Commentary: Every investment portfolio looks like the same trade - AI

Investor portfolios have become increasingly dependent on artificial intelligence (AI) investments, to the point where it seems like everyone is invested in the same trade, according to Katie Martin for the Financial Times. AI was once a promising investment theme, but now it dominates the global financial system, affecting various sectors such as stocks, real estate, infrastructure, energy, and private equity.

The S&P 500 and Nasdaq indices have hit record highs, despite factors like high oil prices, low bond yields, and a lack of diversification among portfolios. The correlation between supposedly diverse asset classes is unusually high, and professional investors are struggling to find ways to diversify properly and mitigate risks associated with AI investments.

Policymakers and experts are divided on the economic implications of AI, with some believing it will reduce inflation while others fear it may have an upward risk. The sheer scale of annual spending on AI infrastructure is also questionable, with some estimating it could reach $6tn annually, which seems far-fetched.