By Jermaine Koh
If you’ve only got a minute:
- AI is no longer experimental. It is now part of how many companies operate day to day.
- This wave is supported by real business results. Many leaders are investing using profits, not debt.
- Investors don’t need to chase headlines. Broad, diversified exposure remains the most sensible way to participate.
A few years ago, artificial intelligence (AI) felt like a futuristic idea. Today, it has quietly become part of how many companies operate. AI isn’t just about experiments or prototypes. It’s about real, measurable impact on business efficiency and decision-making.
For instance, companies are adopting AI to speed up decisions, automate routine tasks, and make better use of data. These improvements translate directly into productivity and profits, which is why AI remains a resilient theme even when markets are cautious about growth and valuations.
According to DBS’s investment outlooks from late 2025 and early 2026, this isn’t hype – AI is settling in as a long-term economic force.
Watch: 1Q26 CIO Insights - The Long Game
Why AI continues to matter
What keeps AI relevant is its usefulness. Businesses continue to spend on AI because it helps them work smarter, not just harder. The benefits of less repetitive work and enhanced efficiency have a tangible effect on operating results, which helps explain why investment in AI has held up well.
Another difference this time is how AI investments are funded. The buzz around an AI bubble is certainly growing louder, with many drawing parallels to the Technology, Media, and Telecommunications (TMT) bubble of 2000-01. Growth often relied heavily on borrowing or speculative financing in past tech cycles. Today, many leading AI-linked companies generate strong profits and reinvest earnings into growth.
DBS Chief Investment Office (CIO) noted that unlike the internet bubble era, future massive capex outlays are funded by real earnings – not debt.
This means today’s AI wave is backed by real business fundamentals, which makes it more resilient in the face of market ups and downs.
AI is spreading across industries
AI isn’t just a technology sector story anymore. Its benefits are reaching all kinds of businesses, which is why its impact is broader than many investors realise.
For example, healthcare organisations are using AI to support diagnostics and manage resources more efficiently. Financial institutions apply AI to analyse data, detect fraud and manage risk. Retailers use it to forecast demand and optimise inventory. Even traditional industries are finding ways to embed AI into daily operations.
At DBS, this shift is already visible in how AI is being integrated into day-to-day operations. Generative AI tools are used to support employees with tasks such as summarising documents, drafting content and automating routine work within secure environments. AI-powered virtual assistants enhance client interactions by providing more contextual and responsive support, while internal tools use AI to personalise employee development and coaching. In fact, DBS expects more than S$1 billion in measurable value from AI initiatives this year, up from around S$750 million the year before – a reflection of how embedded AI has become in real business results and operations.
This breadth of adoption is what turns AI from a trend into a structural force.
What this means for investors
For investors, AI changes both opportunity and risk.
First, it widens the investment universe. While large tech firms remain important, many companies benefit from AI simply by using it well. In other words, AI-related growth is not limited to a handful of familiar names.
Second, AI-related investments can be volatile. Excitement can push prices up quickly, but they can also dip sharply if expectations aren’t met. This is normal for areas linked to new technology, so it’s important to keep this perspective.
Third, diversification is key. Instead of trying to pick a single winner, it makes sense to spread exposure across companies that build AI, provide tools for AI and apply AI to improve their operations. This balances the potential upside with manageable risk.
Making sense of AI exposure
If the AI landscape feels overwhelming, breaking it down into I.D.E.A (innovators, disruptors, enablers, and adaptors) categories, helps. In terms of growth, DBS CIO’s conviction in I.D.E.A companies thriving in an increasingly AI driven world paid off with 21.6% returns YTD.
- Builders/Innovators /Disruptors, such as Nvidia, create the core technologies and platforms.
- Enablers provide the tools, software and security that allow others to use AI effectively.
- Users/Adaptors apply AI to improve efficiency, products or services.
Each group behaves differently. Builders may grow quickly but face higher expectations. Enablers benefit as adoption spreads and user may see steadier and incremental gains.
Trying to pick individual “winners” across these layers isn’t necessary. Diversified global technology or innovation funds offer exposure across the ecosystem.
Each layer grows differently and carries different risks. Rather than trying to pick one, diversified funds provide broad exposure across all these layers.
Examples available on DBS platforms include the Fidelity Global Technology Fund and BlackRock Global Technology Fund - both hold a broad mix of companies participating in AI growth.
The key takeaway is not about specific fund selection, but about approach. Broad exposure helps capture the long-term trend while managing concentration risk.
Risks to keep in view
Even with strong fundamentals, AI is not risk-free.
A meaningful share of AI-related gains remains concentrated among a small group of large companies. This concentration can amplify market swings, especially when sentiment shifts.
Valuation risk is another. After strong performance, even good companies can see price pullbacks if growth expectations cool. High valuations make stocks more sensitive to earnings surprises, even when growth remains solid.
There are also external factors. Regulatory approaches to data and AI governance continue to evolve, particularly in sensitive industries. Broader economic conditions, such as interest rate changes, can influence how quickly companies invest, especially smaller firms with tighter budgets.
Taken together, these factors reinforce the importance of measured exposure and realistic expectations.
Looking ahead
As we move further into 2026, the conversation around AI is becoming more grounded. The focus is less on bold predictions and more on steady integration.
CIO’s view suggests that while short-term volatility is likely, the structural drivers remain intact. Productivity gains, efficiency improvements and broader adoption across industries continue to support AI’s long-term relevance.
Final thoughts
AI is no longer a distant idea or a niche investment theme. It is becoming part of the economic fabric, influencing how businesses operate across sectors.
For investors, the opportunity lies not in predicting the next breakthrough, but in understanding how AI steadily reshapes productivity and competitiveness. A measured, diversified approach allows you to participate in this transformation without overreacting to short-term noise.
In that sense, riding the AI wave isn’t about speed. It’s about staying balanced, informed, and focused on what truly lasts.
