The most important technology investment for the next decade

If there’s one word that can sum up the current economic environment, it’s uncertainty. An uncertainty that’s been driven by U.S. trade policies. Take, for example, the Trump administration’s trade policy in regards to China. It’s implemented and adjusted tariffs on Chinese imports numerous times, with rates as high as 145% at one point. While these measures have been scaled back and deferred, the lack of clarity surrounding their long-term implementation has created a challenging environment for businesses.

However, while much has been said about President Trump’s belief in tariffs as a revenue source, the Chinese tariffs align with a broader goal of other recent U.S. administrations: bringing key technology manufacturing back to the U.S. And this is where one opportunity for tech investors presents itself. The push for domestic manufacturing and the need to remain competitive in global markets stands to make technologies like artificial intelligence (AI) even more critical in improving productivity and driving innovation in the U.S.

While tariffs and trade policies dominate headlines, U.S. export controls that restrict the sales of key technologies are potentially a greater existential threat. True, these measures may protect short-term competitive advantages, but they could inadvertently spur China to improve their own capabilities and create a more formidable competitor in the long run.

Another long-term risk is the inherent disruption within the tech sector itself. Technology evolves through a process of creative destruction, separating winners from losers. The current wave of innovation, driven by AI, presents both immense opportunities and significant challenges. Not all companies will be able to achieve competitive advantage through AI, and only those that leverage it to create a distinct edge will likely thrive.

When choosing how to invest in the AI theme, CIBC Asset Management focuses on three key areas.

• Infrastructure and semiconductors: These two pieces are key to the AI ecosystem puzzle. Companies that provide the hardware and connectivity solutions that power AI applications are at an advantage.
• Enterprise software and tools: The adoption of AI in enterprise settings hinges on the ability to migrate and utilize large datasets effectively. Companies that facilitate this transition should stand to benefit.
• Consumer applications: AI’s impact extends to consumer-facing technologies, from enhanced search engines to personalized recommendation systems. Companies like Google, Meta, and Apple are at the forefront, using AI to improve user experiences and drive monetization.

Despite the challenges posed by trade policies and technological disruption, there’s reason to be optimistic about the tech sector’s medium- and long-term prospects. We think we’re in the early innings of the current technology adoption cycle of AI, and we’ve already witnessed significant investments in AI infrastructure by major companies. This should help drive adoption in enterprise and consumer applications.

The transformative potential of AI is why it remains arguably the most important technology to invest in over the next decade. As the tech sector continues to evolve, investors and businesses must navigate a landscape of uncertainty, innovation and disruption. For those who can identify and capitalize on the right opportunities, the rewards could be substantial.

Robertson Velez is the Lead Portfolio Manager of the CIBC Technology Innovation Fund. This fund invests in technology and technology-adjacent themes. Robertson is also Co-Lead Portfolio Manager of the Renaissance Global Innovation Fund Opens a new window.. This fund invests in a blend of technology and health care.

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