Remember the dot-com bubble? I do. I was just starting out in this business, watching people mortgage their houses to buy anything with “.com” in the name. Fast forward twenty-five years and here we are again—only this time the three magic letters are A-I. The excitement feels exactly the same, the valuations look eerily familiar, and the cocktail-party chatter is identical. That’s why a recent conversation with a seasoned wealth manager stopped me cold. His message was blunt: love AI all you want, but for heaven’s sake, don’t bet the farm on it.
It’s not that he’s bearish on artificial intelligence. Far from it. He actually believes we’re still in the early innings of something that will reshape the global economy. The difference is he refuses to let euphoria cloud judgment. And honestly? After the wild swings we’ve seen this year, his caution feels like a breath of fresh air.
The One Rule That Survives Every Market Mania
Diversification. There, I said it. The least sexy word in investing, yet somehow the one that keeps saving people from disaster. When everyone is racing toward the same trade, the smart money quietly makes sure they still own a bunch of things that aren’t part of the crowd.
Think about it this way: if AI truly changes everything, virtually every company will benefit eventually—some directly, many indirectly. The winners won’t all carry “AI” in their ticker symbol. Companies that master efficiency, cut costs, and redeploy capital intelligently will thrive regardless of whether they build the chips or just use them brilliantly.
“Nothing is a guarantee. Regulation could change tomorrow. An unknown competitor from halfway around the world could appear out of nowhere. I’ve seen it before—it will happen again.”
– Veteran wealth advisor with 30+ years managing client portfolios
What November Taught Us (Again)
November 2025 was brutal for anyone who owned only the usual AI suspects. At one point the tech-heavy indexes were down nearly 8% for the month while the broader market barely blinked. Then, almost like clockwork, a handful of high-profile names reported strong numbers and everything snapped back. Sound familiar? That’s concentration risk in action.
The rebound felt great if you were along for the ride, but it masked a bigger truth: when sentiment turns, the most crowded trades get punished first and hardest. We don’t know when the next turn is coming, but history says it always does.
Emerging Markets: The Most Overlooked AI Play
Here’s something most U.S.-centric investors completely miss: some of the biggest beneficiaries of cheaper, faster AI tools aren’t even headquartered in California. They’re in Seoul, Taipei, Bangalore, and São Paulo.
A weaker dollar in 2025 has only amplified the effect. While domestic large-caps are up a respectable 16% or so year-to-date, broad emerging-market indexes are closing in on 30%. That’s not a typo. Companies leveraging AI to leapfrog decades of infrastructure deficits are growing earnings at rates that make even the Magnificent Seven blush sometimes.
- South Korean memory-chip giants powering the training runs
- Indian IT services firms automating at lightning speed
- Taiwanese contract manufacturers scaling production with robotic precision
- Brazilian banks cutting costs dramatically with AI-driven credit scoring
These aren’t speculative startups. These are established, cash-rich businesses trading at single-digit price-to-earnings multiples in many cases. You get growth plus a margin of safety—my favorite combination.
Healthcare: Quietly Having Its Best Run in Years
While everyone argues about chip shortages and data-center power draws, the healthcare sector has been steadily climbing the leaderboard. Up 8% in a single month and 16% over the past quarter, it’s now the best-performing slice of the market.
Why? Because AI isn’t just about chatbots and image generators. In labs and hospitals it’s accelerating drug discovery, sharpening diagnostics, and streamlining clinical trials. The companies making this happen range from massive device makers to specialized software providers to the insurers figuring out how to pay for it all.
In my experience, sectors that lead during late-stage bull markets often have real fundamental tailwinds, not just momentum. Healthcare checks that box right now.
Utilities: The Stealth AI Trade Everyone Missed
Seriously—utilities? The same stocks your grandfather owned for the dividends? They’re up more than 19% this year and rank third among all sectors. I almost laughed when I first heard someone call them an AI play, then I looked at the power-demand forecasts.
Data centers supporting large language models consume absurd amounts of electricity. Building new ones takes years. In the meantime, someone has to supply the juice—and fast. Suddenly the “boring” utility sector finds itself at the center of the build-out.
“Power demand is growing exponentially, and that plays directly into utilities. They’ve been boring forever, but they’re not boring now.”
Many of these companies are also raising their dividends at the fastest pace in a decade. You get growth, income, and—crucially—a hedge against the possibility that the AI payoff takes longer than the hype suggests.
How Much AI Is Actually Enough?
Here’s a practical framework I’ve been using with clients lately. Think of your portfolio in three buckets:
- Core AI Exposure – 15-25% in the leaders and direct enablers (think semiconductors, cloud infrastructure, foundational models)
- AI Adopters – 30-40% in companies across industries that will become dramatically more profitable by using the technology (healthcare, financials, industrials, etc.)
- Non-Correlated Assets – the remaining 35-50% in areas that do well whether AI delivers tomorrow or five years from now (emerging markets, certain commodities, high-quality bonds, utilities)
Adjust the dials based on your age and risk tolerance, but resist the temptation to push bucket #1 much higher just because it’s working right now. Markets have a nasty habit of humbling the overconfident.
The Psychology Trap We All Face
Perhaps the most interesting aspect of this AI boom is how quickly it separated the pros from the tourists. The tourists see life-changing technology and conclude “everything else is dead money.” The pros see life-changing technology and ask, “How do I own the picks and the shovels and the land the gold is buried under?”
FOMO is a powerful drug. I’ve felt it myself watching certain names double in months. But every time I’ve given in completely, I’ve lived to regret it. The best returns I’ve ever delivered for clients came from staying disciplined when discipline felt painfully uncool.
Where We Go From Here
My base case hasn’t changed: artificial intelligence will be one of the most transformative forces of our lifetime. Corporate earnings will surprise to the upside as productivity gains compound. Stocks, broadly speaking, should continue to work.
But the path won’t be a straight line, and the winners won’t all be obvious today. The investors who look back a decade from now with the biggest smiles will be the ones who stayed in the game without staking everything on a single vision of the future—no matter how compelling that vision appears.
So yes—get excited about AI. Allocate meaningfully. Study the companies pushing the frontier. Just don’t forget the simple rule that has survived every previous revolution: never lose your diversification.
Because in the end, the only guarantee in markets is that today’s consensus will eventually be wrong about something important. The question is whether you’ll still be standing when it is.
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