Artificial intelligence (AI) is now a major topic in investing. Whether in earnings calls or financial news, market conversations increasingly return to this subject. Much of that attention has focused on the technology itself for good reason. The capabilities of modern AI systems continue to improve at a remarkable pace.
At its core, artificial intelligence uses computing power and data to perform tasks that traditionally required significant human input. Whether generating content, analyzing information, writing software, or accelerating scientific research, the goal is to improve productivity and decision-making. As these tools improve and adoption expands, the demand for computing power is growing dramatically.
The Scale of Investment Behind AI
Many people may not realize how much investment is needed to meet AI’s growing demand for computing power. The biggest tech companies are spending hundreds of billions of dollars on data centers, chips, networking gear, and other infrastructure.
The effects of this spending extend well beyond the technology sector. Building a data center requires land, steel, concrete, cooling systems, and backup power, creating demand across multiple industries. Engineering, construction, and finance firms all play a role in supporting this expansion. Utilities are also receiving requests for power loads that would have seemed unlikely just a few years ago, driving demand for transformers, switchgear, and other electrical equipment. Perhaps the most significant impact of this buildout is the growing demand for energy.
Rising Demand for Energy & Infrastructure
Over the past 20 years, power demand in the U.S. has grown slowly. Now, data centers are driving a lot of the new growth, causing utilities and regulators to rethink how much power they’ll need in the future. Predictions differ, but it is clear that building the next wave of computing will require big investments in the electric grid.
Artificial Intelligence stands out from past innovations because it needs much more investment. Unlike earlier software advances that needed little physical spending, AI is pushing companies to spend as if they were building big factories. In many ways, AI is as much a capital spending story as it is a technology story.
Where Long-Term Value May Emerge
Today, most investment focuses on building the infrastructure that supports AI, but the larger long-term opportunity may lie with the businesses that use these tools to create value. The internet offers a useful example. The most successful companies of the last 25 years were not the ones who built the internet, but those who used it to improve operations, reach more customers, and create new ways of doing business. Artificial intelligence may follow the same pattern. Companies that use AI in their operations can become more productive, cut costs, accelerate research, and gain competitive advantages regardless of industry.
When evaluating AI, a key consideration is separating long-term potential from short-term expectations. Technology is advancing rapidly, but adoption across the broader economy will likely take time. Businesses must invest in systems, training, workflows, and processes before they can fully realize the benefits. Beyond adoption challenges, expanding AI’s supporting infrastructure will require significant investment, permitting, and regulatory approvals. In some cases, constraints around power generation, transmission, and data center development could slow the pace of deployment. As with many technological shifts, the ultimate impact may be significant even if the path forward is uneven.
Technological change rarely occurs without disruption. Just as AI creates opportunities, it is also likely to challenge certain business models and reshape parts of the workforce. History shows new technologies often eliminate some jobs while creating new ones that were previously hard to imagine. Artificial intelligence may be no different. Some roles will evolve, some may disappear, and new opportunities will emerge as businesses adapt to new capabilities. These shifts could create important opportunities and risks for investors.
The Challenge of Identifying Winners
The challenge for investors is that eventual winners are rarely obvious at the outset. Periods of significant innovation often attract large amounts of capital, elevated expectations, and intense competition. Some companies will generate attractive returns, while others will struggle to justify the resources they commit. Market leadership will change, and investor enthusiasm will sometimes get ahead of business fundamentals.
That uncertainty reinforces an important investment principle. The goal is not to predict every winner and loser. The goal is to identify durable businesses with strong competitive positions, sound balance sheets, and the ability to adapt as the economy evolves.
Artificial intelligence is already reshaping how companies allocate capital across the economy. Today, companies are investing heavily in the infrastructure that supports the technology, but over time, attention is likely to shift toward the businesses that create the greatest value from it. Building AI may require substantial investment, but the ultimate opportunity may lie with the businesses that put it to work most effectively.
This article was featured in the Summer 2026 edition of the Rising Dividend Report.
Read more articles from this issue here.
This has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of publication and are subject to change without notice. Past performance is not indicative of future results.