Lyn Alden, founder of Lyn Alden Investment Strategy, believes the powerful rally in U.S. technology and AI stocks is approaching exhaustion, setting the stage for a potential capital rotation into underperforming markets like India in the coming years.

The US Tech Thesis: A Weakening Outlook for 2026
Alden stated the "AI trade and the overall US tech trade is getting long in the tooth," expressing specific concern for the sector. She does not foresee a crash but expects a "weaker 2026" for tech stocks than 2025.

• Key Factor: Rising competition, particularly in chips. She noted Nvidia may no longer be the "only game in town," with Google's custom chips gaining traction.
• Closed Trade: She viewed Alphabet (Google) as a buyable laggard earlier but now sees that opportunity as "largely done" after its rally.

The Rotation Thesis: India as a Potential Beneficiary
Alden sees capital flowing to markets that have lagged, with India as a prime candidate.

• Recent Underperformance: "India has been a laggard this year. I am somewhat more optimistic about India next year."
• Past Valuation Hurdle: Her main previous concern was high valuations, but the relative underperformance may have tempered this.
• Dollar Dynamics: She noted countries with a direct link to a weaker dollar outperformed in 2025, while India's relationship is less direct, potentially setting it up for a catch-up.

Global Macro Backdrop: Central Bank Pivot and Liquidity Stress
Alden highlighted shifting central bank policies as a key market driver and risk:

• Federal Reserve: Unstable expectations around rate decisions.
• Bank of Japan (BoJ): Its surprise hawkish shift is pushing global yields higher and weakening the yen. She expects the BoJ to become "slightly more hawkish" but is constrained by "fiscal dominance" due to massive debt, potentially forcing it to sell US Treasuries to stabilize markets.
• Liquidity Crunch: Tight US liquidity, combined with Japan's policy shift, is creating stress, visible in the US repo market and the end of quantitative tightening. This is pressuring liquidity-sensitive assets like Bitcoin and cryptocurrencies.

Sector Views and Risks:

• Selective Opportunities: She remains "less bearish on US financials than many others."
• Liquidity Warning: The current global liquidity tightening is a clear headwind for risk assets.

Bottom Line:
Alden's analysis paints a picture of a maturing US tech cycle and a shifting global liquidity landscape that could catalyze a major rotation in capital allocations. India, having underperformed and possessing strong structural growth fundamentals, emerges as a logical destination for some of that capital in 2026. However, this rotation is contingent on India's ability to navigate the same global liquidity pressures currently hammering crypto and other speculative assets. For investors, the call is to prepare for a potential regime shift where leadership moves from the megacap tech giants of the West to the growth markets of the East, with macro liquidity conditions serving as the decisive gatekeeper.