Every Company Is Now an AI Company

Investors have been flocking to AI-related stocks in 2025, with companies like Nvidia, Palantir, Micron, and Seagate Technology seeing significant gains. While the S&P 500 has managed a 17% gain, AI stocks have outperformed the index by a wide margin. This trend has led many investors to overlook potential risks associated with investing in AI companies.

One of the main drivers of this trend is the increasing adoption of AI technology across various industries. Companies are investing in AI capabilities to remain competitive and drive revenue growth. According to Robinhood CEO Vlad Tenev, “Every company will become an AI company,” highlighting the accelerated pace of AI adoption compared to traditional technologies.

While chipmakers, LLM developers, and cloud computing providers have been the primary beneficiaries of the AI boom, there are other ways for investors to gain exposure to AI. Companies across industries are committing significant capital expenditures to deploy AI agents and enhance their operations.

Apart from the traditional players in the AI space, the “Magnificent Seven” companies have been aggressively investing in AI capabilities. These companies collectively committed around $300 billion in AI CapEx last year and are on track to surpass $400 billion this year. The five largest AI hyperscalers now account for 27% of all S&P 500 CapEx, with global AI-related infrastructure spending forecasted to reach $4 trillion by 2030.

However, there is a downside to investing in hyperscalers for AI exposure. Concentrating investments in a few interconnected businesses can lead to concentration risk. Hyperscalers provide the essential infrastructure and data management capabilities required for AI applications, creating a high-risk pattern among these companies and their suppliers.

Despite the risks, investors continue to pour money into thematic AI and robotics exchange-traded funds, with approximately $14.7 billion in inflows by the end of November 2025. As AI technology continues to reshape industries and drive innovation, investors will need to carefully consider the risks and rewards of investing in AI-related stocks. AI’s long-term potential has been a topic of discussion among equity managers, with many remaining constructive on the technology’s future prospects. However, recent circular funding rounds in the AI sector have raised concerns about potential excess and the formation of an AI bubble. Jonathan Woo, a senior research analyst at Russell Investments, highlighted these issues in a report published in November.

Circular funding, a practice where companies repeatedly invest in each other, has created a self-reinforcing flow of capital within the AI sector. This practice has fueled discussions about the sustainability of AI investments and the potential for a market bubble. Despite these concerns, companies outside of the tech sector are increasingly leveraging AI to improve productivity and increase earnings.

AI’s applications are expanding beyond traditional tech industries, with sectors such as healthcare, mass transit, consumer staples, energy, and utilities incorporating AI technologies to gain competitive advantages. According to Stanford University’s 2025 AI Index Report, 78% of organizations reported using AI in 2024, up from 55% the previous year. This trend has led to a broader range of stocks providing AI exposure while maintaining their core business segments.

Companies operating in defensive sectors like consumer staples, energy, and utilities are incorporating AI to enhance efficiency and optimize operations. For example, Walmart is utilizing AI for inventory management, warehouse automation, and personalized online shopper experiences. Similarly, Valero, the largest independent petroleum refiner, is implementing AI across various operations to increase efficiency and reduce costs. Constellation Energy, a major electricity supplier, is using AI to improve nuclear plant operations and enhance grid stability.

Investing in companies outside of the traditional tech sector that are leveraging AI can provide exposure to the technology while hedging against potential downturns in high-flying tech stocks. These investments may not deliver the same rapid gains as pure-play AI firms like Nvidia and Palantir but offer more stability and lower downside risks. Companies in sectors like consumer staples, energy, and utilities are proving that AI adoption can drive growth and innovation across diverse industries.