The best of the AI trade could be behind us. Here’s how to prepare, according to Barclays.

Barclays suggests the most dramatic phase of the AI-driven rally may already be in the past, even as it advises investors to keep holding large-cap technology names into their upcoming earnings reports. The distinction matters: the bank is not signaling an exit from the theme, but rather a shift in how it expects returns to be generated.

According to the note, Barclays favors companies with durable business models over those whose valuations rest mainly on AI enthusiasm. In practical terms, that means the market may increasingly reward evidence of real revenue and earnings tied to AI, rather than broad exposure to the label itself. This framing echoes a familiar pattern in thematic investing, where early gains often reflect anticipation and later gains require confirmation.

For observers, the key variables are the upcoming earnings results and the guidance that accompanies them. Watch whether AI-related spending is translating into measurable financial performance, and whether management teams signal confidence or caution about the pace of demand. Those details, more than the headline numbers, are likely to shape how the trade evolves from here.