How AI is Affecting Your Retirement Portfolio
While some investors are using Artificial Intelligence (AI) to crunch data, another interesting phenomenon exists in the financial markets. AI is having a significant effect on several investment sectors.
Utilities are a hot commodity due to AI
The utility sector of the stock market, typically attractive to investors seeking income and long-term safety, has seen a significant change with the advent of AI. AI’s increased demand for computing power has made utilities a hot commodity, as all those computers require electricity.
According to recent research from the Bespoke Investment Group, three of this year’s best-performing stocks are utilities. The most significant driver of this increase in electricity demand is the large supercomputers needed for AI computing power. Those supercomputers create heat, so the data centers must be cooled to protect the equipment, driving the demand for even more electricity.
Several utility stocks are outperforming the S&P 500. Talk to your investment counselor to see if you should adapt your retirement portfolio to maximize the utility stock growth.
AI chip market
AI is now the fastest-growing consumer application in history. The market for artificial intelligence grew beyond 184 billion U.S. dollars in 2024, a considerable jump of nearly 50 billion compared to 2023. This staggering growth is expected to continue, with the market racing past 826 billion U.S. dollars in 2030.
The sudden rise in AI chip stocks reflects the demand for artificial intelligence technologies across various industries. Companies developing AI chips, such as Nvidia, are at the forefront of innovation, driving efficiencies and capabilities in data processing, machine learning, and automation.
Investing in AI chip stocks can offer significant growth potential for a retirement portfolio. These firms are positioned to capitalize on the expanding AI market, which is projected to continue its rapid expansion in the coming years. Mutual funds focused on these large chip makers can provide exposure to a high-growth sector, potentially enhancing overall returns.
“Balancing this opportunity with prudent risk management is crucial,” says Michael Norton, Senior Vice President of Investments for David Lerner Associates. “The tech sector can be volatile. Investors should consider their risk tolerance and long-term investment goals when incorporating AI chip stocks into their retirement strategy, ensuring they complement existing holdings and contribute to a diversified and resilient portfolio.”
The growing demand for AI technology and its demand in other sectors like energy, utilities, and chipmakers could boost your retirement portfolio. The industries in which AI stocks affect most are chipmakers, software companies, cloud computing service providers, and technology giants. Consult your investment counselor for ways to boost your retirement portfolio with the AI boom.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.