Governments worldwide are accelerating investments in artificial intelligence infrastructure under the "sovereign AI" strategy, a trend that is expected to extend rather than curtail the current AI capital expenditure cycle through 2026 and beyond.
Morgan Stanley estimates U.S. AI-related capex alone will total approximately $860 billion in 2026, driven by national security considerations and the need for domestic control over critical technology supply chains. The investment bank's projection reflects a broader shift in which governments treat computing capacity, power infrastructure, data storage, AI models and networking as strategic assets rather than commercial commodities.
The sovereign AI approach does not imply complete technological isolation. Countries are increasingly combining domestic development with partnerships with trusted international providers to mitigate risks associated with single points of failure in supply chains. The United States is expected to maintain domestic AI infrastructure while tightening controls on advanced technology transfers to China, potentially extending existing semiconductor restrictions to cloud services, model distribution and data hosting.
China, in turn, is pursuing a localization strategy through domestic procurement mandates, enhanced data security regulations, integration of local AI models and the expansion of sovereign cloud infrastructure. The approach may extend into emerging markets via lower-cost local models and open-source solutions, particularly in the ASEAN region.
Europe faces structural challenges in financing and scaling sovereign AI infrastructure but seeks greater strategic autonomy in computing, cloud services and semiconductor manufacturing. The region's efforts are contributing to a fragmented but expanding global investment landscape in AI-enabling technologies.
Companies positioned to benefit include semiconductor manufacturers, data center operators—particularly those offering colocation services for local hosting and data residency—networking equipment suppliers, power infrastructure providers, cloud service platforms and AI deployment frameworks. The ProPicks AI strategy cited in the report has delivered more than double the S&P 500's performance since its November 2023 launch, with holdings such as Siemens Energy and Sandisk generating gains of 231.5% and 189%, respectively, prior to broader market recognition.
