AI: The great disruptor and where smart money is moving

Artificial intelligence has long been spoken of as a technology of immense potential. What few anticipated, however, was the sheer velocity at which it would evolve and begin rendering entire business models redundant. That reckoning has arrived, and it is unfolding in real time across global markets.

From Buzzword to Business Reality

The past month has served as a compelling case study. AI has moved decisively into software development, automating code generation and modernising legacy systems. It is fundamentally blurring the line between what an IT services firm does and what AI can now do independently. The market responded swiftly: IBM witnessed a staggering 13% erosion in market capitalisation following reports of AI automating the modernisation of legacy programming languages such as COBOL. A loss of this magnitude had not been seen since the dot-com correction of 2000. This was not a bad earnings day. It was the market pricing in a structural question about long-term relevance.

The Middleman Problem

The disruption extends well beyond technology. AI is now systematically targeting industries built on intermediation, the business of being the bridge between a consumer and a service. Travel platforms like Expedia, Booking Holdings, and Airbnb built multi-billion-dollar businesses by aggregating options and earning a commission for the convenience they provided. AI agents can now assemble complete itineraries, right from flights, hotels, loyalty optimization to refunds and that too faster and cheaper, bypassing these platforms entirely. Their role as the indispensable middleman is eroding, and with it, the pricing power that justified their valuations. Markets reflected this promptly, with these stocks falling

The same logic applies to wealth management and tax services. A guided filing platform earns its revenue by walking users through a process. An AI that reads your documents, interprets tax law, and files tax on your behalf makes that guided workflow unnecessary. The function remains , but the revenue model built around facilitating it is under direct assault.

Navigating the AI Wave: What Investors Should Watch

This is where the conversation becomes critically important for investors. AI’s benefits -be it convenience, cost efficiency, speed, -are undeniable. Its adoption across enterprises will continue to accelerate. But the investment question is not simply “is AI good?” The more precise question is: who actually captures the financial value of AI, and over what timeframe?

AI infrastructure demands extraordinary capital, advanced semiconductors, high-performance servers, vast data centres, and the energy to power them. The returns on this investment, at the level of individual AI companies, remain uncertain and difficult to model. Meanwhile, legacy businesses that once carried strong fundamentals are being repriced almost overnight as the market reassesses their moat.

What the Charts Are Telling Us

While the Nasdaq 500 Large Cap Index has delivered broadly flat returns year-to-date, four sector ETFs have quietly but decisively outperformed: XLE (Energy) at +20.2%, XLB (Material) at 14.92%, XLI (Industrials) at +11.2% and XLU (State Utilities) at 9.26%. This divergence tells an important story.

Capital is rotating toward physical, hard-to-replicate assets, precisely the assets AI cannot virtualize or replace. Energy and grid infrastructure are not merely adjacent to the AI story; they are foundational to it. Processing the volumes of data that modern AI demands requires extraordinary computational power, and that power requires energy at an unprecedented scale. Industrial commodities and metals, similarly, are consumed by AI in the construction of the very data centers and server farms that make it possible. The market is already acting on this logic.

Conclusion: Respect the Disruption, But Position for What Endures

AI is not a passing trend. It is a structural shift in how economies function, how businesses create value, and how capital is allocated. Its pace of self-improvement and expanding use cases have already demonstrated that this technology will not wait for industries to adapt at their own pace.

For investors, the lesson is not to fear AI, it is to understand where in the AI value chain durable returns are most likely to be found. Businesses whose entire value proposition rests on being a middleman face a genuine existential question. Meanwhile, the physical world that AI depends upon energy, infrastructure, industrial capacity remains irreplaceable.

(The article in attributed to Jimeet Modi, Founder and CEO, SAMCO Group)