The AI boom is hiding a bigger technology divide: Who profits as device sales fall?

Global technology hardware markets are showing a growing divergence, with shipments of consumer devices expected to decline even as demand for computing infrastructure expands. UBS estimates point to a shift in spending towards servers used by cloud providers and hyperscalers, raising questions about which companies will capture the gains from the artificial intelligence (AI) investment cycle.

Global PC shipments are projected to fall 11% in 2026, while smartphone shipments are expected to decline 10%, according to UBS estimates. Overall mobile phone shipments are forecast to drop 8%. In contrast, server shipments are projected to grow 19%, while hyperscaler server shipments are expected to rise 23%.

The estimates suggest that technology spending is increasingly being directed towards the infrastructure required to develop and deploy AI, rather than towards consumer devices. However, shipment forecasts alone do not establish how much of this growth will translate into profits for individual companies.

Infrastructure suppliers gain attention

The expansion of AI computing is creating potential opportunities across the technology supply chain. Server manufacturers and suppliers of processors, memory, networking equipment and other components could benefit from rising demand for computing capacity.

Hyperscalers — large cloud and technology companies that operate extensive computing infrastructure — are investing in the capacity needed to support AI models, cloud services and data-intensive workloads. Their server demand could create opportunities for companies supplying the hardware and components required to build and operate these systems.

The potential gains extend beyond computing equipment. Data centres require reliable electricity, cooling systems, power-management equipment and supporting infrastructure. Companies supplying these products and services could benefit as operators expand capacity, although the scale of the opportunity will depend on investment plans, costs and competitive conditions.

Consumer electronics face a different cycle

The projected decline in PC and smartphone shipments presents a contrasting outlook for consumer-device manufacturers and their suppliers. Slower replacement demand, market maturity and changing purchasing patterns can influence shipments, although the UBS figures alone do not establish the reasons behind the expected decline.

For manufacturers concentrated in consumer electronics, the divergence raises questions about product mix, margins and diversification. Companies with exposure to enterprise computing and infrastructure may be positioned differently from those dependent primarily on consumer-device demand.

Can India capture the opportunity?

For India, the shift could open opportunities in electronics manufacturing, server assembly, component supply, data centres and power infrastructure. However, capturing a meaningful share will depend on manufacturing capabilities, access to advanced components, investment requirements and integration into global supply chains.

The investment question is not simply whether AI infrastructure spending will rise, but which businesses can convert that demand into sustainable earnings. Investors will need to assess order visibility, pricing power, capital expenditure, competition and valuations rather than relying on shipment growth alone.

The UBS estimates point to a changing technology hardware cycle. Whether infrastructure suppliers emerge as the biggest beneficiaries will depend on how effectively they turn rising demand into profitable and durable business growth.