Halfway through a turbulent year marked by Middle East conflict, political upheaval, and oil price volatility, a clear pattern has emerged across global markets: AI-driven physical infrastructure stocks have surged while traditional defensive assets have struggled.
According to Dan Coatsworth, head of markets at AJ Bell, companies benefiting from the AI spending boom delivered the standout investment returns of the first half, while Bitcoin and gold failed to provide expected safe-haven protection.
The most remarkable gains came from memory chip manufacturers. As demand for AI computing collided with tight supply constraints, prices surged and took shares with them. SanDisk led US markets with a gain of over 850% in six months, while Western Digital, Micron Technology, and Seagate Technology all more than tripled in value—a pace of return that would normally take years to achieve.
The surge is driven by the vast quantity of high-speed memory and storage required to train and run AI systems as technology giants expand their data centres. Other US equities benefiting from the AI trade include Intel, Dell, Advanced Micro Devices (AMD), and Applied Materials, which all rose between 150% and 280% year to date.
The rally extended to emerging markets, where Asian semiconductor leaders like TSMC and SK Hynix powered regional gains, helping South Korea’s KOSPI double in value, Japan’s Nikkei 225 climb roughly 40%, and the MSCI Emerging Markets index rise approximately 27%. In Europe, the FTSE 100 gained 7%, France’s CAC 40 rose 5%, and Germany’s DAX gained 2%. Meanwhile, the MSCI India index fell 5% and Hong Kong’s Hang Seng lost 6%.
Notably, the memory rally has begun to reverse in recent days, with several of these same names caught in a sharp technology sector sell-off.
Former Favorites and Disappointments Define the Second Half
The turnaround was particularly severe for previous AI leaders. Meta and Microsoft were left behind, down 14% and 24% respectively on a total-return basis, as heavy AI spending transformed these technology giants into more capital-intensive businesses and investors moved away from premium valuations.
Microsoft now trades at its cheapest level in a decade, leaving both it and Meta valued more modestly than McDonald’s—a scenario few predicted during the peak of the “Magnificent 7” phenomenon.
Traditional safe havens also underperformed. Gold experienced significant volatility, peaking at $5,594.82 per ounce on January 29 before losing around 28% from its high, despite ongoing geopolitical tensions. Higher bond yields and cash rates, offering income that physical gold cannot match, undermined its appeal as an investment destination.
Bitcoin fared even worse, falling 28% since the start of the year as crypto enthusiasm dissipated and capital rotated toward technology shares.
In the UK, takeover activity provided momentum, with six FTSE 100 companies—including Glencore, Schroders, and Segro—attracting takeover bids, signaling continued value perception in established British companies following a three-year re-rating.
Housebuilders like Persimmon faced challenges amid a sluggish property market, while technology-adjacent names such as Experian and RELX encountered AI disruption concerns.
One notable area of cooling interest was defence stocks. After strong performance in 2025, companies like BAE Systems, Germany’s Rheinmetall, and America’s Palantir gave ground as expectations around rising military budgets appeared fully priced in, prompting investors to seek opportunities elsewhere.