Going with the Flows: The 2026 Themes Are Intact—but the Crowded Trades Are Cracking

The most important message in this week’s thematic ETF flows is that investors have stopped adding indiscriminately to the most crowded positions.  Year-to-date flows still describe a market built around artificial intelligence, semiconductors, software, infrastructure and power demand. Semiconductor ETFs have absorbed almost $20 billion in net inflows this year. Software strategies have attracted more than $5.2 billion, dedicated robotics and AI funds roughly $4.5 billion, and broad infrastructure ETFs about $4.0 billion.  But the one-month and especially one-week numbers look very different.  Semiconductors have lost more than $4.4 billion in the latest week. Software has experienced approximately $700 million of weekly outflows. AI funds are essentially treading water. Broad infrastructure and nuclear exposure are also giving back assets despite positive YTD totals.  Meanwhile, defense, midstream energy infrastructure and electrification continue to attract capital, while precious metals and biotechnology have suddenly become important short-term destinations.  That is not a wholesale move out of risk. Invesco QQQ Trust (QQQ) attracted approximately $11.1 billion in the latest week and $12.6 billion over one month. Investors are still willing to own growth. They are simply becoming much more discriminating about where they own it.

The Flow Dashboard: YTD Conviction Meets Short-Term Rotation

The YTD Message Has Not Changed: AI Still Owns the Flow Map

The long-term positioning picture remains remarkably clear.

Semiconductors remain the biggest thematic winner of 2026. The iShares Semiconductor ETF (SOXX) has attracted approximately $9.34 billion YTD, VanEck Semiconductor ETF (SMH) another $8.46 billion, and Invesco PHLX Semiconductor ETF (SOXQ) roughly $1.33 billion.

The fundamental backdrop continues to support that allocation. AI infrastructure earnings have remained strong, and Reuters reported Thursday that recent results showed little evidence of hyperscalers retreating from capital spending. Semiconductor stocks rallied again as those earnings reassured investors that compute demand remains robust.

Nvidia’s newly announced financing initiative makes the scale of that commitment even clearer. The company is partnering with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR on platforms designed to mobilize more than $500 billion of third-party capital for AI infrastructure.

That is fundamentally bullish for AI demand.  It is also a warning about the changing nature of the investment thesis.  The AI boom is becoming increasingly capital intensive. Investors must now assess not only how much compute will be purchased, but who finances it, what return those assets ultimately produce and whether expensive computing hardware retains enough economic value to support increasingly sophisticated financing structures.  The underlying demand story has not weakened. The hurdle for additional investment has risen.

Semiconductors: The Biggest YTD Winner Becomes the Biggest Weekly Source of Cash

This week’s clearest divergence is semiconductor positioning.  SOXX rose 2.65% over the latest week but lost approximately $3.73 billion in assets. SMH gained 2.34% yet experienced roughly $775 million of weekly outflows.

That is a very different message from a conventional risk-off liquidation. Prices are rebounding while ETF investors reduce positions.  The one-month picture makes the distinction even clearer. SOXX has lost approximately $2.14 billion during the month, but SMH still retains approximately $672 million of one-month inflows and SOXQ has gathered another $484 million.   Investors are not rejecting semiconductors. They are reducing the size of an extraordinarily successful and crowded trade.  That fits the broader 2026 story. Reuters noted last month that semiconductor funds had already experienced unusually violent swings between inflows and outflows as investors struggled to reconcile exceptional earnings growth with elevated valuations and uncertainty about the longevity of the AI capital-spending cycle.  This week’s data suggests that debate remains unresolved.  The YTD flow says structural conviction.  The one-week flow says position-sizing discipline.

Software Is Also Being Sold Into Strength

Software shows an even more revealing price-flow divergence.  The iShares Expanded Tech-Software Sector ETF (IGV) has attracted approximately $5.17 billion YTD, making it one of the strongest thematic asset gatherers in the database.  Yet IGV lost roughly $1.12 billion over one month and $832 million in the latest week.  Those redemptions occurred while the ETF gained 11.6% over the month and another 3.7% during the latest week.  Investors are selling into strength.

But here again, the headline masks an important internal rotation. Cybersecurity and cloud funds are behaving better than broad software. Global X Cybersecurity ETF (BUG) attracted approximately $170 million over one month, while Amplify Cybersecurity ETF (HACK) gathered roughly $62 million. Global X Cloud Computing ETF (CLOU) has attracted approximately $80 million during the month while gaining almost 17%.  There is a fundamental reason for that distinction. AI is increasingly becoming a cybersecurity problem as well as a productivity opportunity. Taiwan reported Thursday that it had been targeted by an AI-driven hacking campaign, while recent industry research has highlighted rapidly increasing use of AI by attackers to automate and scale cyber operations.  The flow market appears to be separating software that could be disrupted by AI from software whose economic necessity increases because of AI.  That is a much more mature form of thematic investing than simply buying everything associated with artificial intelligence.

Defense Is One of the Clearest Confirming Trends

Defense is showing almost the opposite pattern.  Aerospace and defense ETFs have attracted approximately $1.68 billion YTD, and the recent numbers continue to reinforce—not challenge—that trend.  The group received roughly $215 million during the latest week and $126 million over one month.

The iShares U.S. Aerospace & Defense ETF (ITA) alone attracted approximately $163 million this week. Invesco Aerospace & Defense ETF (PPA) has received roughly $55 million over one month.  Here, news and money flows are aligned.  The war with Iran has depleted portions of U.S. weapons inventories and increased pressure on defense contractors to expand production. Rheinmetall said last week that rebuilding U.S. stocks of long-range precision missiles will take time, while defense companies are increasing production capacity.  Meanwhile, the Strait of Hormuz remains unresolved. Washington and Tehran were still making competing claims Thursday about compliance with arrangements to reopen the waterway, which carried roughly one-fifth of global oil and LNG flows before the conflict.  Defense therefore remains one of the few large thematic allocations where the one-week, one-month and YTD messages all point in the same direction.

Energy Investors Prefer Infrastructure to Maximum Oil Beta

Energy flows tell a similarly useful story.  Traditional exploration-and-production exposure has strong performance but weaker flows. Oil and gas producers have rallied sharply, yet the largest high-beta energy funds are not attracting commensurate capital.  Midstream is.  MLP and energy-infrastructure ETFs have gathered approximately $1.62 billion YTD, including roughly $432 million during the latest month.  Alerian MLP ETF (AMLP) has received approximately $322 million over one month and $930 million YTD. Global X MLP ETF (MLPA) added another $68 million during the month.  By contrast, VanEck Oil Services ETF (OIH) has lost approximately $192 million over one month despite gaining almost 9%.  That divergence looks increasingly rational.

Oil remains supported by the unresolved Hormuz dispute, but Thursday’s market also had to absorb a 17.4-million-barrel increase in U.S. crude inventories and another downgrade to global oil-demand expectations.  The flow market appears to prefer the cash-generating infrastructure attached to the energy system rather than making an outright bet on continually rising commodity prices or a new drilling boom.  It is another example of investors choosing durable economics over maximum thematic beta.

Power Remains a Structural Theme—but Investors Are Narrowing the Trade

The YTD infrastructure picture is still constructive, but it has become considerably more selective.  Broad infrastructure funds have attracted approximately $4.02 billion YTD. Yet they have lost roughly $169 million over one month and $111 million during the latest week.  Global X U.S. Infrastructure Development ETF (PAVE), for example, has gathered almost $2.0 billion YTD but lost approximately $131 million during the latest month.  Electrification is holding up better.  Electrification-focused funds still show approximately $1.12 billion of YTD inflows and roughly $81 million during the latest month. The iShares U.S. Power Infrastructure ETF (POWR) has attracted approximately $380 million YTD and $43 million over one month.

The fundamental bottleneck remains intact. The Energy Information Administration expects U.S. electricity consumption to set new records in both 2026 and 2027 as AI data centers and electrification increase power demand.  On Thursday, former Tesla executive Drew Baglino’s Heron Power announced plans for a $100 million U.S. transformer factory, explicitly targeting shortages created by expanding utility and data-center demand.  This helps explain the flow split.  Investors are losing interest in owning infrastructure as a generic theme. They remain interested in owning the specific electrical bottlenecks AI cannot operate without.

Nuclear: The Thesis Survives, the Momentum Does Not

Nuclear power provides one of the better examples of a long-term thesis colliding with short-term valuation discipline.  The nuclear and uranium group retains approximately $1.38 billion of YTD inflows. VanEck Uranium and Nuclear ETF (NLR) accounts for roughly $921 million of that amount.  But NLR has lost approximately $110 million over one month and another $32 million during the latest week, despite positive returns over both periods.  Again, investors are selling into a rally.  The fundamental case for nuclear has not disappeared. Constellation Energy recently raised its profit forecast on strong power demand and said most of its generation is contracted through 2050 and beyond.  But speculative nuclear valuations have already been reset sharply. Standard Nuclear cut the size of its proposed IPO by more than half in July, while Reuters noted substantial YTD declines in several early-stage nuclear developers despite continued enthusiasm for AI-related power demand.  The flows therefore look less like rejection of nuclear power and more like rejection of the idea that every nuclear-related security deserves an AI premium.

Precious Metals Are the Biggest Short-Term Reversal

If semiconductors represent the biggest short-term divergence from positive YTD positioning, precious metals represent the opposite.  Gold and silver entered the current period with substantial YTD redemptions.  SPDR Gold Shares (GLD) remains down approximately $6.31 billion YTD in flows.  Yet GLD has attracted approximately $3.19 billion over one month and $1.67 billion during the latest week.  The iShares Silver Trust (SLV) remains down approximately $2.81 billion YTD, but has gathered roughly $866 million over one month and $372 million this week.  Those are not small tactical adjustments. They represent a genuine short-term reversal of the longer-term flow trend.

The macro backdrop explains part of the turn. July CPI increased 3.4% from a year earlier and core inflation eased to 2.5%, reducing expectations for an immediate Federal Reserve rate increase. Treasury yields fell after the release.  Gold consequently reached a more than two-month high before some profit-taking Thursday.  Add unresolved geopolitical risk in the Gulf, and precious metals have regained a portfolio role they did not consistently possess earlier this year.  This is one of the flow signals worth watching most closely. Another few weeks of strong inflows would turn what is currently a tactical reversal into a more meaningful change in the YTD trend.

Biotechnology Is Quietly Re-Accelerating

Biotechnology is another emerging short-term change.  The group has attracted only about $216 million YTD, but approximately $268 million arrived during the latest week alone.  The iShares Biotechnology ETF (IBB) gained 4.0% during the week while receiving roughly $117 million. The broad biotech group also benefited from approximately $167 million of weekly inflows into XBI.  Unlike semiconductor or software flows, the recent biotechnology buying is occurring from a relatively weak YTD positioning base.   The softer July inflation report and reduced probability of a September Fed hike improve the discount-rate environment for long-duration businesses whose value depends heavily on future drug-development cash flows.

Rates alone do not establish a new biotech bull market, but the combination of improving returns and accelerating ETF demand deserves attention.  Biotech is moving from ignored toward accumulated.

Where Investors Have Stayed Consistent

The most durable themes remain surprisingly concentrated.  Defense continues to attract assets across one-week, one-month and YTD horizons as geopolitical risk and military-replenishment spending reinforce the investment case.  Midstream energy infrastructure continues to receive capital as investors favor existing cash-generating assets over high-beta commodity exposure.  Electrification and grid infrastructure retain positive longer-term flows because AI power demand is producing physical bottlenecks that cannot be solved with software.

And outside the pure thematic universe, dividend and free-cash-flow strategies remain persistent winners. Schwab U.S. Dividend Equity ETF (SCHD) has attracted approximately $17.5 billion YTD, $3.7 billion over one month and $878 million during the latest week. VictoryShares Free Cash Flow ETF (VFLO) has gathered roughly $2.13 billion YTD.  That remains an important control signal: investors have not abandoned growth, but they continue to demand cash-flow support elsewhere in the portfolio.

Where the Flow Picture Is Changing

The divergences are becoming equally important.

Semiconductors: enormous YTD inflows, major weekly withdrawals.

Software: strong YTD accumulation, but investors are now selling into double-digit monthly gains.

AI: the structural theme survives, but dedicated ETF flows have stalled despite ever-larger infrastructure commitments.

Nuclear: positive long-term positioning, negative short-term flows despite positive performance.

Broad infrastructure: still a YTD winner, but capital is narrowing toward electrical infrastructure rather than generic construction exposure.

Precious metals: deeply negative YTD flows are reversing sharply.

Biotechnology: modest YTD positioning is suddenly attracting meaningful weekly capital.

These are precisely the kinds of divergences that matter most for thematic investors. YTD flows show where conviction has been. Weekly flows show where conviction is changing.

The Bottom Line

The August 13 flow data does not signal the end of 2026’s dominant investment themes.  It signals their maturation.  Investors spent the first part of the year aggressively accumulating semiconductors, AI, software, infrastructure, nuclear power and other beneficiaries of the AI capital-spending cycle. Those positions are now large enough—and in many cases profitable enough—that strong fundamentals alone are no longer sufficient to generate additional buying.  The short-term market is demanding another layer of proof.  Semiconductor investors want evidence that extraordinary capital spending produces adequate returns. Software investors increasingly distinguish between AI beneficiaries and potential AI disruption. Nuclear investors want operating economics rather than distant power-demand narratives. Infrastructure investors increasingly prefer transformers and grid capacity to generic construction.  At the same time, investors are adding to themes where current events make the economic demand unusually difficult to avoid: defense replenishment, energy infrastructure, cybersecurity and electrical capacity.  And the sudden return of money to precious metals and biotechnology shows that macro conditions are beginning to broaden the opportunity set beyond the year’s established leaders.

The YTD flow map still says AI and infrastructure. The one-month map says selectivity. The one-week map says rotation.

For thematic investors, that distinction is the key message.  The better opportunity may no longer be found by identifying the biggest secular trend. It may be found by identifying which part of that trend investors have not already crowded into—and where the newest flows are beginning to confirm the fundamentals.

Sources

• FactSet Research Systems Inc. — August 13, 2026 thematic ETF return and fund-flow database; source for the article’s 1-week, 1-month and YTD ETF positioning comparisons.
• Reuters — Aug. 13: Global markets coverage showing AI-infrastructure earnings continuing to support technology stocks even as investors reassess crowded positioning and Fed expectations.
• Reuters — Aug. 13: Taiwan’s disclosure of an AI-assisted cyberattack on government agencies, supporting the argument that cybersecurity is becoming an increasingly direct second-order beneficiary of AI adoption.
• Reuters — Aug. 11: EIA forecasts U.S. electricity consumption reaching new records in 2026 and 2027 as AI data centers and electrification increase power demand, supporting the grid-infrastructure thesis.
• Reuters — Aug. 13: Heron Power’s planned $100 million transformer factory and reports of multi-year equipment lead times illustrate the physical grid bottlenecks accompanying data-center expansion.
• Reuters — Aug. 13: Oil-market coverage of the unresolved Hormuz disruption, a 17.4-million-barrel increase in U.S. crude inventories and softer global demand forecasts, supporting the distinction between energy infrastructure and high-beta oil exposure.
• Reuters — Aug. 7: Rheinmetall commentary on the difficulty of rebuilding depleted U.S. precision-missile inventories supports the persistent aerospace-and-defense investment theme.
• Reuters — Aug. 6: Constellation Energy raised its earnings outlook on strong electricity demand and disclosed additional long-term power contracts, providing fundamental support for continued nuclear and power-sector interest.
• Reuters — Aug. 12: July CPI rose 0.1% month over month while core CPI increased 0.2% and 2.5% year over year, reducing expectations for an immediate Fed hike and helping explain renewed interest in rate-sensitive themes.
• Reuters — Aug. 13: Continued U.S.–Iran tension and Hormuz shipping disruption provide the geopolitical backdrop for defense, precious-metals and energy-security positioning

Disclaimer:  This material is provided for informational and educational purposes only and does not constitute investment advice, an offer, solicitation or recommendation to buy or sell any security, exchange-traded fund or other investment product.

ETF returns and fund flows are historical observations and may change rapidly. Fund flows indicate investor activity but should not be interpreted independently as evidence of fundamental value, future performance or an appropriate investment strategy. Thematic ETFs may involve greater concentration, volatility, valuation, liquidity, geopolitical, commodity, regulatory and technology-related risks than broadly diversified investments.

Past performance does not guarantee future results. Investors should review each fund’s prospectus and consider their investment objectives, risk tolerance, time horizon, tax circumstances and existing portfolio exposures before making an investment decision.