Own Assets or Be Left Behind

Key Takeaways

• S&P 500 returned 18% in 2025, 25% in 2024, 26% in 2023.
• AI infrastructure spending by top tech firms exceeds $680 billion this year.
• Market fear drives prices low; staying investors capture outsized returns.
• AI sector may contain a bubble; B2B infrastructure likely to survive.
• Author recommends 90/10 split: 90% S&P 500, 10% select convictions.

Pulse Analysis

The relentless march of artificial‑intelligence spending is reshaping market dynamics. Even as geopolitical tensions and a post‑pandemic labor squeeze raise headlines, the world’s largest tech firms—Amazon, Alphabet, Meta and Microsoft—have collectively committed more than $680 billion to AI infrastructure this year. That scale of capital allocation signals a structural shift, not a speculative fad, and it underpins the surprisingly robust equity performance that has outpaced traditional macro concerns. Investors who understand that the market prices in known, long‑term cash flows rather than headline fear are better positioned to ride the wave.

Behavioral finance research repeatedly shows that periods of heightened fear create the most fertile ground for future gains. When investors collectively retreat, asset prices depress, setting the stage for a rebound that rewards the few who remain fully exposed. The S&P 500’s 18‑25% annual returns over the past three years illustrate this principle, as the index absorbed AI‑driven earnings growth while broader sentiment remained cautious. Missing these cycles—by waiting for a false sense of certainty—has historically cost investors more than any single market correction.

Practical portfolio construction now leans toward simplicity and breadth. Rather than attempting to pick the next AI unicorn, the author suggests a 90/10 split: 90% of capital in the diversified S&P 500 and 10% in a handful of high‑conviction stocks that already sit within the index. This approach captures the upside of AI‑enabled megacap firms while limiting exposure to speculative, cash‑burning startups. By letting the index self‑clean and focusing on proven infrastructure players, investors can align with the long‑term drivers of growth without the research overhead of picking individual winners.