Oil and Gas Stocks Surge as Capital Shifts Away from Big Tech AI Spending

U.S. investors are rotating capital from Big Tech to oil and gas as tech companies' aggressive AI spending drives sell-offs. Tech giants plan over $660 billion in AI-related capital expenditures this year, with Amazon and Meta significantly exceeding prior-year levels. NVIDIA CEO Jensen Huang defended the software industry, noting AI is not replacing it. As a result, U.S. oil and gas stocks have gained 17% since the start of 2026, with Exxon, Chevron, and ConocoPhillips seeing 25% increases in market cap over the past 12 months. The move reflects strong cash returns (about 50% of cash flow from operations for supermajors), relatively low debt levels, and a perceived safer alternative to the high-debt, cash-flow-constrained tech sector. Despite lower oil prices, Big Oil remains profitable and the IEA's updated demand outlook, along with potential supply disruptions, are supporting the sector. The broader implication is a reallocation of risk-averse capital to more stable assets as the AI story continues to develop.