Three strategies for investing amid AI whiplash

The debate about artificial intelligence has taken a sharp turn. The initial excitement about AI’s transformative potential sparked investor fears of an AI bubble. But these concerns have now been overshadowed by concerns that the AI ​​juggernaut will overwhelm large parts of the global economy.

The evolving narrative has led to vastly different outcomes for companies. Investors have fled so-called “AI roadkills” — business models like software that are likely to be rendered obsolete by AI — and turned to old-economy companies that produce physical goods. Although the S&P 500’s total returns have been negative this year, the energy, materials and industrials sectors have posted solid gains, while software and other capital-light industries have suffered sharp declines. Since the start of the Iran war, the energy sector has continued to rise, while gains in other asset-intensive industries have slowed.

How should long-term investors think about this…