There’s been no shortage of noise lately about an “AI bubble.”
Yet, the data suggests we’re seeing a structural shift in how the economy operates—driven by steady, long-term investments rather than speculation.
As the chart below shows, technology and R&D spending as a share of the U.S. economy is now higher than it was during the dot-com era, currently led by massive investments in AI infrastructure.
However, unlike the 90s, today’s tech leaders are backed by robust earnings and significant cash reserves—capital that’s available for acquisitions, stock buybacks and weathering downturns without needing to raise outside funding.
Who will win? A key trend to watch.
All this spending begs the question: how does this build-out translate into shareholder returns?
While current winners include the companies building data centers and power grids that supply the computing power AI requires, history suggests the biggest beneficiaries may not even exist yet.
Just as the internet reaching critical mass enabled companies like Facebook (Meta) and PayPal, today’s AI infrastructure build-out is setting the stage for a new generation of high-growth businesses.
So who will they be?
That’s the key question—and only time will tell.
In the meantime, we’re focused on data and research—tracking where investment, earnings and innovation are converging.
You can read more about this concept and the data behind it in Capital Group’s article, 4 charts on why the U.S. economy could stay resilient.2
Your Portfolio: Rebalancing Is Critical During Aggressive Growth
One of our core disciplines during periods of strong growth is frequent rebalancing.
Specifically, trimming positions and taking profits when portfolios drift out of alignment, rather than chasing what’s already run up.
As always, our focus remains the same: staying invested, staying balanced and keeping your long-term plan on track—regardless of the headlines.
Final Thought
It’s important to remember that roughly $7.5 trillion is sitting in money market funds and cash equivalents waiting to be invested.
This sidelined capital adds a significant layer of economic stability, especially during times of loud “AI bubble” noise.
If you’d like to talk through how this trend fits into your portfolio, reach out anytime.
Happy Holidays,
–David Bunker, Financial Advisor & Licensed Fiduciary
P.S. — I recently spent some time analyzing the year ahead. If you’re curious about what’s coming next, you can find my breakdown here: Rate Cuts, Jobs and Growth: A Look at 2026.
Before You Go
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This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.
Source:
1 & 2: Capital Group, 4 charts on why the U.S. economy could stay resilient, https://www.capitalgroup.com/ria/insights/articles/4-charts-us-economy-resilient.html
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