Watching and W(AI)ting

Did you see what we did there?  We cleverly inserted AI into waiting.  OK, maybe it wasn’t that clever, but it is pretty appropriate considering how AI dominates and permeates our culture and social media, yet relatively few people really understand what AI is, how it works, who is using it or why.  We are all kind of waiting to see what it will do next.  Despite the uncertainty, investments in AI have been massive, and have powered the stock market to record heights repeatedly this year.  The top 5 tech companies – Nvidia, Microsoft, Alphabet (Google), Apple and Amazon currently represent 30% of the S&P 500.  It is difficult to determine what the total AI exposure is in the S&P 500, because virtually every company in the index has some investment in AI. 

A recent article in the Wall Street Journal, by Steven Rosenbush, (10/14/25) titled “AI Economics Are Brutal.  Demand Is the Variable to Watch” focused on the usage of AI as determined by ‘tokens’.  Tokens are units of data processed by AI models during training and inference, enabling prediction, generation and reasoning.  100 tokens represent about 75 words.  According to the article, in May of 2025 Google estimated that they were processing 480 trillion tokens a month, 50 times more than a year ago.  Yes, that is trillions with a T.  By July of this year, that number had jumped to 980 trillion tokens.  By October the figure had reached 1.3 quadrillion.  That is 1,300,000,000,000,000 tokens.  And that is usage measured only on the Google platform.  That does not include Amazon, Apple, Microsoft, Meta, Nvidia, OpenAI, etc., or the US Government.  The amount of energy and processing power required to fuel AI is staggering, and it appears to be expanding at an incredible rate.  

We do not know how AI will change our daily lives, but it is clear that AI is here to stay.  What does that mean for investors?  As we saw with the dot.com boom, not all the players will be winners in the long run.  Some will survive, and their trillions of dollars of investments will pay off.  Others won’t, and they will pay a very steep price for failure.  That is why the big 5 are investing so heavily in AI now.  They don’t want to get left behind. 

Not all industries will be dramatically changed by AI, and not all sectors of the economy will be impacted in the same way.  Proper diversification will be an important tool to help reduce volatility and mitigate risk in investing.  The economy has continued to show strength with low unemployment at 4.3%.  Inflation came in at 3%, which is still higher than the 2% goal, but it has been fairly stable at that rate.  Social Security recipients will get a raise of 2.8% in 2026.  Bond yields have declined some but are also staying fairly stable.  All of this despite a government shutdown and a toxic political environment at home and abroad.

So we stay diversified in our investment strategy, keep a watchful eye on the markets … and w(AI)t.

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