Every so often a single corner of the market becomes the story everyone feels they need an opinion on, from seasoned trustees to first time investors. In 2026 that corner is artificial intelligence, and the numbers have done little to quieten the conversation. The Nasdaq 100 — the technology heavy American index that has become shorthand for the AI trade — began the year near 25,000 and had pushed above 29,000 by the middle of it, sitting at roughly 29,300 as we came into July. Over the past five years it has returned more than 120%.
Those are the sort of figures that make people feel two things at once, often in the same breath: a fear of having missed the move, and a quiet worry that the best of it may already be behind them. So the question we field most often at the moment is not whether artificial intelligence matters. It is a more careful one. Can this continue, and if it can, how does a sensible investor take part without being fully exposed to the fall if it does not?
The companies doing the lifting
Most of the index’s recent strength traces back to a small cluster of very large American technology firms, the group the market has taken to calling the “Magnificent Seven”: Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta and Tesla. They sit at the centre of the AI build out. Between them they supply a great deal of the plumbing the next wave of computing runs on, from the chips and the data centres to the cloud platforms and the software layered on top.
What makes this period genuinely different from the dot com years of the late 1990s is that these are not stories trading on promise alone. Today’s leaders are, for the most part, deeply profitable businesses throwing off enormous revenues and free cash flow. That financial strength is precisely what lets them pour money into AI at a scale nobody else can match, which in turn reinforces their lead. Strong earnings fund the next round of investment, and the cycle feeds itself.
It is worth being honest about the other side of that strength, though. Because so much of the index now rests on so few shoulders, the market has grown unusually concentrated. And the seven have not moved as one lately: as a group they have actually lagged the broader American market for stretches of this year, a reminder that “big and dominant” and “always rising” are not the same thing.
The question is no longer whether artificial intelligence will shape the economy. It is how to take part in a way that fits your own tolerance for a bad year.
Why the story may still have room to run
For all the gains already banked, a good many investors believe the AI cycle is still early. Most businesses outside technology have barely begun to use these tools in earnest, while demand for computing power, cloud capacity and advanced semiconductors keeps climbing. The largest technology firms have answered that demand with staggering commitments to new capacity: taken together, the big American cloud operators are on course to spend several hundred billion dollars on data centres and AI infrastructure in 2026 alone.
The most recent full earnings season, covering the first quarter of 2026, largely bore out the optimists. The biggest technology companies mostly beat analysts’ expectations, even against an uncertain global backdrop. Telling, though, was how the market answered: several of those companies saw their shares dip in spite of the good news. When beating expectations is no longer enough to lift a price, it usually means a great deal of good news is already in it.
What gives a careful investor pause
No investment theme travels in a straight line, and this one has left plenty for a cautious mind to chew on. The run has stretched valuations and, as noted, packed an uncomfortable share of the world’s equity indices into a handful of names. Anyone who has done well out of the rally is entitled to ask how much future growth is already reflected in today’s prices.
The recent wave of blockbuster listings sharpens the point on both sides. SpaceX came to market in June in the largest listing on record, and both Anthropic and OpenAI have filed to follow, although OpenAI, by some reports, may now hold off until 2027. That is a powerful signal of appetite for anything touching AI. It is also worth noting that SpaceX’s shares slipped in the weeks after its debut — a useful reminder that late arriving enthusiasm and steady returns do not always travel together.
Others are simply wary of committing fresh money after so strong a run, mindful of what slower growth, a regulatory intervention or a shift in mood might do. For most people the real question is not whether to hold technology at all. It is how to take part in the opportunity while keeping a firm hand on the risk.
Different ways to take part
There is no single right answer here, and the sensible route depends heavily on the person. Broadly, though, an investor drawn to the AI theme has a few doors to choose from.
- Direct shares. Buying individual technology companies. The most direct exposure, and the most concentrated. It rewards conviction and punishes it in equal measure.
- Exchange traded funds. A fund tracking a broad technology index such as the Nasdaq 100 spreads the bet across many names at low cost. You give up the chance of picking the single winner in return for not having to.
- Structured solutions. A growing number of investors are turning to structured products that aim to capture much of the market’s upside while building in a defined measure of protection against a fall. They tend to appeal to those who stay constructive on technology over the long run but would rather not sit fully exposed to a sharp drawdown.
Each of these carries its own trade offs in cost, tax, liquidity and the precise shape of the risk you end up holding. None is inherently better than the others; they simply suit different temperaments and different plans. That is usually the part of the conversation worth having slowly, and with someone who knows your whole picture rather than this one holding in isolation.
Beyond the headlines
Whatever one makes of current valuations, it is hard to argue with the scale of the shift underway. Artificial intelligence is already reshaping industries, business models and the markets that price them. For most investors the interesting question has quietly moved on. It is no longer whether AI will matter to future growth, which few now dispute, but how best to gain exposure to it in a way that genuinely fits their own goals and their own appetite for risk.
As the cycle matures, we suspect that balancing the pull of growth against a sober respect for what can go wrong will count every bit as much as spotting the next breakthrough. The upside is worth wanting. It is simply worth holding carefully.
Market data referenced is approximate and as at early July 2026; index levels and company circumstances change constantly, so verify current figures before acting. This article is general in nature, does not constitute financial advice or a recommendation to buy or sell any particular investment, and does not take your personal circumstances into account. Past performance is not a guide to future returns. Please speak to your adviser about what is appropriate for you.
