Recent AI cybersecurity tests exposed weaknesses in both frontier models and the environments built to contain them.
Vanguard global chief economist Joe Davis says investors should prepare for a transition from AI infrastructure stocks to companies that benefit from using AI.
Joe Davis, Vanguard’s global chief economist, says investors should start preparing for a transition away from AI infrastructure stocks and toward AI beneficiaries. The article notes that hyperscalers and AI hardware makers have posted strong gains, while Davis thinks aggressive spending may continue for another year or two. His concern is that much of that upside may already be priced in.
Davis argues that transformative technologies often create more long-term value for users than for the companies that build the technology. For investors, the key takeaway is not to abandon technology exposure, but to broaden attention toward companies that can use AI to improve productivity, services, and earnings growth.
Davis highlighted three areas for the next five to 10 years: value-oriented US stocks, non-US developed markets, and high-quality fixed income. These trades are presented as ways to participate in the potential shift from AI builders to AI users. The article cites healthcare providers, financial firms, and business services companies as examples of firms that could use AI to automate tasks or offer more personalized services.
Examples of funds offering exposure to those areas include the iShares Core S&P US Value ETF (IUSV), the Schwab International Equity ETF (SCHF), and the Vanguard Total Bond Market ETF (BND). Those examples are not framed as short-term calls; they are tied to Davis’s longer-term view of how AI benefits could spread across the market.
Davis’s thesis is not only about capturing potential upside if AI delivers on its promise. He also says these areas could act as defensive investments if the AI trade falters and investors move away from growth stocks. That makes the strategy relevant for investors who want AI exposure without relying solely on the current leaders of the AI buildout.
The practical takeaway is to review whether a portfolio is concentrated in AI infrastructure names and consider broader exposure to beneficiaries, international developed markets, and quality bonds. The article’s emphasis is on positioning for a market transition rather than trying to time the exact peak of popular AI stocks.
Recent AI cybersecurity tests exposed weaknesses in both frontier models and the environments built to contain them.

Three U.S. startups raised $1B or more in a week packed with major venture checks.
Berkshire’s cash pile shrank as Greg Abel increased stock buying and buybacks.

Amazon’s planned Texas data center would rely on on-site natural gas power, raising major emissions concerns.