Artificial intelligence is showing signs that it could reshape the global economy. According to Vanguard Global Chief Economist Joe Davis, AI investment may lead to stronger-than-expected growth in the U.S. and other leading economies. This could stabilize labor markets and even result in fewer interest rate cuts by the Federal Reserve than many anticipate.
While technology stocks have dominated in recent years, history suggests that market leadership shifts over time. As AI’s benefits spread, value stocks and non-U.S. equities offer among the strongest risk return profiles. Meanwhile, fixed income remains compelling, providing income above inflation and a defensive posture amid AI exuberance.
Watch this short video to learn why diversification matters even as stock prices charge higher.
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Notes:
- All investing is subject to risk, including the possible loss of the money you invest. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss.
- Investments in bonds are subject to interest rate, credit, and inflation risk.
- Investments in stocks and bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.
