Thematic ETF flows still favor AI-linked software, semiconductors, electrification and infrastructure, but leadership is narrowing. Investors are rotating away from commodity hedges and weaker speculative themes while adding selectively to REITs as lower crude and rates become plausible near-term catalyst
Biotechnology and semiconductors are leading as investors rotate back toward AI hardware and healthcare beta, while cannabis, space, blockchain, software and uranium-linked themes lag.
AI infrastructure is becoming a resource-security trade: compute demand remains strong, but water access, power constraints, copper intensity, financing costs and permitting risk could disrupt data-center deployment, especially in hot or water-stressed regions where cooling assumptions look fragile right now
Semiconductors regained leadership as AI infrastructure momentum rotated back toward hardware, while biotechnology, blockchain and software lagged after recent strength.
Software and cybersecurity are extending leadership as AI monetization broadens beyond hardware, while biotechnology, space, defense, metals and electrification lag in a more selective tape.
Software and cybersecurity are leading as AI demand broadens beyond semiconductors, while hydrogen, cannabis, space and select semiconductor sleeves lag after a strong May momentum run.
Kaleidoscope Thematic Equity Model outperformed SPY in May as AI, cybersecurity, cloud, semiconductors and blockchain themes led. AIQ, CIBR, BKCH, SKYY and SMH drove attribution, while KWEB, GBTC, URA, NANR and ITB were the primary detractors during the month.
Cannabis, biotechnology, software and defense/space themes are leading as risk appetite holds, while China internet, electrification, fintech, energy services and MLP-linked exposures lag.
Thematic flows remain constructive but selective, led by dividends, semiconductors, software, AI, electrification and infrastructure. Near-term interest is strengthening in momentum, REITs, clean energy and space, while natural resources, low volatility, fintech and speculative themes keep losing sponsorship across ETFs.
Blockchain and travel are leading as lower oil supports risk appetite, while software, cybersecurity, energy services and Natural Resources lag as the market digests a post-rally momentum pause.
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