AI, Investing and the Importance of Perspective

When most people think about AI investing, they think about companies such as Google, OpenAI, Anthropic, and others developing the technologies behind tools like Gemini, ChatGPT, and Claude. But AI represents a much larger investment ecosystem.

At the foundation are semiconductors, data centers, networking equipment, electricity, and other infrastructure required to build and operate AI systems. Above that are the companies developing AI applications and using the technology to improve productivity, reduce costs, and create new products and services.

The scale of investment in AI has been extraordinary, reflecting the widespread belief that the technology could have a meaningful and lasting impact on the economy. As with any major technological development, however, the path forward is unlikely to be perfectly linear.

A Long-Term Opportunity, With a Few Unknowns

Recent headlines have highlighted questions about the pace of AI development, including calls for additional safeguards and oversight as increasingly powerful systems are developed. At the same time, investors are considering whether the enormous amount of spending on AI infrastructure can continue at its current pace and ultimately produce sufficient economic returns.

Both are reasonable questions, but neither changes the broader potential of the technology.

AI is already being incorporated into businesses across the economy, helping companies improve efficiency, automate routine tasks, analyze information, and develop new products and services. Even if the pace of development or investment changes, the broader adoption of AI could continue for many years.

For investors, the more important question is therefore not whether AI will succeed or fail. It is how quickly the benefits will materialize, which companies will capture those benefits, and how much investors are willing to pay for that future growth.

What Does This Mean for Your Portfolio?

Our approach is to participate in the long-term opportunity without making the portfolio dependent on any single technology, company, or investment theme.

A diversified portfolio already provides exposure to many of the companies positioned to benefit from continued technological innovation. Additional growth-oriented investments can provide greater participation in areas such as AI when appropriate for an individual client's risk tolerance, time horizon, and financial plan.

At the same time, maintaining exposure to other sectors, investment styles, and asset classes provides balance if expectations around any particular technology change.

History shows that transformative technologies can take years to fully develop and that investor enthusiasm can sometimes move faster than the underlying economic benefits. That doesn't diminish the long-term potential of the technology; it simply reinforces the importance of maintaining perspective.

AI could prove to be one of the most important technological developments of our lifetime. We believe investors are best positioned to benefit by maintaining thoughtful exposure to that opportunity while allowing a diversified portfolio and a long-term financial plan to provide perspective and flexibility along the way.