The AI Boom Isn’t Over: The Next $10 Trillion Wave Is Beginning

So far this year—and probably over the past three years—your investment portfolio has done very well. You did what everyone else was doing and overweighted tech stocks.

In just the past five months, the NASDAQ is up over 13% and the semiconductor index has increased almost 80%. On an absolute dollar basis, your 401(k) and other investment accounts have probably never reached these levels before. While this investment performance no doubt thrills you, there would be something wrong if you weren't also a bit concerned that some of these stock prices may be ahead of themselves.

With this outperformance in mind, you've been reviewing your investment portfolio and wondering if you should leave things as they are or make some changes.

As an investment professional who started as a semiconductor analyst almost 30 years ago, I've been wondering the same thing. Let me share some of my thoughts.

The rationale behind the AI investment theme was rational—and still is. The amount of money invested in AI infrastructure has been huge. According to Gartner, worldwide AI spending is expected to surpass $2.5 trillion in 2026.

Not only have we seen this play out in recent earnings announcements from the hyperscalers—Alphabet, Amazon, Meta, and Microsoft—but these companies are also expected to significantly increase their capital expenditures in 2026. As Fortune recently reported, hyperscaler AI infrastructure spending could surpass $700 billion this year, up sharply from about $410 billion last year.

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Many sell-side analysts also expect this level of AI capital investment to continue through 2030. Another $8 trillion to $10 trillion could be spent before the end of the decade.

The fact that the AI infrastructure buildout not only has several years in front of it, but also potentially requires an additional $8 trillion to $12 trillion, means that we aren't in an "investment bubble"—yet—and the AI trade is far from over.

Industrial revolutions take years to run their course. Before the innovation of AI, our nation had three previous industrial revolutions, each spanning several decades. The first revolution occurred approximately between 1765 and the 1820s, when the introduction of the steam engine and mechanical production became the main economic drivers. The next revolution lasted from roughly 1825 to 1890. This 75-year period introduced railroads, electricity, the telegraph, and the internal combustion engine.

The third industrial revolution was driven by electronics, automation, computers, and telecommunications, beginning in the late 20th century and accelerating with the rise of the internet and the digital economy. Each industrial revolution began with entrepreneurs, their discoveries, and private investors. Each also resulted in new and dying industries, fundamental changes for workers and citizens, and massive wealth creation. As Roundhill Investments notes, prior industrial revolutions reshaped labor structures and generated extraordinary capital formation. Like the revolutions before it, we should expect the AI revolution to exhibit similar characteristics of lengthy duration, disruption, and multiple investment opportunities.

During any industrial revolution, investors should continually ask themselves how far along the current revolution is, where profits should be taken, and how new money should be allocated.

While AI capital expenditures have remained fairly constant, the stock winners have changed since the AI trade began in 2023—the point when generative AI models were publicly released.

Initially, the "Magnificent 7"—Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, and Nvidia—were the best-performing stocks for nearly three years. These names represented the majority of the S&P 500's returns during the three-year period ending in 2025. These seven stocks accounted for 63% of stock market gains in 2023, and approximately 55% and 46% of the S&P 500's returns in 2024 and 2025, respectively.

However, this dominance has not only narrowed, but changed over the last year.

Over the past 12 months, Amazon, Alphabet, and Nvidia have continued to perform well. These companies have either become successful, profitable hyperscalers or provide the semiconductors and storage materials necessary to build them. Microsoft and Meta shares have declined over this timeframe, while Tesla is up only 24%.

At the same time, companies that make memory semiconductors, data storage systems, or semiconductor fabrication equipment have become some of the market's best performers. Because these companies cannot keep up with demand, their profits—and stock performances—have been hyperbolic. For example, SanDisk has risen dramatically over the past year, while Western Digital, Micron, and Intel have also posted outsized gains.

While these companies have been the winners, many software-as-a-service companies have been crushed, including Salesforce, ServiceNow, and even Microsoft. The assumption has been that agentic AI will replace traditional software models.

As AI infrastructure becomes more mature and entrenched in business, investment markets will pivot toward industries that are beneficiaries or enhancers of AI. Currently, markets are rewarding stocks associated with space travel, robotics, and quantum computing. Healthcare and biotech stocks should also continue to see increased interest.

I still believe that investment in technology disruptors and innovators will generate greater gains than passive investing. This was the case in the late 1800s, as railroads and electricity spread across the United States. It was also the case at the end of the last century, when the Digital Age and the internet became integral parts of the economy. At a minimum, we likely have another five to 10 years of AI buildout and implementation ahead of us.

My advice would be to let your investments in long-term disruptors run, as these can build lasting wealth. But also be ready for short-term opportunities with low barriers to entry, and continue evaluating the next industries that may become beneficiaries of this industrial revolution.

Link: Michelle Connell and Portia Capital Management