Are We in an AI Bubble?

I don’t know if you’ve noticed, but AI chatter seems to be dominating a lot of conversations. I'm hearing it come up regularly in investment circles, podcasts and, most recently, client emails.

But what does all this AI innovation mean for markets, and for Your WealthMap® Plan — is Artificial Intelligence creating the next market bubble?

Haven’t we been here before?

When I started my career in the early 2000s, there was extraordinary enthusiasm for the internet.

Many companies promised revolutions but delivered little more than a website and hope. Subsequently, the dot-com collapse wiped out trillions in market value.

So how is AI different?

The dot-com boom was built largely on potential.

In contrast, AI is driving measurable productivity gains today.

Goldman Sachs estimates AI could raise global GDP by 7% and lift productivity by 1.5 percentage points annually over the next decade.

The current market winners aren’t speculative, loss-making startups, they are: highly profitable, deeply capitalised and monetising AI.

Think of companies like Apple, Microsoft, Nvidia, Alphabet — real revenues, real earnings, real adoption.

Where the dot-com bubble had a future earnings story, AI has: proven economic utility, broad applications across every sector, and real cashflows and rising margins.

There are excesses — as there always are in periods of innovation — but the foundation is much more solid.

Markets correct, then they continue their long-term upward march.

Historically, investors who remained globally diversified and disciplined are able to capture the next wave of growth — without ever needing to predict winners.

What AI Means for Valuations

Excitement for AI is running high, which is evident in stock prices.

Companies that are closely tied to AI — think your big tech giants — are now priced as if everything from here on will go perfectly.

That doesn’t mean a crash is imminent — but it does suggest a few things:

• More ups and downs are likely, when prices are high even small disappointments can cause big swings
• Think about concentration risk where a handful of the big tech names have driven much of the growth, if those stocks stumble the wider market will feel it
• Returns may start to differ across markets and sectors and not every industry will benefit from AI In the same way

Understanding AI

It’s helpful to understand that, in the AI world, there are two important distinctions between the “Builders” and the “Users”.

The Builders are basically the companies making the hardware and infrastructure for AI.

Think enormous data centres, semiconductors and cloud systems.

These companies are currently in the spotlight, and their stock prices are experiencing massive growth.

Then you have the Users, the companies in all the industries that are using AI to become faster, cheaper and more efficient.

Think of construction firms using AI to cut project times and manufacturers improving automation.

So while The Builders are already priced for perfection, the real long-term opportunity might actually sit with The Users, who are the ones using AI to quietly boost their productivity.

What This Means for Your Portfolio?

In our Navigate® portfolios, less than 2% of your equity exposure is tied specifically to semiconductor manufacturers (the AI “Builders”).

This means that you are not over-exposed to inflated hardware valuations, but you are strategically positioned to benefit from the diffusion of AI across the entire economy.

That is diversification doing its job.

What Should Investors Do?

1. Bank the gains when markets over-deliver

Rebalancing isn’t about pessimism — it’s about discipline. When markets surge, locking in some gains helps keep your portfolio aligned with your long-term plan.

2. Own assets that behave differently

Bonds, infrastructure, value companies and international markets all behave differently from tech stocks. When one area gets overheated, you’ve got your bases covered elsewhere.

3. Focus on your WealthMap®

Your plan isn’t anchored to headlines but to history. We don’t just model a routine 15% decline, as we saw in February this year — we stress-test your WealthMap® against events like the 2008 crisis or the dot-com collapse.

If your portfolio can survive everything that has already happened, then AI exuberance,  justified or not, is unlikely to derail your future.

Where Does That Leave Us?

AI may very well reshape the century ahead, just as the internet reshaped the one behind.

But long-term success doesn’t depend on guessing which AI stock will be the next big winner. It depends on structure, balance and discipline.

Innovation lifts global progress, but your wealth isn’t determined by hype cycles, it’s determined by how well your portfolio supports the life you want to live.

Keep moving forward.
Keep banking progress.
Stick to the strategy that already works.

If you’d like to review how your plan is positioned to capture opportunity and withstand whatever comes next, we’d be delighted to walk through your WealthMap® with you.