The rapid expansion of artificial intelligence may weaken the foundations of market dominance enjoyed by major technology companies, according to analysts at BCA Research.
In a note to clients, strategists led by Peter Berezin argued that AI has the potential to challenge key advantages that have historically supported Big Tech profitability, including economies of scale, network effects, and proprietary platforms.
Berezin said the technology could simultaneously increase costs and compress pricing power. Companies are expected to spend heavily on the infrastructure required to support AI, while competition enabled by the technology may reduce how much firms can charge for standardized software products.
Large cloud providers — often referred to as “hyperscalers,” including companies such as Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) — are projected to invest roughly $670 billion in AI infrastructure in 2026, up from $410 billion last year and $240 billion in 2024. Berezin noted that this surge in capital spending raises concerns that these companies are shifting away from the “capital lite” business models that previously attracted investors and toward more capital-intensive operations.
Software companies have also faced recent market pressure amid growing investor concerns that businesses may increasingly rely on AI-powered coding tools rather than traditional software-as-a-service platforms.
Berezin suggested that AI disruption could extend beyond enterprise software and reshape social media platforms as well, potentially transforming them from centralized destinations for users into what he described as “mere repositories of content.”
“AI has the potential to upend the traditional hub-and-spoke model by creating an agentic layer between the user and the content. Rather than going to Instagram to find out what is new or see something interesting, people could ask an AI agent for that information,” Berezin wrote.
He added that the growing availability of open-source AI development tools could further weaken monopolistic advantages by making it harder for any single company to maintain exclusive technological control or charge premium prices for proprietary systems.
Instead, Berezin expects the biggest beneficiaries of the AI era to be owners of scarce physical assets, such as land and natural resources.
Given the heavy weighting of technology stocks within the S&P 500 and the strong exposure of U.S. households to equity markets, Berezin warned that an AI-driven selloff combined with weaker corporate investment could tip the economy into a “mild recession.” However, he emphasized that the firm’s base case centers more on a market rotation than an outright downturn.
The analysts reiterated their preferred equity positioning for 2026, which includes expectations for Big Tech stocks to decline while long-term government bonds gain, broader market stocks to outperform major technology names in the S&P 500, emerging markets to beat global equities, and increased exposure to metals such as gold and silver.