Barclays' team, led by George Featherstone, wrote that "peak cycle economics could soon be normalized," warning that a combination of weaker pricing and lower volumes would be "the worst of all scenarios." The group also noted the AI trade slipped again on Tuesday, a continuation of the recent pullback as investors debate the durability of the spending surge.
The bank says top-tier AI players and large cloud operators are starting to push harder on their suppliers. They attribute that approach to closer vetting of investment returns alongside a recent uptick in borrowing costs.
As an example, the analysts pointed to Nscale Ltd.'s negotiations with Anthropic for computing capacity that could amount to about $45 billion. They added that, measured per gigawatt per year, the price comes in well below recent benchmarks such as CoreWeave's short-term agreements disclosed in September, while stressing the contracts aren't directly comparable.
That shift has landed on stocks that had been buoyed by data center demand. Siemens Energy AG is down 31% from its April high, putting the stock near its January lows. Since an August peak, Schneider Electric SE has declined 22%, and ABB Ltd. has fallen by a comparable amount from June. A Bloomberg chart titled "Gains in Electrification Stocks Wane as AI Trades Cool Off" tracks performance since Dec. 31, 2025.
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Barclays also flagged growing competition as new players chase what it called "excessively good returns." The bank sees notable capacity additions coming in power and medium voltage electrical equipment, the two areas where lead times have been spiking.
Combine worries that growth at Anthropic PBC is decelerating with concerns over credit risk among neocloud players such as CoreWeave Inc., and the mood has turned cautious. In plain English: a supply chain that enjoyed "supernormal returns" is now being pressed on both price and output, with capacity still ramping.
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