Summary

• International small-cap stocks were volatile in the first quarter as shifting investor sentiment drove sharp rotations within the market.
• While the selloff among software companies received the most attention, the AI disruption debate was much broader, extending to many asset-light business models whose value is largely derived from intangible assets.
• One of the defining investment trends in early 2026 has been investors' intense focus on AI disruption.

Overview

International small-cap stocks were volatile in the first quarter as shifting investor sentiment drove sharp rotations within the market. Enthusiasm around artificial intelligence (AI) continued to support companies tied to the AI infrastructure buildout, but each wave of