Thematic Mid-Year Update: What's next for AI & geopolitics

Our 2024 Mid-Year thematic update focuses on two mega forces that are reaching critical inflection points -- the transformative advancements in artificial intelligence and the growing importance of geopolitics.
These mega forces are reshaping the global economy and, as a consequence, are impacting virtually all investors’ portfolios. So how should investors approach these mega forces for the rest of 2024 and beyond?

First, we believe the opportunity today in AI lies less in the digital world and more in the physical infrastructure supporting this technology. Artificial intelligence has transcended buzzword status and is getting rapidly integrated in businesses across the economy, from healthcare to financials and more. Yet as AI adoption takes off, its emergence is creating tremendous and immediate demand for hardware, for digital infrastructure and for power. Semiconductors, data centers, and even raw materials like copper are becoming the picks and shovels critical to AI's growth with data centers alone requiring as much as $1 trillion of investment by 2030.¹

Second, geopolitics is reshaping supply chains and public policy, creating select opportunities. Bipartisan efforts in the US to support domestic production and critical industries like semiconductors and automobiles, are poised to drive a renaissance in U.S. manufacturing.
At the same time, select emerging markets like Mexico and India are even benefiting from growing trade and attractive labor pools. And finally, global competition in technology and AI highlights both the vulnerabilities and opportunities of the S&P 500’s largest sector.²

To learn more about these powerful mega forces and how to potentially capture these opportunities in your portfolio, please visit iShares.com/Insights.

Sources
1: McKinsey & Company, “The semiconductor decade: A trillion-dollar industry,” 4/1/22. Forward looking estimates may not come to pass.
2: Sourced from Morningstar as of 6/12/24. The Information Technology sector holds the largest weight in the S&P 500 TR Index, accounting for 31% of the total.

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