Artificial Intelligence (AI) Asset Allocation Currency Economics Tech and Innovation Multi-Asset White Paper

The Everything Trade

15 September 2026

3 min read

What You Need to Know

Artificial intelligence (AI) is all-consuming in terms of investors’ attention. Its demand for capital is creating linkages across asset classes that make diversifying AI exposure significantly harder. We are in no way bearish on the AI trade and maintain our positive views on equities and the US. Calling a tactical top would be futile, anyway. However, there is an urgency in constructing portfolios that can be robust to any ebbing of the AI trade.

The acceleration in foreign demand for US assets, and equity exposure in particular, is an extra reason to suspect that the dollar would be less defensive in an AI sell-off. Similarly, extra issuance in equity markets creates risks, while tight spreads and growing AI exposure in credit markets raise questions as to how defensive it can be.

Possible defensive trades as part of a broader portfolio that includes an equity overweight include value exposure, healthcare and energy, and possibly the yen. Within credit, we prefer active over passive exposure. We also remain positive on gold, as we have been for many years.

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Additional Contributors: Alla Harmsworth, Robertas Stancikas and Maureen Hughes

There are many faces of the AI trade, and it is all-consuming in terms of the narrative in financial markets. One important aspect is how the need for capital and the global desire to invest in the US AI buildout are increasing cross-asset linkages. There was already a strategic problem in terms of how to find diversifiers in a multi-asset portfolio, but the all-consuming nature of the AI trade compounds this. We are in no way negative on the AI trade and we’re happy to continue recommending a strategic overweight to equities and an overweight call on US equities compared with the rest of the world. However, investors urgently need to find ways to build portfolios that can be robust against any volatility in the AI trade.

This is not a tactical note in the sense of making a directional call N months forward; instead, it is a call for portfolio robustness in the face of the all-encompassing capital demands of AI.

With AI, the bigger issues are really more societal than financial. The concentration of power amongst AI firms, the demand for resources, and the risk that high productivity assumptions implicitly require a radically detrimental impact on the labor market all imply that this will in turn become a political issue—indeed, one can see the beginnings forming already. This in turn will possibly create extra connectivity between markets in time. Seen from this angle, the risk of AI being a cross-asset bubble might be better than the alternative that it actually works. But that is a topic for a different note. In this note, we discuss how to consider a broader portfolio approach to the risks in the capital concentration of the AI trade.

The equity perspective

The most obvious manifestation of the AI trade is in the equity market, up a very respectable 11% this year despite a Middle East escapade with questionable objectives that has not gone well, deteriorating geopolitics more generally, weak US consumer confidence and significantly higher bond yields (the topic of our next note). Yet, for all the excitement of higher index values, a US 12-month forward price/earnings ratio (PE) at 19.4x and a global 12-month forward PE of 18x may be elevated but is hardly extreme. Where valuation is stretched is on a Shiller PE basis at 41x, which tells us that if this is indeed a bubble, it is an odd one because it is more of an earnings bubble than a valuation bubble.

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The views expressed herein do not constitute research, investment advice or trade recommendations, do not necessarily represent the views of all AB portfolio-management teams and are subject to change over time.

About the Author

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