What’s really driving the S&P 500 in 2026: AI, energy, and a divided market 

The S&P 500 has delivered solid year-to-date gains in 2026. But the composition of those gains tells a more nuanced story than the index level alone suggests. Market cap growth since January has been concentrated in two sectors: artificial intelligence and energy. The rest of the index has been a net drag. 

Market cap is up for AI and energy but down for everyone else 

Sector leadership in 2026 

Energy and Information Technology rank as the top two performing S&P 500 sectors year-to-date, with returns of 29.2% and 17.1% respectively as of early June. The S&P 500’s forward P/E stood at approximately 20.8x as of mid-June, consistent with a market where earnings growth is meaningful but concentrated rather than broad. 

Despite that the geopolitical tensions in the Middle east have propped up energy prices which have reflected in companies operating within the space, the energy sector’s outperformance is structurally linked to the AI buildout. The power requirements of large-scale data centre infrastructure have created sustained demand for electricity generation that extends well beyond traditional commodity dynamics. 

The AI factor remains dominant 

Despite near-term rotation, the underlying driver of this market has not changed. Analysts estimate that 70% of S&P 500 variability continues to be explained by the AI factor. The question for investors is not whether AI remains the central theme. It is which companies within the ecosystem are positioned to translate capital expenditure into earnings. 

Hyperscalers continue to commit capital at historically elevated levels. The direct beneficiaries, primarily semiconductors, data centre operators, and power infrastructure providers, remain the clearest near-term earners. Companies dependent on broader AI commercialisation face a longer and less certain path. 

Why it matters 

“The AI factor still dominates, but the market is becoming more selective about where it expects returns to materialise. The next phase is about execution: which parts of the ecosystem convert that spending into earnings. Our positioning in AI infrastructure has reflected that view throughout. We have been targeting the AI infrastructure for a while and deviated from the so-called hyperscalers as we believe the receiving end, AI infrastructure is a safer bet. Heading into quarter two earnings we are of the view that capital expenditure on AI by the big boys will be sustained. This augurs well for companies with the different waves of AI.” says Jordan Portelli, Chief Investment Officer at Calamatta Cuschieri Moneybase. 

FAQs 

Does the recent rotation away from megacap tech mean AI is losing momentum? 
Not necessarily. The AI factor still explains the majority of S&P 500 variability. What is shifting is positioning within the trade, with some capital moving toward broader beneficiaries. 

Why has energy performed so strongly this year? 
Two reasons: geopolitical factors supporting oil prices earlier in the year, and structural demand from AI data centres driving sustained interest in power infrastructure. 

What should investors be watching heading into Q2 results? 
Hyperscaler capital expenditure guidance will be the key signal. It determines whether the AI infrastructure buildout continues at pace, and therefore whether the current earnings concentration holds. 

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Calamatta Cuschieri Investment Services Ltd (C13729) is licensed by the MFSA to carry out investment services business in terms of the Investment Services Act (Cap. 370). The company is a subsidiary of Calamatta Cuschieri Moneybase plc and is registered at Level 0, Ewropa Business Centre, Dun Karm Street, Birkirkara BKR 9034, Malta.