As we look ahead to 2025, investment strategies are poised to pivot significantly, particularly in sectors tied to infrastructure and cybersecurity. Jay Jacobs, the head of thematic and active ETFs at BlackRock, has highlighted artificial intelligence (AI) as a transformative force behind these investment avenues. Jacobs emphasizes that we are still in the nascent stages of AI adoption, suggesting that the real action is yet to unfold, and investors should be prepared to capitalize on emerging trends.
The Importance of Data Infrastructure
One of the essential elements driving the need for infrastructure investments lies in the requirement for robust data centers. As businesses increasingly adopt AI technologies, the demand for data storage and processing capabilities will surge. Jacobs points out that these facilities are not just abstract concepts—they represent physical structures that are critical for operating AI systems. This shift necessitates a focus on tangible investments in real estate, energy sources, and essential materials such as copper, which are indispensable for maintaining the physical backbone of our digital economy.
Alongside infrastructure, the growing significance of data safety cannot be downplayed. Jacobs argues that as the value of data increases, so does the need for comprehensive cybersecurity measures. The investment landscape is evolving, and cybersecurity is emerging as a key player in assuring the integrity and privacy of information. The rapid growth in revenue within the cybersecurity sector is largely attributed to the expanding reliance on AI technologies, which present both opportunities and vulnerabilities that must be addressed.
Jacobs advocates for a diversification of investment strategies beyond traditional tech giants. He indicates that investors should consider other players in the semiconductor and software arenas that are aligning with the AI trend. Focusing solely on megacap technology stocks may not capture the full spectrum of growth opportunities that are potentially profitable in this dynamic landscape. By broadening their investment focus, savvy investors can unearth hidden gems within various sectors that stand to benefit from the AI boom.
For investors eager to dive into this burgeoning landscape, Jacobs recommends several exchange-traded funds (ETFs) as viable options. BlackRock’s iShares Future AI & Tech ETF (ARTY) and the iShares AI Innovation and Tech Active ETF (BAI) are illustrative examples. The performance of these ETFs, with a notable uptick of around 13% for ARTY this year and similar growth for BAI since its late-October launch, underscores the potential returns the market holds for early adopters in AI and associated technologies.
The investment outlook for 2025 appears promising for sectors linked to AI, infrastructure, and cybersecurity. By understanding the demands of the digital economy and recognizing the physical elements that make AI viable, investors can strategically position themselves for success. As technology continues to shape the future, embracing a forward-thinking investment strategy will be crucial in navigating the complex landscape of opportunities ahead.