Artificial intelligence (AI) is poised to revolutionize investments, primarily because it is driving significant disruption across the technology industry and beyond, according to experts. “Historically, technological cycles have emerged approximately every 15 years, each leading to profound economic and industrial shifts. From mainframes in the 1960s to personal computers and smartphones, each cycle has seen a surge in demand for key technologies like semiconductors, which often triple or quadruple in demand during these periods. AI is now triggering the next major cycle,” said Wesley Lebeau, deputy head of global thematic equities at Amundi Investment Institute, in an interview with Khaleej Times. AI’s impact is not limited to the technology sector; it is expected to positively influence long-term productivity and GDP growth. However, not all companies will benefit equally, as Amundi analysts note. “In this new AI-driven cycle, there will be clear winners and losers. Early adopters of AI, those with proprietary data advantages, and existing competitive edges are likely to outperform. Companies that fail to innovate or merely adopt AI without a distinct advantage may see their competitive edge eroded,” Lebeau added.
In the coming months, market performance will hinge on economic activities and job data, with monetary policy direction being data-dependent. A key trend expected to gain traction in a soft-landing scenario is the capital expenditure cycle linked to power infrastructure and grid upgrades. “As industries and governments strive to meet rising energy demands, upgrading aging infrastructure has become a pressing priority. After nearly two decades of stagnation, electricity demand is booming, marking a significant turning point in global energy management, fueled by the exponential growth of energy-intensive facilities like data centers,” said Vafa Ahmadi, head of global thematic equities at Amundi. Investing in disruptive sectors can be highly rewarding, offering the potential for exponential growth as industries are reshaped by groundbreaking innovations. However, with great opportunity comes heightened risk. “To navigate these rapidly evolving markets, investors must consider several critical factors beyond buzzwords, including understanding the underlying technology, the competitive landscape, assessing market potential, scalability, and speed of adoption. Diversifying across multiple disruptive themes is advisable to reduce the risk of underperformance and capture opportunities across a broader range of innovations,” Ahmadi advised.
A significant area of investment is the circular economy. Investing in the circular economy involves supporting businesses and initiatives aimed at reducing waste, promoting resource efficiency, and fostering a more sustainable and regenerative economy. “One of the primary goals of the circular economy is to keep products and materials in circulation for as long as possible. This can be achieved through practices like recycling, which recovers valuable materials from end-of-life products. Waste treatment is also crucial, aiming to minimize environmental impact by recycling or converting waste into energy,” Lebeau explained. Beyond recycling and waste treatment, other circular economy strategies like leasing and reuse are important. Leasing allows consumers to rent products instead of buying them, promoting reuse and waste reduction. “By opting for leasing, products can be used by multiple individuals successively, extending their use period. Redesigning products for reuse, involving repair, refurbishment, or alternative uses, is another key practice of the circular economy,” Lebeau noted. The circular economy also promotes the transition to clean or renewable energy sources, including investments in technologies like solar, wind, hydro, or geothermal energy. By reducing reliance on fossil fuels, greenhouse gas emissions can be lowered. Finally, the circular economy encourages responsible consumption and supports brands that adopt sustainable and ethical practices. “This includes purchasing durable, high-quality products designed to last, buying from sustainable and ethical sources, and supporting brands with a strong reputation for social and environmental responsibility. By choosing to support these brands, society can encourage other companies to adopt similar practices, especially in an environment increasingly influenced by social networks,” Ahmadi concluded.
