Just a month ago, investors were increasingly concerned about the seemingly astronomical spending of major tech companies on AI infrastructure build-out.
Yet the S&P 500 (SPX) reached another new high on 13 August 2026.
One thing is clear: no one can predict short-term market movements.
The good news is you don’t have to.
Subsequent AI waves will create fresh opportunities.
But can you distinguish real opportunities from hidden traps?
That’s what matters most.
AI Growth is a Cycle, not a Straight Line
When prices fall, investors wait for a “bottom”.
But when prices rise, they wonder whether it’s the “peak”.
The result?
Inaction from constantly sitting on the sidelines.
While holding cash removes market risks, inflation erodes its purchasing power.
Such analysis paralysis is what prevented investors from participating in one of the greatest wealth-creation engines of our time – the AI supercycle.
But here’s the thing about supercycles: they don’t always move in a straight line.
AI model winners like Alphabet (NASDAQ: GOOGL) and OpenAI drove the initial phases of the growth cycle from 2023.
Today, players that anchor the most critical supply chain bottlenecks, such as high-bandwidth memory and advanced expertise required to manufacture them, have taken over the momentum.
Still, the initial momentum isn’t over.
As capacity constraints are resolved and enterprise monetisation scales meaningfully, overall growth should broaden sustainably and include successful players across all phases.
For investors, the key is to position themselves in key players that generate long-term value rather than mull over short-term market volatility.
Who’s Funding the Current Momentum?
While global AI investment is expected to reach US$900 billion in 2026, the lion’s share – US$730 billion – comes from the four largest US hyperscalers: Amazon (NASDAQ: AMZN), Alphabet, Microsoft (NASDAQ: MSFT), and Meta Platforms (NASDAQ: META).
The reason? To win an unprecedented AI arms race among themselves.
Here’s the thing about this arms race: the risk of losing market share due to a lack of computing power is larger than that of short-term margin compression.
Despite the unprecedented investment, it’s not even the peak, as global AI investment is forecast to rise further by 33% to US$1.2 trillion in 2027, year on year (YoY).
The implications?
Massive capital flows to vendors that supply the specialised infrastructure equipment that powers critical AI workloads.
As hyperscalers evolve from their traditionally “asset-light” software businesses into capital-intensive infrastructure operators, these vendors become prime beneficiaries of these capital outflows.
Follow the Money
Defining the foundations for AI compute, NVIDIA (NASDAQ: NVDA) is one of the greatest recipients of these humongous AI investments.
However, as a fabless chip designer, it still needs Taiwan Semiconductor Manufacturing Company (NYSE: TSM), or TSMC, and SK hynix (KRX: 000660) to provide the advanced packaging expertise and specialised high-bandwidth memory (HBM) to build its chips at scale.
NVIDIA’s Rubin generation, which entered full production in June 2026, stacks HBM4 memory delivering roughly 2.75 times the bandwidth of Blackwell’s HBM3e – making these “unsung kings” of the supply chain indispensable partners rather than mere suppliers.
Aside from NVIDIA’s “general-purpose” graphics processing units (GPUs), hyperscalers rely on in-house-designed “custom” silicon to diversify specific AI workloads away from NVIDIA’s chips.
To this end, Broadcom (NASDAQ: AVGO) is reportedly a premier partner for multiple tech giants like Alphabet, Anthropic, Meta, and OpenAI.
How Can You Position Your Portfolio to Ride the AI Wave?
Picking the next multi-trillion-dollar winner is the most rewarding approach to riding the AI wave.
However, with the nascent AI revolution laden with multiple twists and turns, picking the ultimate winner is hard – if not impossible.
But what if you don’t have to pick?
That’s where exchange-traded funds (ETFs) come into the picture.
ETFs that track the largest global semiconductor companies, like the VanEck Semiconductor ETF (NASDAQ: SMH), benefit from the current global AI chip crunch.
And should AI growth broaden to include enterprise software, ETFs like the Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ), with broader exposure to the software and hardware sectors, should enrich investors.
Alternatively, investors can consider a core-satellite portfolio – anchor your core position in diversified passive ETFs while actively managing your satellite portion exposed to key players that benefit massively from global AI investments.
Get Smart: The Fundamentals Always Win
Instead of being fixated on sensational headlines that try to predict the next winner, focus on key fundamental metrics:
A high price-to-earnings (P/E) multiple is not always bad; just ensure the company’s earnings growth is comparably high.
Earnings are an opinion, but cash is a fact.
Earnings are only good if most of them are converted into actual free cash flow – the lifeblood of a sustainable business.
Avoid speculation; save it for your next visit to Singapore Pools.
For the stock market, you are better off sticking to businesses with clear competitive advantages.
By positioning yourself in AI enablers that pass the above criteria, you are on your way to riding the next wave of the once-in-a-lifetime AI supercycle.
What if the current “market turmoil” isn’t a crisis… but a setup?
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Disclaimer: Larry L owns shares of NVIDIA, Amazon, Microsoft, Alphabet, Meta Platforms, and Broadcom.
