Asset management giant Vanguard discusses the AI investment boom: Don't just focus on technology giants, diversified allocation will never go out of style.

Chief economist Joe Davis of Vanguard, a giant in asset management from the United States, recently suggested that when investors are seeking to capitalize on the investment opportunities brought by the full rise of artificial intelligence (AI) technology, they should broaden their investment focus beyond large tech stocks. The investment craze surrounding AI should not be limited to the "Magnificent Seven" tech giants representing the tech stocks. Davis stated that through the timeless "classic investment strategy" of diversifying investments across the entire US stock market, investors can better seize the economic growth and productivity improvements driven by AI. The "Magnificent Seven" or so-called "Big Seven" tech giants include: Apple, Microsoft, Google, Tesla, Nvidia, Amazon, and Meta Platforms, which are core drivers behind the record highs of the S&P 500 index. Looking at the entire US stock market, the "Big Seven" have been the leading force propelling the US stock market since 2023, attracting global funds with strong revenue from AI deployment, rock-solid fundamentals, years of robust free cash flow reserves, and expanding stock buyback programs. However, Davis emphasized the importance of "broad sector allocation" in participating in the AI investment craze. He stated: "AI is a key force in the current global technology transformation, this is no longer a secret. But focusing solely on tech stocks to achieve excess investment returns may not be a wise choice." Davis further added that accessing the entire US market might be the best way to capitalize on the AI boom, as AI will impact various sectors globally beyond technology, including healthcare, finance, manufacturing, utilities, and many other fields. With AI helping to enhance company fundamentals and operational efficiency, and gaining ground in other economic sectors, these areas will also see comprehensive development. Davis added: "Perhaps surprisingly, our research does not recommend investors to increase their holdings in tech stocks right now. If investors wish to benefit from the strong growth prospects brought by the AI trend, the first priority is to increase their exposure to the entire stock market, such as broad-based US stock indices." The analyst team at Seeking Alpha stated in a report that although Vanguard's chief economist Davis did not directly mention specific targets, investors can focus on multiple-traded ETFs that cover a broader market exposure and focus on AI itself, with the following US ETF codes: ETFs covering broad exposure: VTI, SPGM, VT, SPTY, VOO, IVV, RSP, QQQ, and DIA. AI ETFs: AGIX, AIQ, BOTZ, DTEC, ROBT, THNQ, and CHAT. Goldman Sachs believes that the global stock market's "upward momentum" fueled by the AI investment craze is far from being exhausted. The firm stated in a recent forecast report that most global stock markets are currently in the first and second phases led by AI investment craze, but this craze is gradually expanding to the third and fourth phases, boosting efficiency in industries and overall value globally. "If Nvidia represents the first stage of the AI stock trading craze - the stage where data center AI server chips benefit the most directly, then the second stage will be other global companies besides Nvidia helping build AI infrastructure related to AI," Goldman Sachs wrote in the report. "The third stage is expected to be companies incorporating AI into their products to increase revenue, mainly software and IT service companies; and the fourth stage is companies benefiting greatly from the overall increase in production efficiency related to AI, which is expected to be achieved in many companies globally, especially in labor-intensive service industries."