The AI Economy (Part 5) - What AI Means for Long-Term Investors

Over the first four parts of this series, we have looked at what artificial intelligence is, why investors are paying attention, what history can teach us about periods of technological excitement, and how AI could affect infrastructure, businesses, jobs, and the broader economy. While we have briefly mentioned the markets previously, this article will dive deeper and talk about what this all means for investors.

AI may prove to be one of the most impactful technological developments of our generation, but like many major changes, there will be companies that succeed and those that fail. For long-term investors, the goal is not necessarily to predict the future. It is to build a portfolio that can participate in economic growth while remaining resilient when expectations change.

Current Impacts on the Markets

Even before massive AI firms like Anthropic and Open AI have had their IPOs, investors and companies have already placed great value on the potential of AI.

Goldman Sachs Research estimates that AI-related companies have added roughly $27 trillion in market value since late 2022. The firm notes that the current market value can be supported by future profit growth, but doing so requires relatively optimistic assumptions about how much of the economic gains from AI will ultimately be captured by those companies. Meanwhile, large companies are spending hundreds of billions of dollars the infrastructure surrounding the technology.

The question we keep coming back to is "How much future success is already reflected in today's stock prices?". If that number is high, even a successful company may be a poor investment.

The Benefits May Spread Much Further Than AI Companies

As discussed earlier, the economic impact of AI will not be limited to technology companies, so it will likely play a factor in the performance of companies outside of the technology sector as well. Hypothetically, AI can reduce costs, improve productivity, develop new products, or allow companies to serve customers more effectively.

McKinsey's 2026 Global Tech Agenda found that AI had become the top technology investment priority among companies surveyed, with half identifying AI as a priority investment area for the next two years.

For investors, this may be something to monitor. If AI allows workers to accomplish more in less time, companies can potentially produce more goods and services without requiring a proportional increase in resources leading to economic growth and profits.

The International Monetary Fund reported that AI-related investment accounted for a significant share of recent U.S. growth, with investment in information-processing equipment and software increasing 16.5% year-over-year in the third quarter of 2025. The IMF also noted that the benefits of AI remain concentrated in a relatively narrow group of sectors and regions.

AI can increase productivity without immediately benefiting every company or every worker. Perhaps more than the AI companies themselves, the biggest beneficiaries of AI may be the companies that figure out how to use it better than their competitors. Determining exactly which companies have effectively implemented AI into their systems and which are just paying lip service will be tricky. The technology may also take years to permeate the economy, just as previous general-purpose technologies such as electricity and the internet required significant complementary investment and time before their full economic effects were realized.

The Risks

There is still a lot of unknowns around AI. AI could develop faster than expected or it could develop slowly. Restrictions could be put in place due to recent concerns behind the ethics and safety behind the technology. Businesses may find ways to use it that we cannot currently anticipate. Some applications likely will be valuable while others may fail to hit the mark. We've discussed the inherent risks involving competition, infrastructure, energy costs, and employment before getting into public sentiment and what that could mean for the trajectory of AI. The AI industry itself is also highly concentrated. When a small number of companies account for a large portion of market performance, investors may have more exposure to those companies than they realize.

The OECD reported in 2026 that the three largest cloud providers accounted for approximately 74% of the global cloud market in 2023, while NVIDIA accounted for roughly 90% of the GPU market. The OECD noted that high fixed costs, economies of scale, and first-mover advantages can contribute to continued concentration in parts of the AI value chain.

What Should Long-Term Investors Do?

Investors should focus on the things they can control and take a balanced approach to their investment strategy.

Diversification - To reduce guesswork as to which companies, industries, or technologies will be the best investment, a diversified portfolio is often the best option. It allows you to participate without over exposure.

Valuation - Even an solid company can become a poor investment if its stock price already includes future growth. The question is not simply whether a company will benefit from AI, but whether the future benefits are greater than what investors have already priced into the stock.

Time horizon - Technological change rarely happens in a straight line. There will likely be periods of adoption and set-back. Long-term investors are better positioned to look beyond the headlines and emotions.

Flexibility - The companies that benefit most from AI five or ten years from now may not be the companies receiving the most attention today. A strong investment strategy should include rebalancing to adapt as the technology and economy evolve.

Key Takeaways

AI could become one of the most important technological developments of our generation, but like many transformative technologies, there will be companies that successfully navigate the changing environment and those that don't. The challenge for investors is figuring out how to participate in that growth without relying on a handful of companies or making big bets on an uncertain future. Diversification, reasonable valuations, and a long-term perspective remain important, especially when excitement around a new technology is running high.

We don't yet know which companies will ultimately benefit most from AI, how quickly its economic impact will unfold, or what new challenges and opportunities will emerge along the way. What we do know is that technology will continue to change, businesses will adapt, and some companies will handle those changes better than others.

Investors don't need to predict exactly how the AI story will unfold; they need a strategy that can adapt as it does. Our financial advisors can help you navigate these changes, evaluate your investment strategy, and keep your long-term financial goals at the center of your decisions.