than a cyclical one. In our view, that's one of the biggest profit bubbles we've seen concentrated in a single sector, and it's dangerous precisely because everyone's drawn the same conclusion at the same time.

None of this makes us Luddites. We're not sitting here pretending the world isn't changing. We own businesses partnering with AI to offer more to their clients, from old-fashioned names like tobacco investing in next-generation products, to businesses whose service is different enough that bundling in AI makes them more relevant, not less. What we won't do is underwrite the wide range of outcomes priced into the market's most fashionable names. Everybody likes a good story to tell at dinner, the exotic crypto trade, the hot gold share, whatever it is this year. We'd rather own the boring compounders that keep growing and keep working, even when nobody wants to talk about them at dinner.

The same discipline applies to the oil question. A military operation in Iran that's been running since March, with the talks on and then off and then on again, has left investors fatigued. Fair enough. But higher for longer oil has real consequences for rates and growth into 2027, and being tired of the headline isn't a reason to stop pricing the risk.

It applies at home too. South Africa's strong run over the past couple of years owes more to the world turning away from the dollar than to any transformation in the local growth story, and that narrative looks like it's running out of legs here faster than elsewhere. We don't read that as a reason to put your head in the sand. It means the money is to be made in different places: good businesses compounding quietly, South African inflation-linked bonds, cash that's genuinely competitive while rates stay higher for longer, and an offshore book that should work as a tailwind now that the rand's strengthening looks largely done.

The market is late cycle. It's expensive. It's narrow. That's not a reason to hide, and it's certainly not a reason to let your grandmother pick your next stock. It's a reason to own real cash flows and build a portfolio balanced enough to take the upside and the downside as they come. **DM**

*Author: Clyde Rossouw, Head of Quality, Ninety One*