When investors think about artificial intelligence, the same names tend to dominate the conversation.
Chipmakers. Data centers. Software companies. The businesses building the infrastructure required to power AI.
But we believe the next phase of the AI investment cycle could look very different.
Instead of focusing exclusively on the companies creating AI, we may increasingly see opportunities in the companies using it.
Biotechnology provides a fascinating example.
One of the Year’s Biggest Winners Isn’t an AI Stock
One of the market’s strongest performers this year has been Moderna.
The company’s dramatic move followed promising results involving its mRNA technology and cancer treatment. While the technology remains relatively early in its development, the potential applications could extend beyond a single type of cancer.
What makes the story particularly interesting from an investment perspective is how artificial intelligence is accelerating research.
AI can help researchers analyze enormous amounts of information, evaluate results, identify patterns, and potentially compress processes that once required months of work.
That doesn’t make Moderna an AI company.
It makes Moderna an example of a company that may become substantially more productive because of AI.
From Building AI to Using AI
We’ve already experienced the first major stages of the AI investment cycle.
Companies developed increasingly capable models. Semiconductor companies supplied the computing power. Data centers expanded to accommodate the enormous demand.
Now we’re beginning to see what happens when businesses actually put those tools to work.
Biotechnology may be one of the most compelling examples, but it isn’t alone.
Healthcare, finance, manufacturing, logistics, marketing, and countless other industries have opportunities to use AI to become faster and more efficient.
We’ve seen another example in Eli Lilly, where innovation has helped propel the company into the ranks of the world’s largest businesses.
The next major AI winners may not necessarily have “AI” anywhere in their description.
Don’t Underestimate Productivity
There’s also plenty of concern about what AI means for employment.
Will it eliminate jobs? Will entire professions disappear?
Technology has been changing jobs for centuries.
We think the more important question is whether people and businesses learn to use the new tools available to them.
AI can allow one employee to accomplish more, research faster, communicate more efficiently, and make better use of information.
That productivity can create enormous economic value.
The jobs of ten or fifteen years from now may look different from the jobs of today. Some may not even exist yet.
That’s not necessarily a reason to fear technological progress. It’s a reason to adapt to it.
The Market Is Still Near Its Highs
Meanwhile, the broader stock market continues to show resilience.
The S&P 500 remains close to its all-time highs after spending much of the past several months consolidating. September passed without the major decline some investors feared, and we’re now entering a period with several potential market catalysts, including inflation data, Federal Reserve commentary, and another earnings season.
We’re optimistic heading toward the end of the year.
That doesn’t mean there won’t be volatility. It means we’d rather remain invested according to the investor’s long-term plan than move in and out of the market trying to anticipate every headline.
Investment Management Is Also Tax Management
As the year winds down, we’re spending more time talking with clients about something that can be just as important as investment selection: taxes.
A portfolio shouldn’t exist independently from a tax strategy.
Depending on the investor, that could mean evaluating Roth conversions, harvesting investment losses, managing income to avoid unnecessary tax consequences, or developing strategies around highly concentrated stock positions.
The right answer depends entirely on the individual.
But these decisions need to be considered before the year ends. Once January arrives, many opportunities for the previous tax year disappear.
You Don’t Know What You Don’t Know
One of the most common things we see when reviewing a new portfolio is a collection of investments without an overarching strategy.
There may be retirement accounts that aren’t being fully utilized, taxable investments carrying losses that could potentially be harvested, or concentrated stock positions that expose the investor to unnecessary risk.
Individually, none of those accounts may look particularly unusual.
The problem becomes clearer when you look at everything together.
Financial planning isn’t simply choosing investments. It’s coordinating investments, taxes, income needs, risk, and long-term goals into one strategy.
The Bigger Picture
Artificial intelligence isn’t simply an investment theme anymore.
It’s becoming a tool used throughout the economy.
The first major winners were companies building the technology and infrastructure. The next group may include businesses that figure out how to use AI better than their competitors.
That’s why we don’t want to think about AI exposure too narrowly.
A biotechnology company developing new treatments, a manufacturer improving its processes, or a financial company increasing productivity could all benefit from the same technological transformation.
We want to remain diversified enough to participate as those opportunities spread throughout the economy while continuing to manage risk, taxes, and the investor’s long-term financial plan.
The technology will continue changing.
Our job is to keep looking for where that change creates opportunity.
At WealthGuard Advisors, we focus on disciplined portfolio management, risk control, and long-term positioning tailored to your specific goals. If you want a second opinion or a more structured approach to navigating markets like this, we are here to help.
This content is based on a recorded discussion by WealthGuard Advisors and has been edited and formatted with the assistance of artificial intelligence. It is provided for informational purposes only and should not be considered investment advice or a recommendation to buy or sell any securities.
