Sector Rotation to Energy and Materials in 2026: Operating Leverage and Infrastructure Investment

Tomasz Tunguz analyzes a market rotation away from technology toward energy and materials sectors in early 2026, driven by operating leverage dynamics and infrastructure spending. Energy's 3x operating leverage converts modest 5% revenue growth into 16% earnings growth while trading at a cheaper 21x P/E with 3% dividend cushion, contrasting with tech's vulnerable 32x multiple. The rotation reflects confidence in $600 billion hyperscaler infrastructure spending despite risks including transformer supply chain delays and potential capex cuts if AI monetization disappoints.