Why AI-related company shares are leading the stock market - why you should pay attention

In recent years, artificial intelligence (AI) has become one of the hottest topics in the world of investing. If you keep an eye on the stock market, you may have noticed that companies involved in AI have been delivering impressive returns. US technology firm NVIDIA, for example, became the world’s first US$5 trillion company in October 2025.

If you’re investing in an equity fund, you’ll most likely have some exposure to AI. That’s because large benchmark indexes, like the S&P 500 and MSCI World, are heavily weighted towards mega cap tech companies like Alphabet, Microsoft, Amazon and NVIDIA that lead global AI investment.

This article considers why AI-related company shares have performed so well, whether this trend is likely to continue, why some investors might be thinking about adding AI-driven companies to their portfolios, and how to protect your portfolio in the event of volatility.

Why are AI companies dominating stock market performance?

AI-related companies have outperformed many others for several reasons:

• Innovation and growth: AI is transforming industries ranging from healthcare and finance to transport and retail. Companies leading the way in AI are often at the forefront of innovation, which attracts investors.
• Productivity boost: It’s anticipated that AI could help businesses operate more efficiently, reduce costs, and deliver better products and services. This could lead to higher profits and better share price performance.
• Widespread adoption: From chatbots to self-driving cars, it feels like AI technology is being used everywhere. As more companies rely on AI to stay competitive, those with strong AI capabilities are seeing increased revenues and market share.
• Investor excitement: There’s a lot of buzz around AI’s potential to change the world. This excitement has led to more investment in AI companies, pushing their share prices up.

Will AI-related companies continue to outperform?

No one can predict the future with certainty, and there remains some uncertainty about the growth and use of AI. While there are some reasons to believe that the shares of AI companies may remain strong, others suggest a wait and see approach:

• Growing demand: As technology continues to advance, some businesses and consumers are demanding smarter solutions and companies may be keen to keep pace with their competitors. This keeps the demand for AI high. 
• Continuous innovation: AI is still developing, with new breakthroughs happening regularly. This means that companies investing in AI research are likely to keep growing.
• Global reach: AI is not limited to one industry or country - it has global applications, making it a long-term growth opportunity.
• Support from big players: Major technology firms are investing heavily in AI, which helps drive the entire sector forward.

However, it’s important to remember that all investments carry risks. The AI sector can be volatile, and some companies may not live up to expectations. Diversifying your investments remains important and researching companies and sectors can be useful.

Why it’s important not to get carried away

Usually, the stock market tends to do well when the overall economy is growing, which is measured by GDP or the total value of goods and services an economy produces. This is because companies make more money when people and businesses spend more, which pushes up their share prices.

When it comes to investing in AI, there are risks to keep in mind: if the benefits and progress from AI don’t actually lead to the economy growing, then investing in AI might not be as rewarding as some hope.

Right now, most experts think that the economy won’t grow very quickly in many countries over the next few years. Because of this, it’s important to remember that AI isn’t expected to make a big difference to economic growth at the moment, so there’s a risk that investing heavily in AI may not pay off as much as people expect.

Why consider investing in AI-driven companies?

Having said that, including companies that are driving AI or adopting it as part of a balanced investment portfolio, isn’t necessarily a bad thing. There are a number of reasons you might consider it:

• Potential for high returns: Companies that successfully use AI to innovate and grow often see strong stock performance.
• Future-proofing your portfolio: As AI becomes more integrated into daily life, companies without AI may struggle to compete. Investing in AI companies helps you keep pace with changing times.
• Diverse opportunities: AI is used in many sectors, so you can invest in everything from tech giants to healthcare innovators and financial firms.
• Driving positive change: AI is helping solve major global challenges, such as improving medical diagnostics and reducing energy consumption. Investing in this sector means supporting progress.

For those new to investing, it can be helpful to look for established companies with a clear track record in AI, or consider funds that focus on technology and innovation. 

As ever, it’s important to consider your own financial goals and your appetite for risk before making investment decisions. Having a diversified portfolio across different sectors, different geographical regions, and different investment types, can help better spread your risk.

AI-related company shares have dominated recent stock market performance due to their ability to innovate and adapt in a rapidly changing world. While the continued growth and application of AI suggest that it may remain a key area for investors to watch, being mindful of the risks and staying true to key investment principles like not putting all your eggs in one basket is crucial.