For much of the last decade, software has been the dominant force in technology investing, attracting significant attention from private equity firms, venture capital funds, and strategic acquirers. In 2026, however, a notable shift is underway. Rather than broadly investing across software, investors are becoming far more selective as artificial intelligence reshapes competitive dynamics and raises questions about the long-term durability of traditional software business models. As a result, capital is increasingly flowing toward AI infrastructure, advanced manufacturing, industrial technologies, and the physical systems required to power the next wave of innovation.
This evolution is not a retreat from technology. In fact, technology remains the largest destination for private equity investment globally through the first half of 2026. What has changed is where investors see the greatest opportunity within the broader technology landscape. Rather than focusing solely on software applications, firms are directing attention toward the infrastructure that enables artificial intelligence, including data centers, semiconductors, power generation, robotics, sensors, and digital infrastructure. Many investors now view these sectors as essential building blocks of the AI economy and are allocating capital accordingly.
At the same time, industrial manufacturing has emerged as one of the market’s most compelling investment themes through Q2 2026. Investors are increasingly drawn to companies developing advanced manufacturing technologies, automation systems, precision components, and industrial hardware that can modernize production environments and improve efficiency. As AI capabilities move from concept to implementation, manufacturers capable of integrating intelligent systems into factories, supply chains, and industrial workflows are attracting growing interest from both financial and strategic investors.
The shift is also evident in investor allocation decisions. According to recent private equity survey data, firms have been increasing exposure to sectors such as business services, energy, healthcare, and industrials, while reducing exposure to traditional software investments. Many investors are reevaluating software portfolios in light of AI-driven disruption and focusing instead on businesses with defensible competitive advantages, tangible assets, and clear paths to value creation. The conversation has moved beyond simply investing in technology toward investing in the technologies that enable economic transformation.
The forces reshaping technology investment — from AI infrastructure and semiconductors to advanced manufacturing and robotics — are still in early stages, and the intersection of digital innovation and the physical economy will only grow more consequential in the years ahead.
Our next Hot Topics event on October 8, 2026, at Nixon Peabody Boston will take a deeper dive into this rapidly evolving landscape, exploring the trends, investors, and companies shaping the next generation of growth and investment opportunity. We hope you'll join us for this half-day program bringing together innovative technology companies, active investors, and senior dealmakers at the forefront of industrial transformation.
