Artificial intelligence is not a future technology. It is a present one, already embedded in financial services, healthcare, logistics, media, law, and dozens of other industries. For investors, the question is no longer whether AI will transform the economy — it is how to think about the investment implications of a transformation that is already underway.
This is not a simple question. The history of transformative technologies is littered with investors who identified the right technological shift but picked the wrong investment vehicle, bought at the wrong valuation, or failed to anticipate second-order effects. The railroad boom enriched some investors spectacularly and ruined many others. The internet transformed the economy but destroyed far more capital in the late 1990s than it created for investors in that period.
With that caution in mind, here is how we are thinking about AI as an investment theme.
The macroeconomic picture: productivity and its effects
The most significant long-term economic impact of AI is likely to be on productivity — output per worker. If AI tools allow knowledge workers to do more in less time, the potential for GDP growth to accelerate above its trend rate is real. Some economists are cautiously optimistic that we are entering a productivity boom comparable to those driven by electrification and the internet.
This productivity gain would be broadly deflationary over the long run. Producing the same output with fewer labour inputs means lower unit costs and, ultimately, lower prices. This has implications for monetary policy (less inflation pressure allowing lower rates), corporate margins (higher for firms that adopt AI early; compressed for those that do not), and labour markets (potentially significant displacement in routine knowledge work over the medium term).
However, it is worth noting that productivity gains from major technological shifts often take longer to materialise in the data than the technology's proponents expect. The internet was commercially deployed in the early 1990s; measurable productivity effects in the US economy appeared most clearly in the late 1990s and continued into the 2000s. AI's productivity effects may follow a similar lag.
Sector implications
Technology: the direct beneficiaries
The most obvious beneficiaries of AI are the companies developing and deploying the core technologies. Semiconductor manufacturers producing the specialised chips required for AI training and inference, cloud infrastructure providers hosting AI compute, and the large-scale model developers themselves have been the first-order winners.
However, first-order beneficiaries often attract the most attention — and the highest valuations. Investors buying into these names in 2026 are not buying into the early days of AI; they are buying into companies that the market has already substantially re-rated to reflect AI optimism. Whether current valuations are justified by future earnings depends on assumptions about growth rates, margin sustainability, and the pace of competitive displacement.
Energy: an unexpected beneficiary
AI data centres are extraordinarily energy-intensive. Training large AI models and running inference at scale requires substantial electricity, and the build-out of AI infrastructure is one of the drivers of increased electricity demand globally. Utilities, grid infrastructure companies, and nuclear energy operators — an unlikely group to be AI beneficiaries — have attracted significant investor interest for this reason. Renewable energy developers are also relevant here, as hyperscalers seek to power data centres with clean energy.
Healthcare: AI accelerating discovery
AI's ability to analyse vast datasets is already accelerating drug discovery, protein structure prediction, diagnostic imaging, and clinical trial design. The pharmaceutical and biotechnology sectors have genuine long-run potential here — but the investment case is complicated by the very long development timelines for drugs, regulatory approval uncertainty, and the fact that many AI-in-healthcare applications are still at early stages.
Finance: transformation from within
Wealth management, banking, insurance, and financial services more broadly are already being transformed by AI — in risk modelling, fraud detection, client servicing, compliance, and portfolio management. This creates both competitive dynamics (incumbents with large proprietary datasets may have an advantage; they may also be disrupted by leaner new entrants) and efficiency gains for the sector overall.
Concentration risk: the Magnificent Few problem
One of the most important investment observations of the past few years is the degree to which major equity indices — and in particular the S&P 500 — have become concentrated in a small number of large-cap technology companies. AI optimism has accelerated this concentration. A small handful of mega-cap technology names now account for a disproportionate share of the S&P 500's total market capitalisation.
This creates an index-level risk that many investors do not fully appreciate. A passive investor holding a "global equities" fund may believe they are diversified, but if that fund tracks a market-cap-weighted index dominated by US technology names, they are implicitly making a concentrated bet on those companies continuing to deliver extraordinary results.
If AI expectations are partially reset — through regulatory action, competitive disruption, earnings disappointment, or a change in investor sentiment — the downward move in indices dominated by these names could be severe. This is not a prediction; it is a risk that warrants awareness.
How to invest in AI responsibly
Broad diversification first. AI's economic benefits will ultimately be distributed across the economy — to companies that use AI to improve their operations, not just those selling AI products. A broadly diversified equity portfolio will participate in AI's economic benefits without requiring a concentrated bet on specific companies.
Thematic ETFs with caution. AI-focused ETFs have proliferated. They offer concentrated exposure to AI-related companies, which means amplified upside if the theme continues to perform — but also amplified downside if it does not. They typically carry higher fees than broad market funds. Investors should understand exactly what they own before committing meaningful capital to a thematic fund.
Individual stock selection. Picking individual AI winners requires significant time, expertise, and the ability to evaluate complex technology businesses. Most investors — including most professional investors — do not reliably beat diversified index approaches through individual stock selection.
Consider second-order effects. Some of the most interesting investment opportunities from AI may not be in the obvious technology names. Energy infrastructure, industrial companies adopting AI-driven automation, and healthcare businesses applying AI to reduce costs are examples of second-order beneficiaries that may be less crowded than the direct technology plays.
What Global Investments is watching
Our view is that AI is a genuine and durable productivity-enhancing technology with important long-run economic implications. We are cautious about the near-term valuations of the most prominent AI-adjacent investments, while remaining constructive on the long-run economic effects. We are watching energy demand growth, labour market data for early signs of productivity effects, regulatory developments — particularly in the EU and UK — and earnings results from major technology companies for signs of whether current optimism is being validated or is running ahead of fundamentals.
For our clients, the most important implication is that existing portfolios should be reviewed for unintentional AI concentration — particularly in broadly marketed "global" equity funds that are, in practice, heavily weighted towards US mega-cap technology.
This article is for general information purposes only and does not constitute personal investment advice. The value of investments can fall as well as rise. Past performance is not a reliable guide to future returns. Specific securities mentioned are illustrative only and are not a recommendation. Global Investments recommends seeking independent financial advice tailored to your individual circumstances — contact us to speak with our team.
This article is for general information only and does not constitute financial, legal or tax advice. Rules, prices and regulations change; verify current requirements with a qualified adviser before acting.