October 2025 Client Letter

Last month, I wrote about Apple as a modern-day consumer staple, a company whose products have become integral to everyday life. The iPhone helps us communicate, navigate, research, shop, and stay connected in ways that are second nature.

If Apple is a modern consumer staple, then Alphabet, the parent company of Google, could be viewed as a modern utility. A utility typically provides an essential public service; operates at scale; and faces little viable competition because of its infrastructure, data, or network effects. By these measures, Google meets many of the same criteria.

Google Search has become the front door to the Internet for billions of people—an essential digital service much like electricity or water in the physical world. It is so deeply woven into daily routines—search, email, maps, documents, and video—that many of us could not function productively online without it. With an estimated 80–90 percent share of global search, Google has become not just a household name but also a pillar of the world’s information infrastructure.

Beyond Search, YouTube and YouTube TV have become part of everyday routines for millions of households. And this time of year, for us football fans, YouTube TV’s NFL Sunday Ticket is as close as it gets to a weekend fixture.

Google’s reach extends beyond screens. Through Waymo, its autonomous ride division, the company is operating services in Phoenix, San Francisco, Los Angeles, and Austin—reportedly completing around 250,000 paid rides per week in spring 2025. In March, Waymo logged over 700,000 monthly trips, more than 50 times its 2023 volume. The service has recently expanded to Atlanta (via Uber) and plans to launch in Miami and Washington, D.C., by 2026. Autonomous mobility adoption is accelerating, and Google is among the central participants.

Inside Google’s research labs lies an important frontier: the Willow quantum-chip project. Though still in its early stages, Willow represents Google’s effort to move beyond the limits of classical computing. Traditional computers operate on bits, ones, and zeros that must test possibilities one at a time, often brute-forcing through countless paths to reach an answer. Quantum computers, by contrast, use qubits that can exist in multiple states simultaneously, a phenomenon known as superposition. This allows them to explore many paths at once rather than sequentially.

If quantum computing becomes commercially viable, the shift could break through the boundaries of Moore’s Law. Tasks like predictive analytics, pharmaceutical research, and complex simulations could be performed not just faster but in entirely new ways. That is why Google is investing in this field, not merely to stay ahead in AI but to help shape the next computing paradigm.

While Google holds structural advantages, potential challenges exist. Governments continue to evaluate large tech platforms for competition and data practices, and emerging AI models could eventually introduce new forms of search or user interaction. However, most competitors currently lack the scale of data, infrastructure, and capital that underpin Google’s existing advantage. For now, its information backlog and technological depth are competitive strengths.

Financially, Google has been a profitable company. In its most recent quarter, Alphabet reported approximately $95 billion in cash and marketable securities and total debt of about $14 billion. Over the past 12 months, the company generated roughly $73 billion in free cash flow—often described as “owner’s cash,” since it represents what remains after funding operations and capital investments. Free cash flow can be used to pay dividends, repurchase shares, or reinvest in the business. In 2024, Alphabet reported net income of approximately $100 billion, placing it among the highest earners in U.S. public companies. The company also initiated a modest dividend in June 2024, something investors may overlook because of its long-standing tech label.

Some analysts and investors—the late Charlie Munger among them—have described Google as one of the most durable and wide-moat businesses ever built. Munger stated, “I’ve probably never seen such a wide moat,” when referring to Google’s competitive advantage. Whether or not one agrees, few dispute the scale of its global reach, the resilience of its recurring revenue, and the strength of its balance sheet.

Ultimately, Google’s expansive digital footprint depends on physical infrastructure including power, construction, energy systems, and the industrial networks that support them. The companies behind that infrastructure help form the foundation on which the digital world is built.

The Backbone of AI: Building the Physical Foundations

In the California Gold Rush era, not every prospector struck gold. Yet those who supplied the tools—Levi Strauss with durable work pants, Samuel Brannan with picks and pans—often built steadier fortunes. In investing terms, these were the original “picks and shovels” plays: the companies that prospered by enabling others to chase opportunity.

Today’s artificial-intelligence boom has its own version. Over the past year, we’ve discussed companies such as NVIDIA, Microsoft, and Broadcom—the first-order picks and shovels of the digital age. They design the chips, run the data centers, and provide the cloud platforms that make AI possible.

But major innovation waves often depend on a quieter group: those that build the physical foundation beneath the technology. These are the second-order picks and shovels. The companies that enable the enablers. They generate the power, build the infrastructure, and manage the systems that keep the digital economy running. In many ways, these industrial leaders form the physical backbone that supports the AI-driven world.

Several of our industrial holdings illustrate this theme:

Caterpillar (CAT): Caterpillar supplies the heavy machinery and backup-generation systems that prepare and power massive data-center projects. Its equipment shapes the ground on which digital infrastructure stands. Caterpillar’s dividend legacy, which includes three decades of annual dividend growth, has helped make this a reliable industrial company.

Cummins (CMI): Known for its engines and generators, Cummins is also building its future around cleaner power—hydrogen, battery systems, and integrated microgrid solutions. The company’s nearly 20-year history of annual dividend increases underscores a culture of consistency even as it adapts to energy transition trends.

Emerson Electric (EMR): Emerson offers advanced automation, process control, and power-management technologies used across data centers, utilities, and manufacturing. Its history of dividend growth reflects both financial discipline and steady cash generation. Emerson’s combination of engineering depth and shareholder reliability have made it a reliable industrial holding.

Sterling Infrastructure (STRL): Sterling specializes in site development, civil engineering, and transportation projects that support industrial growth and data-center expansion—essential groundwork before the first chip is installed. While Sterling does not currently pay a dividend, its existing work backlog and focus on high-return projects continue to drive long-term growth potential.

With its recent $505-million agreement to acquire CEC Facilities Group, Sterling is now adding electrical and mechanical services to its capabilities. CEC’s expertise in designing and maintaining power systems for semiconductors, data centers, and advanced manufacturing should complement Sterling’s civil infrastructure platform. The deal is anticipated to strengthen Sterling’s presence across the full project lifecycle, accelerate delivery timelines, and enhance cross-selling opportunities.   

Vertiv (VRT): Vertiv provides power and cooling systems that keep hyperscale data centers operating around the clock. As AI workloads surge, Vertiv’s precision-cooling and backup-power technologies have become essential to maintaining uptime. While its dividend yield is modest, the company’s reinvestment strategy supports growth in the expanding data-center market. 

Williams Companies (WMB): Williams operates one of the largest natural-gas pipeline networks in North America, supplying the cleaner energy that powers both industry and data centers. Its infrastructure supports consistent cash flow and an attractive dividend yield, positioning it as both a traditional income holding and an enabler of the AI-era energy build-out. 

While these companies don’t design semiconductors or run AI models, they build and maintain the systems that help make those innovations possible. Collectively, they offer a blend of dividend income and participation in the digital era.

Microgrids: The Emerging Industrial Layer

An emerging concept in industrial energy, the microgrid is a localized, self-contained system that can operate independently from the main grid. Microgrids integrate multiple energy sources, including solar, battery storage, and traditional generators, to provide reliable, efficient power for campuses, hospitals, military bases, and, increasingly, data centers.

While many data centers aim to incorporate renewable energy, the current reality is that wind and solar can meet only a fraction of their enormous power needs. Modern hyperscale data centers consume between 50 and 100 megawatts of electricity, roughly the same amount used by 80,000 U.S. homes. That level of demand makes full reliance on renewables impractical. For example, generating just 10 megawatts from solar would require about 25,000 panels spread across 40 to 50 acres—nearly 35 football fields—and only produces power when the sun is shining. Wind faces similar challenges, operating intermittently and requiring dozens of large turbines to deliver continuous output. 

For this reason, most data centers are turning to hybrid microgrids that blend renewables with natural-gas or diesel generation, battery storage, and traditional grid connections. These systems provide the flexibility and reliability needed for 24/7 operation while still incorporating cleaner energy where possible. 

As AI adoption accelerates, uptime and energy continuity have become critical. Microgrids offer resilience against outages, grid congestion, and volatile energy costs—an increasingly important advantage as demand for computing power expands.

Several of our holdings play direct or supporting roles in this evolving space. Cummins and Caterpillar produce advanced generators and energy-storage systems tailored for microgrid environments. Emerson Electric supplies the automation and controls that synchronize distributed power sources. Vertiv designs the power-distribution and backup systems that make microgrids viable for high-density data centers. Williams Companies provides the natural-gas infrastructure that fuels the generation side of these systems.

Microgrids represent an important step in the modernization of industrial America. They combine technology, energy efficiency, and reliability. While not yet mainstream, they are gaining momentum in sectors where power stability and cost management are essential. For long-term investors, the companies developing these systems are helping power the next phase of digital growth, one built on resilient, intelligent energy.

Perspective and Patience: Navigating the AI Spending Boom

Amazon founder Jeff Bezos recently described the current wave of AI investment as a “bubble that will pay off.” As summarized by Bloomberg, Bezos noted that, while capital is flowing quickly and sometimes ahead of fundamentals, the resulting innovation could lay the groundwork for long-term gains.

According to Bloomberg’s report:

• Bezos said the surge in AI spending resembles an “industrial bubble” that may lead to some failed investments but ultimately leave society better off.
• He noted that investors often struggle to distinguish between good and bad ideas in periods of technological excitement, with companies being funded before they have a product.
• He emphasized taking the long view, arguing that once the dust settles, the societal benefits from AI could be enormous. 

Brian Wesbury, chief economist at First Trust Advisors, offered his own perspective in an October 3 post on X: 

I don’t disagree with Bezos at all. The problem is how few people remember 1999. The fiber that Worldcom laid changed everything, but Worldcom went bankrupt. The Palm Pilot was the precursor of the iPhone, but 3Com went bankrupt. Yes, the future is bright, but markets have priced in that brightness awfully early. It’s possible that investors will have patience at these bubble prices to wait for the benefits (profits) of our current push into AI to show up. And, it is possible that the Fed will keep cutting rates and printing money and holding up asset prices with new money. But what that does is juice inflation. And inflation reduces the value of those future profits. Bubbles can persist for a long time, but they are still bubbles.

Wesbury’s message is worth considering. Innovation cycles rarely move in straight lines. Excitement can run ahead of earnings, just as it did during the dot-com era. But the technologies born from these periods—fiber optics then, AI infrastructure now—can still transform industries long after early investors lose enthusiasm. 

For investors, perspective and patience remain important. Markets may overshoot expectations in the short term, but innovation often compounds in the background. There can be opportunity staying invested in durable businesses and the infrastructure positioned to outlast the initial wave of excitement.

Staying Grounded: The Importance of Diversification

As long-term investors, our goal isn’t to time bubbles or chase every trend. It’s to combine innovation exposure with quality, income, and discipline. Many of the companies we own share a common foundation: strong balance sheets, consistent dividends, and tangible assets that can help smooth the path through periods of market volatility.

We believe diversification remains as relevant as ever, both within the equity portfolio and across asset classes. In addition to stocks, we continue to value the role of cash reserves, fixed income, and precious metals as long-term hedges against uncertainty.

The AI era is reshaping industries, but it still depends on physical power, machinery, and engineering. The modern digital gold rush will have winners and casualties, but those supplying the tools—the modern picks and shovels—may deliver progress for years to come.

As always, we’re here to help you navigate what’s next. If your financial situation has changed—or if you have questions about your investment portfolio—please don’t hesitate to call us at (800) 843-7273.

Warm Regards,

Matthew A. Young
President and Chief Executive Officer

October 21st, 2025
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October 16th, 2025
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October 15th, 2025
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October 14th, 2025
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October 13th, 2025
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September 2025 Client Letter

Last month, I drove my son to Gainesville to begin his junior year at the University of Florida. Moving into the fraternity house began with an introduction to a black box mounted beside the front door. It was a newly installed contactless entry system powered by near field communication (NFC). The brotherhood simply tap their phones near the reader to gain entry.

NFC lets devices talk to each other within a few centimeters. It’s the same technology behind tap-to-pay cards and mobile wallets. The setup offers secure, fast access without physical keys or shareable codes.

Later that night, we grabbed dinner at BJ’s, which uses a QR-based payment system. Scan the code at the table, view the bill, and pay via mobile wallet. No waiting for the server, no paper receipts.

Conveniences like these are nudging me toward a wallet-less lifestyle. I sometimes carry a minimalist wallet, but increasingly prefer my iPhone for secure, hassle-free payments.

While iPhones have been around for years, I’m still struck by all their applications. Navigation, payments, communication, reservations, entertainment, news, research, weather reports, and coupon clipping. All indispensables.

I don’t view Apple as a tech company. I see it as a modern consumer staple. Some push back on that comparison, but I ask: Would you rather go a week without toothpaste or without your iPhone? Personally, I’d manage without toothpaste. A week without my iPhone? That’s a logistical meltdown. For me, the device is command central.

We rely on our phones to connect with countless services, often without a second thought about the infrastructure making it all possible. That invisible layer is one of the main areas where today’s digital revolution is unfolding. And at the center of it all are data centers.

Digital Mines: The Role of Data Centers in the Data Economy

Data is increasingly seen as the raw material of the digital economy. Much like gold was for industrial economies. While gold fueled wealth creation in past centuries, data now powers innovation, automation, and decision-making across nearly every sector.

Often described as “mining the new gold,” data centers are where the value of information is unlocked. These facilities store, process, and transmit the data behind everything we do online. From email and streaming to navigation and shopping. Data centers comprise servers, networking gear, and systems for power and cooling. Think of them as digital factories where data is refined and distributed.

If data is the new gold, then data centers are the mines. From contactless entry systems to mobile payments, we interact with data-rich technologies constantly. Behind every tap, scan, or swipe is an infrastructure built to keep that data secure, accessible, and flowing.

Mapping the Mines: Types of Data Centers and Who Runs Them

There are several types of data centers, each playing a distinct role in the digital ecosystem:

• Hyperscale centers are operated by tech giants like Amazon Web Services, Google Cloud, Microsoft Azure, Meta (with Prometheus coming online in 2026 and Hyperion under development), and Oracle Cloud Infrastructure. These facilities support millions of users and vast computing workloads.
• Enterprise centers are owned by individual companies for internal operations. JPMorgan Chase uses them to support secure financial transactions, Walmart to manage logistics and inventory, and Coca-Cola to oversee global supply chain and marketing data.
• Colocation centers allow businesses to rent space from third-party providers such as Equinix and Digital Realty, offering flexibility without the need to build and maintain their own infrastructure.
• Edge centers are located closer to end users to reduce latency and improve response times, which are critical for applications like autonomous vehicles and real-time analytics.
• Cloud-based centers may appear virtual to users but rely on physical infrastructure. This is the model many small businesses use to store and access our files, email, and internal systems.

Artificial intelligence is accelerating demand for data centers. Machine learning models require massive computing power and storage, creating a feedback loop: more data leads to better models, which in turn require more infrastructure. This dynamic has sparked a surge in investment across the data center landscape.

For investors, understanding the role of data centers is increasingly important. These facilities aren’t just technical assets. They’re central to the growth of AI, cloud computing, and digital services. As demand continues to rise, companies that build, power, and support data centers may offer long-term investment opportunities.

Foundational Players in the Data Center Ecosystem

With data centers playing a foundational role in the digital economy, several companies are generally recognized for their strategic contributions to building and supporting the infrastructure behind it:

• Alphabet (Google)
  Alphabet has earmarked $75 billion for AI-ready data centers, scaling aggressively with a focus on energy-efficient infrastructure and custom silicon (TPUs). This investment supports its shift from ad-centric to platform-centric revenue, potentially positioning Alphabet as a leader in cloud and AI infrastructure.

• Amazon (AWS)
  Amazon Web Services operates one of the world’s largest hyperscale data center networks. With over $150 billion invested in infrastructure, AWS is partnering with NVIDIA on liquid cooling for AI workloads, an indicator of its commitment to next-generation efficiency.

• Broadcom
  Often overlooked, Broadcom plays an important role in digital infrastructure. Its networking chips move vast amounts of data quickly and efficiently, enabling large-scale AI systems. As data center traffic grows, Broadcom’s expertise in routing and switching makes it an enabler of modern computer environments. Its technology is embedded in many of the world’s largest cloud and enterprise data centers.

• Dell Technologies
  Dell builds the hardware behind private cloud, edge computing, and AI workloads. It helps enterprise clients modernize without starting from scratch, offering scalable systems and leading in liquid cooling. Liquid cooling technology is increasingly responsible for managing heat in high-performance AI systems. Dell’s latest servers can reduce cooling energy costs by up to 60%, making data centers more efficient. While not a hyperscaler, Dell’s infrastructure is widely used across enterprise environments.

• Meta
  Meta is investing $65 billion in hyperscale and edge data centers to support AI and augmented reality / virtual reality platforms. Its use of immersion cooling reflects the intensity of its computer needs and its long-term bet on spatial computing.

• NVIDIA
  NVIDIA has evolved from a chipmaker into a full-stack systems company helping power the AI revolution. Its GB200 NVL72 platform, built on the Blackwell architecture, delivers rack-scale performance with advanced liquid cooling for trillion-parameter AI models. NVIDIA’s infrastructure strategy now includes reference designs for “AI factories,” integrating computer, cooling, and power systems into unified, simulation-ready environments.

Building the Foundation: Companies Powering Data Center Infrastructure

While companies like Amazon, Alphabet, and NVIDIA lead the computer and platform layers of digital infrastructure, others play important roles in building and enabling the systems that support them:

• Sterling Infrastructure
  Sterling specializes in site development for data centers, including excavation, grading, and utility installation. In March 2024, its subsidiary Plateau Excavation secured a $100 million contract for a data center project in the southeastern U.S., spanning 280 acres and involving 125,000 linear feet of underground infrastructure. This award reflects strong demand from hyperscale clients expanding capacity for AI and cloud workloads.

  Sterling offers exposure to the physical buildout of digital infrastructure, which is a less crowded but necessary corner of the market. Its E-Infrastructure segment accounts for over 65% of its backlog, with data-center-related activity growing 60% year over year in early 2025. Sterling’s ability to deliver complex, mission-critical projects on time appears to have made it a trusted partner for hyperscale developers.

• Vertiv Holdings
  Vertiv provides the power infrastructure essential for AI data centers, where rack-level energy demands now exceed 300 kilowatts. It is pioneering 800 VDC architectures, aligned with NVIDIA’s AI roadmap, to deliver power more efficiently while reducing copper use and thermal losses.

  Vertiv’s portfolio includes DC busways, converters, backup systems, battery storage, and microgrid solutions that help reduce reliance on utilities. It also leads in direct-to-chip and immersion liquid cooling, which is critical for managing heat in high-performance AI environments. Its MegaMod CoolChip modular systems integrate cooling and power, enabling hyperscale deployments up to 50% faster than traditional builds.

  As density and energy needs rise, Vertiv’s end-to-end infrastructure, from grid to chip, positions it as an important component in the evolving architecture of AI infrastructure.

AI Valuations: Hype, Reality, and Risk

In mid-August, OpenAI CEO Sam Altman stirred debate with candid remarks to Bloomberg about investor enthusiasm for artificial intelligence. When asked whether we’re in an AI bubble, Altman replied, “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes.” He likened the current mood to the dot-com era, noting that “when bubbles happen, smart people get overexcited about a kernel of truth.”

Altman emphasized that AI is indeed that kernel. A transformative technology he called “the most important thing to happen in a very long time.” At the same time, he acknowledged that some startup valuations are irrational and warned that “someone will lose a phenomenal amount of money.”

These comments came as OpenAI was negotiating a secondary share sale valuing the company at $500 billion despite being just a few years old. Altman’s remarks appear to strike a balance: cautioning against investor exuberance while reaffirming his belief in AI’s long-term significance.

Why Today’s AI Market Looks Different

While Altman’s warning is worth noting, today’s environment appears to differ from the dot-com era. In 2000, the Federal Reserve tightened financial conditions, raising interest rates five times as valuations peaked. Today, we’re seeing the opposite. Rate cuts have begun. An easing could provide a tailwind for both the economy and equity markets.

Meanwhile, the AI spending continues, helping to fuel GDP, corporate earnings, and stock prices. Businesses and investors are directing tens of billions toward AI infrastructure, software, and applications.

We’ve just wrapped up a better-than-expected earnings season for Q2, and from what I can tell, Q3 looks positive as well. I believe when paired with a Federal Reserve in rate-cutting mode, the combination of earnings growth and AI investment creates a potentially favorable backdrop for equities. A bubble may eventually form, but it doesn’t appear to be on our doorstep today. If spending slows, earnings soften, and the Fed reverses course, then conditions would most likely shift. But for now, fundamentals seem to remain supportive.

As always, we’re here to help you navigate what’s next. If your financial situation has changed or if you have questions about your investment portfolio, please don’t hesitate to call us at (800) 843-7273.

 Warm Regards, 

Matthew A. Young 
President and Chief Executive Officer

September 23rd, 2025
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August 2025 Client Letter

In an age of constant media churn, politics often dominates the news headlines. For investors, this sometimes makes it challenging to separate fact from opinion or find a clear, nonpartisan view of what’s really happening. Many are understandably frustrated when one network reports a story one way, only to hear a completely different take on another. This kind of polarization can make it harder to invest with confidence.

A prime example of this dynamic was on display with the release of the July U.S. jobs report.

The numbers were disappointing: only 73,000 jobs were added, well below the consensus estimate of 100,000. Worse, job gains for May and June were revised down by a combined 258,000, bringing the three-month average to just 35,000, a level that historically signals economic trouble.

Politically, the left suggested immigration policy as a factor, citing a sharp drop in the number of foreign-born workers in the labor force. Meanwhile, the right questioned the reliability of the data itself. President Trump even dismissed the head of the Bureau of Labor Statistics, alleging bias in the reporting.

Yet amid the finger-pointing, one critical factor may be slipping under the radar. The disruptor might not be immigration or data reliability, but instead artificial intelligence. The July employment report may be less about policy and more about a technological shift that’s transforming how work gets done.

AI Shaking up the Labor Market

Artificial intelligence is reshaping how companies operate, and it appears to me that the ripple effects are beginning to show in the labor market.

At the Cisco AI Summit this past January, Goldman Sachs (GS) CEO David Solomon revealed that artificial intelligence can now draft 95% of an IPO filing, specifically the Form S-1, in just minutes. An initial public offering (IPO) is when a private company offers shares to the public for the first time, transitioning to public ownership and raising capital for growth. What once required a team of six bankers working over two weeks now takes only a few minutes of machine time. “The last 5% now matters because the rest is now a commodity,” Solomon said. While he referenced six bankers, it’s reasonable to assume that figure excludes junior staff and support teams, likely bringing the total headcount even higher.

Microsoft: Scaling Without Hiring

This kind of efficiency isn’t isolated. Microsoft (MSFT) recently reported that revenue grew 18% year-over-year with no increase in headcount. The company has publicly stated it has no appetite to grow its finance team at the same pace as before, despite the business becoming more complex. AI is allowing Microsoft to scale its operations, streamline inefficiencies, and empower employees to do more with less.

The Crazy Efficient Revolution Behind Palantir’s Growth

Palantir Technologies (PLTR), a software platform company announced its earnings in early August. During the call, CEO Alex Karp shared a bold vision:

We’re planning to grow our revenue while decreasing our number of people. This is a crazy efficient revolution. The goal is to get 10 times revenue and have 3,600 people. We have 4,100 now.

Some analysts now forecast that Palantir could become a trillion-dollar company within the next few years. That kind of valuation is rare. What’s even rarer is the path Palantir is taking to get there: massive growth with a shrinking workforce. It’s difficult to find historical parallels for a company with such lofty expectations and such a lean operational model.

Amazon’s Robotic Workforce Surges Past One Million 

In its march toward large-scale automation, Amazon (AMZN) recently surpassed one million robots deployed across its global warehouses, up from 750,000 just a year ago. With AI now orchestrating robot movement in real time, Amazon’s fulfillment network continues to evolve as one of the most advanced logistical systems in the world. Meanwhile, Walmart (WMT), the world’s largest private employer, is undergoing restructuring. Walmart is cutting jobs and streamlining operations with AI tools. I wonder whether Walmart still sees value in holding the title of “largest employer” in an increasingly automated economy.

Lemonade: A Tech-Driven Approach to Insurance

Lemonade (LMND) is a relatively new player in the insurance industry. The company is aiming to disrupt traditional models through artificial intelligence by using AI-powered bots, which are software programs designed to perform tasks automatically without human intervention. These bots handle everything from onboarding to claims processing, often in seconds, delivering a faster and more transparent experience for policyholders. This tech-first approach allows the company to scale efficiently with fewer employees than legacy insurers. While still small in market cap (around $4 billion), Lemonade has expanded into renters, homeowners, pet, and auto insurance, and it is gaining attention for its innovative model and improving financials.

A Contrasting Strategy: Meta’s Bold Bet on AI Talent

While many companies are trimming staff and leaning on AI to drive efficiency, Meta (META), formerly known as Facebook, is taking a different approach.

Instead of mass hiring or layoffs, Meta is selectively recruiting elite AI engineers and offering them compensation packages that resemble NBA-sized contracts. Some engineers reportedly receive multi-year deals worth hundreds of thousands in base salary, with total packages reaching into the nine-figure range when stock and bonuses are included. These aren’t broad hiring waves. They’re strategic talent acquisitions, aimed at building Meta’s Superintelligence Lab and securing its place at the forefront of AI innovation.

This strategy fits squarely into the narrative: AI is not just replacing jobs; it is reshaping the value of work itself. In a labor market where efficiency is often a priority, Meta is betting that investing in the best minds will yield exponential returns. It’s a reminder that AI isn’t just a cost-cutting tool; it’s a lever for transformation.

AI: Bull Case, Bear Case, or Middle Ground?

Artificial intelligence is positioned to reshape the global economy, but how that transformation unfolds remains uncertain.

The bull case envisions a super cycle that unlocks massive efficiency gains across industries. Agentic AI, a term describing systems capable of making decisions with minimal human input, could automate not just repetitive tasks but complex cognitive work, giving workers a virtual team of assistants working around the clock. This could accelerate innovation in fields such as drug development, sciences, and logistics, potentially lifting global growth and living standards.

The bear case warns of a “jobs apocalypse.” Unlike past technological revolutions that replaced physical labor, AI is replacing cognitive labor—threatening jobs in customer service, analysis, and creative fields. If high-paying jobs disappear faster than new ones emerge, consumer spending could decline, triggering deflation or a slowdown in the economy.

The reality may lie somewhere in between. AI agents, which are software programs designed to act autonomously with other systems, are still evolving, and their limitations could slow adoption, giving the economy time to adapt. Governments may intervene to protect jobs or regulate AI’s reach. And new industries we can’t yet imagine may emerge, creating fresh opportunities and roles.

Navigating Disruption: What AI Could Mean for Your Portfolio

So, what does this mean for investors? A balanced approach that plays both offense and defense may be prudent.

On the offensive side, foundational AI players like Alphabet (GOOGL), Amazon, Broadcom (AVGO), Meta, Microsoft, Nvidia (NVDA), and Oracle (ORCL) offer exposure to the infrastructure driving the AI revolution. These firms have the scale, capital, and networks to lead the AI transformation. They’re building the platforms, chips, and data centers necessary to power the future.

On the defensive side, maintain exposure to sectors less likely to be disrupted by AI. Industries such as utilities, energy, and infrastructure—represented by companies including Chevron (CVX), Exxon Mobil (XOM), Kinder Morgan (KMI), Southern Company (SO), Union Pacific (UNP), and Valero Energy (VLO)—provide essential services that AI is unlikely to replace. These firms also offer exposure to real assets, which can be valuable in times of market volatility.

In short, investing in an era of disruption can include a balance of innovation with resilience. It’s about positioning portfolios to benefit from technological breakthroughs while staying grounded in the fundamentals that support the economy.

As always, we’re here to help you navigate what’s next. If your financial situation has changed—or if you have questions about your investment portfolio—please don’t hesitate to call us at (800) 843-7273.

Warm regards,

Matthew A. Young  
President and Chief Executive Officer

August 21st, 2025
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