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AI slowdown debate could shift focus from chips to software and cybersecurity.
Adobe, Salesforce and Microsoft offer exposure to broader AI adoption.
Meta and Alphabet provide diversified AI exposure beyond infrastructure spending.
The recent debate over slowing frontier AI development could shift investor attention from capital-intensive chipmakers toward software platforms, cybersecurity and established technology companies.
Major AI lab CEOs (Amodei, Altman, Musk) have recently called for slowing frontier model development. OpenAI’s Sam Altman has also said the company “welcomes” safety requirements for frontier AI labs.
However, the distinction is important: a slowdown in frontier-model development does not necessarily mean a slowdown in AI adoption or infrastructure spending.
Against this backdrop, the below-mentioned stocks and exchange traded funds (ETFs) fit the potential rotation.
Software Platforms
If AI development becomes more measured, investors may focus on companies that monetize existing software products rather than those relying heavily on continuous increases in computing capacity.
Adobe (ADBE - Free Report) : Its creative and document software businesses provide an established revenue base, while AI-powered features offer additional growth opportunities.
Salesforce (CRM - Free Report) : Its enterprise software platform could benefit from continued corporate spending on AI-enabled productivity and customer management tools.
Microsoft (MSFT - Free Report) : Its diversified software, cloud and enterprise businesses could provide exposure to AI adoption beyond frontier-model development.
Microsoft-heavy ETFs includeGlobal X PureCap MSCI Information Technology ETF GXPT and Vanguard Information Technology ETF (VGT - Free Report) .
Cybersecurity
AI safety concerns could increase attention on cybersecurity and the need to protect AI systems, data and enterprise networks. This is a separate investment theme from a slowdown in model development (read: Time to Boost Cybersecurity ETF Exposure as AI Safety Concerns Rise).
Stocks like Palo Alto Networks (PANW - Free Report) and CrowdStrike (CRWD - Free Report) are good bets in this context, while ETFs like Amplify ETFs Amplify Cybersecurity ETF (HACK - Free Report) and First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) could provide a diversified way to cover this theme.
Established AI Platforms
A slower pace of frontier AI development could also favor companies with existing distribution networks, established customer relationships and multiple revenue streams.
Meta Platforms META is an apt pick. Zuckerberg's recent comments emphasize independent AI evaluations and safety work, while Meta's advertising business provides a revenue base beyond frontier-model development.
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Frontier AI Slowdown: Stocks and ETFs to Watch
Key Takeaways
The recent debate over slowing frontier AI development could shift investor attention from capital-intensive chipmakers toward software platforms, cybersecurity and established technology companies.
Major AI lab CEOs (Amodei, Altman, Musk) have recently called for slowing frontier model development. OpenAI’s Sam Altman has also said the company “welcomes” safety requirements for frontier AI labs.
However, the distinction is important: a slowdown in frontier-model development does not necessarily mean a slowdown in AI adoption or infrastructure spending.
Against this backdrop, the below-mentioned stocks and exchange traded funds (ETFs) fit the potential rotation.
Software Platforms
If AI development becomes more measured, investors may focus on companies that monetize existing software products rather than those relying heavily on continuous increases in computing capacity.
Adobe (ADBE - Free Report) : Its creative and document software businesses provide an established revenue base, while AI-powered features offer additional growth opportunities.
Adobe-heavy ETFs include Fidelity Metaverse ETF FMET, Invesco Next Gen Media and Gaming ETF GGME (read: Should You Play Adobe's Q3 Earnings With ETFs?).
Salesforce (CRM - Free Report) : Its enterprise software platform could benefit from continued corporate spending on AI-enabled productivity and customer management tools.
CRM-Heavy ETFs include iShares Expanded Tech-Software Sector ETF (IGV - Free Report) and First Trust Dow Jones Internet ETF (FDN - Free Report) (read: ETFs to Buy as Salesforce Jumps on Q2 Earnings Beat, Anthropic Gains).
Microsoft (MSFT - Free Report) : Its diversified software, cloud and enterprise businesses could provide exposure to AI adoption beyond frontier-model development.
Microsoft-heavy ETFs includeGlobal X PureCap MSCI Information Technology ETF GXPT and Vanguard Information Technology ETF (VGT - Free Report) .
Cybersecurity
AI safety concerns could increase attention on cybersecurity and the need to protect AI systems, data and enterprise networks. This is a separate investment theme from a slowdown in model development (read: Time to Boost Cybersecurity ETF Exposure as AI Safety Concerns Rise).
Stocks like Palo Alto Networks (PANW - Free Report) and CrowdStrike (CRWD - Free Report) are good bets in this context, while ETFs like Amplify ETFs Amplify Cybersecurity ETF (HACK - Free Report) and First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) could provide a diversified way to cover this theme.
Established AI Platforms
A slower pace of frontier AI development could also favor companies with existing distribution networks, established customer relationships and multiple revenue streams.
Meta Platforms META is an apt pick. Zuckerberg's recent comments emphasize independent AI evaluations and safety work, while Meta's advertising business provides a revenue base beyond frontier-model development.
Alphabet (GOOGL - Free Report) and Microsoft could also be discussed as diversified AI platforms, rather than pure-play chip or data-center investments. One can tap Meta and Alphabet-heavy ETFs like Vanguard Communication Services ETF (VOX - Free Report) (read: Should You Rotate to Telecom & Software ETFs Now?).