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  • Navigating AI Megatrend PART 2: AI Effects on Investment Strategies

Navigating AI Megatrend PART 2: AI Effects on Investment Strategies

Written By Millen Livis

History shows that when a revolutionary technology improves our lives, or makes things cheaper, or more efficient – then the adoption of that technology spreads across different industries no matter what.

And the companies that are going to embrace the AI Megatrend fast will not just survive but thrive.

In PART 1 article of the AI Megatrend series, I talked about the economic impacts of the AI on our lives and jobs.

In this article I’ll talk about investment opportunities that the AI Megatrend presents to you!

When it comes to investing, the TREND is YOUR FRIEND!

I tend to always be aware of the big-picture trends that drive huge, multiyear moves in our lives, economy and financial markets.

Because these megatrends can lead to triple- and even quadruple-digit gains in your investments in a span of a few years.

And while AI has limitless potential to enhance almost every aspect of daily life, it also possesses limitless potential to enrich informed investors. 

Here’s the thing…

According to Bank of America, AI “could revolutionize everything.”

That’s why the AI Megatrend is dominating financial headlines right now – from the most promising AI stocks to the ones to avoid.

It’s a CRAZY amount of information, and it’s extremely tough to navigate!

Virtually every industry is looking to take advantage of AI.

According to one survey, 3 out of every 4 businesses plan to increase or make a significant AI investment now and in a future.

Industries such as automotive, health care, banking and finance, manufacturing, food and beverages, logistics, and retail  – are all using or looking to integrate AI into their processes.

Warren Buffett recently shared his thoughts on AI.

“It can do all kinds of things… and when something can do all kinds of things, I get a little bit worried,” Buffett said.

Because we won’t be able to un-invent it.”

In that same conference, he compared the dangers of AI to an atomic bomb.

Buffett is known for “buy and hold” investing.

He said that his favorite holding period for investments is “forever.”

But “buy and hold” soon won’t be feasible, because the AI disrupts even the most established and well-financed companies out there!

It’s very likely that some favorite blue-chip companies, which you may think of as untouchable in terms of their performance, will be shattered by the AI.

The reason I bring this to your attention is because your 401K and other retirement accounts may have “long-term” investments in some long-term “blue-chip” companies but they are NOT immune to this wave of the AI disruption.

So, consider diversifying your portfolio with the AI-focused stocks and ETFs (exchange-traded funds), because they offer exciting prospects for growth.

Stocks of AI-driven companies like Google, Microsoft, Amazon, and NVIDIA are soaring in spite of overall market downturn right now, and they show no signs of slowing down….

However, it’s crucial to keep an eye on traditional industries too.

The fact is… the companies that embrace AI megatrend will thrive, while those that are slow to adapt AI may face difficulties.

With this being said, it’s important to remember that not all AI companies will succeed!  Do you remember the hype we experienced with blockchain trend?

Some startups would add word “blockchain” in their names and had their moment of fame… only to devastate unexperienced investors at the end.

That’s why being strategic and well-informed is key to successful investing!

Investing in traditional market sectors (like shipping, energy, healthcare, etc.) alongside AI-driven sectors of economy can balance a risk-reward ratio in your investment portfolio.

Strategic investors must look for ways to ride the market trend wave while managing the risk that comes with any investing.

Market Sectors Benefiting From the AI Interest

Every time a new technology Megatrend emerges, it creates separate “profit ripple effects” in 3 groups of companies:

1.   Suppliers.

2.   Device-makers / hardware makers.

3.   Software developers. 

The AI Megatrend is going to create similar “profit ripple effects.”

We’re already seeing the first profit wave emerged – the semiconductors.

AI chip-supplier stocks are soaring right now.  

This boom will last for a year or two.

Then, it’ll be the AI hardware makers who experience a profit surge.

After that, the AI software developers will start to soar.  

To take advantage of these “profit waves” you can use dedicated ETFs.

For example, iShares Semiconductor ETF (SOXX) tracks semiconductor stocks, and is up over 32% this year.

(btw, last it declined by almost 35%!)

The semiconductor market sector continues to benefit immensely from the big AI push this year because of the demand for the amount of data processing and storage by AI applications.

iShares also offers an Artificial Intelligence ETF (symbol: IRBO).

This fund invests in semiconductor sticks like Nvidia, AMD, Intel, AND in technology behemoths like Google and Microsoft, as well as dozens of other artificial intelligence companies.

While Nvidia is the leader in GPUs (graphic processing Units used for deep learning computations), it is also one of the most overvalued companies in this ETF.

Other companies in the IRBO fund serve different markets and offer a better valuation.

Using the AI ETFs helps balancing out the market risk and market volatility – something that is very important if you don’t want to be babysitting individual companies in your investment portfolio.

Bottom Line

Chances are, you’ve seen the media crediting AI for this year’s strong market rally. No other technology megatrend in our lifetime has moved the needle for stocks as fast as AI has done. But as striking as this simple fact is… the AI Megatrend is just getting started.

If you do not yet have AI-related positions in your portfolio, you may want to consider taking a “dollar cost averaging” approach to invest in AI MEGATREND (meaning investing a fixed dollar amount on a regular basis, regardless of the share price)….

Because the potential for AI now and in the coming years is massive for you as an investor.

To your Health, Wealth and Freedom!

Millen Livis

P.S. What is your opinion about AI and investing?

About the Author

Millen is a Wealth architect and Financial Independence Coach, entrepreneur, and a bestselling author. Being a Possibilities' Catalyst, she uses her intuition, business, and investment expertise to support entrepreneurial women (like you) who want to master their money, live their purpose achieve financial prosperity and freedom. With her physics and business education, corporate and entrepreneurial experience, money management know-how, mindfulness practices and transformational coaching skills, Millen has a unique ability to guide and support clients in achieving extraordinary success in their lives.

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