As we approach 2025, investment strategies are increasingly centered on sectors poised for significant growth, particularly infrastructure and cybersecurity. Notably, Jay Jacobs, the head of thematic and active exchange-traded funds (ETFs) for BlackRock in the United States, anticipates that advancements in artificial intelligence (AI) will be a principal driver of this transformation. Jacobs emphasizes that the current phase of AI adoption is merely the tip of the iceberg, suggesting a ripe opportunity for astute investors to consider.
Jacobs outlines that the AI revolution is not just a software phenomenon; it necessitates the establishment and expansion of robust physical infrastructure. This encompasses data centers, energy resources, and specific materials integral to technological advancement, such as copper. Interestingly, as AI continues to evolve and data becomes an ever-more precious commodity, the imperative for cybersecurity escalates. Companies are compelled to invest in sophisticated security measures to safeguard their valuable data, ultimately enhancing the cybersecurity sector’s growth potential.
He notes, “If you think about your data, you want to spend more on cybersecurity as it gets more valuable.” This reflects a broader trend where industries are increasingly recognizing that safeguarding their assets is as critical as the technological innovations themselves.
Jacobs contends that it is essential for investors to recognize the intricate relationship between technology and its underlying infrastructure. “Magic technology,” he states, “is supported by tangible components like data centers and energy supplies.” By not solely focusing on leading tech giants, investors can uncover opportunities within related industries. Companies specializing in semiconductors and hardware will be crucial in supporting the expanding AI sector. Therefore, as technology burgeons, so too will the physical assets needed to facilitate it.
Diversifying Investment Portfolios
For investors eager to tap into this burgeoning trend, Jacobs recommends looking beyond major technology firms. He identifies several sectors that will benefit as AI continues its ascent, such as semiconductor manufacturers, data center providers, and cybersecurity firms. By diversifying portfolios to include these sectors, investors can strategically position themselves to benefit from the anticipated growth in AI technologies.
Jacobs highlights investment vehicles like BlackRock’s iShares Future AI & Tech ETF (ARTY) and the iShares AI Innovation and Tech Active ETF (BAI) as prime examples of how investors can leverage this trend. With the iShares Future AI & Tech ETF already experiencing a noteworthy 13% increase this year, it reinforces the performance expectations for sectors aligned with AI advancements.
As we move closer to 2025, it is clear that infrastructure and cybersecurity represent significant investment opportunities shaped by the AI boom. By understanding the deeper connections between technology and its physical underpinnings, investors can diversify their portfolios and position themselves advantageously for the future. Jacobs’ insights underscore the importance of a multifaceted approach to investing—one that considers emergent technologies while also recognizing the essential infrastructure supporting these innovations.