AI, energy transition and Islamic equity markets: wavelet-quantile evidence from matched conventional benchmarks

Purpose This study aims to examine the state- and horizon-dependent relationships of artificial intelligence (AI) and robotics equities with Islamic equity, renewable-energy and fossil-energy markets. It also evaluates whether AI linkages are stronger for Shariah-compliant indices than for region-matched conventional parent benchmarks. Design/methodology/approach Daily returns from July 2018 to August 2025 are analysed using Wavelet Quantile Correlation based on maximal-overlap discrete wavelet decomposition and nonparametric causality-in-quantiles tests for conditional mean and variance. The empirical design incorporates bootstrap confidence intervals, serial-dependence-preserving null inference, false-discovery-rate correction, an alternative wavelet filter, subsample analyses, structural-break tests, latent common-factor residualisation, matched conventional benchmarks, bandwidth sensitivity and out-of-sample portfolio evaluation. Findings AI assets display broad positive dependence with all three market groups, although average linkages are stronger for the US and European Islamic indices and selected renewable-energy benchmarks than for most fossil-energy indices. Predictability is moment-specific and heterogeneous. The main dependence patterns are stable across wavelet filters but vary across structural regimes and weaken substantially after removal of a common market component. Matched-parent tests identify no excess AI linkage that remains significant after false-discovery-rate correction. Portfolio gains are modest and arise mainly from small renewable-energy allocations. Originality/value The study shifts the research question from whether Islamic equities are connected to AI toward whether that connection is specifically attributable to Shariah screening. Formal WQC inference, moment-specific predictability, matched conventional parent indices, structural heterogeneity and portfolio evidence show that Islamic equities participate fully in technology-driven market dynamics, but the evidence is more consistent with shared regional equity exposure and possible sector-composition effects than with a general Shariah-specific channel.