The AI Arms Race Is Here. Should Advisors Care?
New developments are kicking off a new era in AI investing and have advisors closely monitoring their tech allocations.

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They’re investing how much in AI?
Some of the world’s most recognizable tech giants like OpenAI, Softbank and Oracle announced a joint venture last week that would pump $500 billion into artificial intelligence infrastructure in the US over the next four years. Not to be outdone, Meta said it plans to spend as much as $65 billion on AI development this year alone. Then DeepSeek, China’s answer to ChatGPT, set off an international AI arms race over the weekend that led to about a $1 trillion thrashing of tech stocks on Monday.
It’s the latest in a string of developments that could kick off a new era in AI investing and has advisors closely monitoring their tech allocations. “You have to be very careful when there is a generational tech change,” said Leo Kelly, founder of Verdence Capital Advisors. “People get less discerning, you get explosive gains, and I think we’re there.”
Semi-Charmed Kind of Conductors
The new investments are throwing fuel on the AI fire, pushing already sky-high valuations into the stratosphere. Nvidia has risen more than 200% in about 18 months, while the tech-heavy Nasdaq jumped 53% and trades at a multiple of 16 times its companies’ earnings, per Reuters. That’s impressive alpha, but Monday’s DeepSeek wipeout served as something of a reality check — and an opportunity to approach the sector with a new lens. While public companies are pricey, there are private ones that can help tap the new developments, Kelly said.
“We’re looking for companies that are getting bolted on the chassis,” he said. Some of the venture funds he researched were from companies like Grit Capital, Millennium Media and New Enterprise Associates, and included early-stage startups that are designing the killer apps to sit on top of all the AI infrastructure. It usually takes about five years to have a fully invested PE portfolio, he said. “It’s a long play — and a patient play — but it has major upside,” Kelly said.
Everything’s Better Abroad. International companies may also benefit from heavy doses of US investment. There are “hidden gems” around the world that many investors simply don’t know exist, said Adam Patti, co-founder of the asset manager VistaShares. Every AI-related fund is massively overweighted in companies like Apple, Amazon, Google, Meta and Microsoft. Instead, his AI-focused fund invests in data centers and advanced semiconductor companies like South Korea’s SK Hynix and Taiwan’s TSMC.
“If the question is why all of these investments are being made, the answer is simple: This a global arms race that will change the way we live,” he said.
With any kind of AI investments, advisors will need to remind clients about the need to stay diversified, take profits and rebalance. Sure, some gains may be left on the table, but it’s about protecting assets long-term, Kelly said. “Where people really get really hurt is when they stop being disciplined, and egos and greed kick in,” he said. Ah, the animal instincts.