Some Thoughts on A.I. and Historical Precedents

Introduction: A Reflection on Technological Patterns

I am neither a technology expert nor a futurist. At Innova, we are not stock analysts, so we don’t speculate on the future earnings of specific companies like Nvidia, Alphabet, or Meta. However, while the future rarely mirrors the past exactly, historical trends can provide valuable insights that help us navigate both the present and what lies ahead. In this context, the emergence of Artificial Intelligence (A.I.) seems to echo familiar patterns from recent technological revolutions.

A Historical Parallel: The Rise of Computing and the Internet

For those over the age of 40, think back 30 to 35 years ago. Do you remember when one of your friends or neighbours bought their first personal computer? You likely visited their house, curious to see what this groundbreaking technology could do—an innovation some believed would eventually take over all our jobs.

Fast forward just a decade, and most businesses, along with nearly every household, had a computer. The internet was also taking root. Fast forward again to today—what would happen if the internet went offline overnight? A significant portion of global activity would come to a halt.

The combination of the microchip, personal computers, and the internet has become so deeply embedded in daily life, economics, politics, and business that imagining life without it feels nearly impossible. It’s arguably the most significant societal shift since the Industrial Revolution—so integrated that we rarely pause to consider its scale.

New Business Models and Industries Born from Technological Shifts

This technological revolution didn’t just disrupt industries—it created entirely new ones. Initially, there were fears that computers would replace human jobs. Instead, they gave rise to industries that hadn’t previously existed, introducing careers that are now mainstream.

Will A.I. become as pervasive as computing and the internet? Will it reach a point where society could not function without it? The answer seems increasingly likely to be yes. If so, what lessons can we draw from the technological blueprint of the last 35 years that might inform the coming decades?

Key Lessons from the Past: What A.I. Might Mirror

1. Widespread Adoption and Economic Gains

Computers and the internet became ubiquitous, with productivity gains felt across the entire economy. A.I. is likely to follow the same path. While some sectors and

businesses will benefit more than others initially, the economic benefits of A.I. will likely filter through to nearly every corner of the market as adoption grows.

2. Emergence of New Business Models and Industries

Without the microchip and the internet, we wouldn’t have smartphones, streaming services, or online payment platforms. Companies like Apple, Microsoft, Amazon, and Netflix would look entirely different—or perhaps wouldn’t exist at all. Likewise, Alphabet, Meta, TikTok, and X owe their existence to the internet’s proliferation.

Who could have predicted, back in 2000, how this evolution would unfold? Amazon, now a global retail powerhouse, faced severe challenges in its early days—losing 90% of its market value by late 2001 after the dot-com crash.

A.I. may similarly pave the way for industries and careers we cannot yet imagine. A decade ago, who would have thought that becoming a “YouTuber” or an “online influencer” could be a legitimate career path?

The Unpredictable Nature of Technological Winners

One thing seems certain: we can’t accurately predict which companies will dominate the A.I. space in the future. However, it’s likely that the economic benefits will be widespread, touching businesses across all industries. Just as with the internet revolution, entirely new business models will arise, and currently unimaginable careers will emerge.

Following historical patterns, placing all your bets on a small number of current industry leaders seems overly simplistic—and potentially risky.

Investment Implications: A Sensible Strategy Moving Forward

We have already witnessed one of the most significant technological shifts in human history—could A.I. represent the next major transformation? If so, history provides a blueprint that suggests the dominance of a small number of players may not define the future landscape.

This perspective supports Innova’s current investment positioning: diversifying global equity allocations across styles, regions, and sectors that have not kept pace with the tech giants currently dominating market performance. Instead, we focus on businesses tied to economic growth that typically thrive in pro-growth environments.

These companies don’t require significant multiple expansion to succeed; they simply need their share prices to grow in line with their earnings. While this approach may underperform in markets where expensive sectors continue to become more expensive, it offers the potential to benefit from sector rotations and reduces exposure to risks such as higher inflation, fewer interest rate cuts than anticipated, unexpected economic shocks, or contracting market multiples.

This strategy, in our view, is both sensible and logical. At Innova, we believe in taking appropriate risks—this doesn’t include chasing past market leaders but instead positioning for the future based on historical lessons.