AI Is Changing How We Think About Investing
Investing has always been about understanding risk, timing, and long-term opportunity. The core principles still apply. Stick to your strategy, invest in companies you understand, avoid panic selling, and look for opportunities when strong stocks trade at a discount.
But now there is a new filter that investors cannot ignore.
Artificial intelligence.
We are entering a phase where investors need to ask one question before every investment decision.
Can AI disrupt or replace this company’s core business model?
Why AI Risk Changes the Game
In the past, a stock that dropped in price often had a path back to its previous highs. Investors could wait for recovery, hold through volatility, and expect that strong companies would rebound over time.
That assumption is no longer always true.
If a company’s core business can be replicated or replaced by AI, there is a real possibility that it may never return to previous price levels. Even if it does recover, it could take six to ten years. During that time, opportunity cost becomes a major factor. You could have been invested in companies that are benefiting from AI instead of being hurt by it.
That is a major shift in how investors should think.
The Valuation Problem: Multiples Can Keep Falling
This is not about saying these companies are worthless. Many of them still generate revenue, serve customers, and play a role in their industries.
The issue is valuation.
If investors begin to believe that AI can replace or reduce the importance of a company’s product, they may stop assigning high multiples to that business. When multiples compress, stock prices fall even if the company continues to perform.
We have already seen this play out in the software space. The SaaS sector experienced a sharp decline as concerns grew that AI could replace or significantly reduce the need for certain tools. Over a short period of time, many of these stocks were repriced lower, not because they stopped working, but because investors changed how they valued them.
That shift can be long lasting.
Where We Are Reducing Exposure
Because of this risk, we are becoming more cautious around companies that rely heavily on software that could potentially be replicated by AI.
This includes:
- SaaS companies with tools that could be replaced by AI models
- Businesses built around data processing or automation
- Platforms that may be simplified or absorbed into larger AI ecosystems
Even companies that were previously strong can face new uncertainty.
Names like Palantir and Shopify, while still important, could see pressure if parts of their business become easier to replicate with AI tools. Microsoft’s cloud ecosystem, once viewed as a clear long-term winner, now has areas that may face competition from evolving AI platforms.
This does not mean these companies will fail. It means the level of certainty around their future growth is lower than it once was.
Stocks Most Vulnerable to AI Disruption
To illustrate the point, here are the types of businesses that we believe face the most risk from AI disruption.
| Category | Example Type of Business | Why It Is Vulnerable |
| SaaS platforms | Workflow tools, dashboards, automation software | AI can replicate core functions faster and cheaper |
| Data processing companies | Analytics platforms, reporting tools | AI models can process and interpret data more efficiently |
| Automation software | Task-based tools, integrations | AI can replace multiple tools with one system |
| Content and digital services | Writing tools, design platforms | Generative AI can produce similar outputs instantly |
| E-commerce tools | Backend tools supporting online stores | AI can simplify or replace operational layers |
Where We See Opportunity Instead
While some sectors face disruption, others remain strong because their core business cannot easily be replaced by AI.
We are seeing more confidence in companies tied to physical products, real-world demand, and essential services.
Examples include:
- McDonald’s, which operates a global consumer business tied to daily demand
- Apple, which combines hardware, brand loyalty, and ecosystem strength
- Boeing, which builds aircraft and operates in a highly specialized industry
These types of companies provide something AI cannot replicate directly. Their value is rooted in physical infrastructure, global scale, and real-world production.
Stocks More Resistant to AI Disruption
On the other side, these are the types of businesses that are much harder for AI to replace.
| Category | Example Type of Business | Why It Is More Durable |
| Consumer brands | Restaurants, retail, global franchises | Demand is driven by real-world consumption and brand loyalty |
| Manufacturing | Aerospace, industrial production | Requires physical production and infrastructure |
| Hardware ecosystems | Devices and integrated products | Combines physical goods with software and brand ecosystem |
| Infrastructure and logistics | Transportation, supply chains | Complex systems that cannot be easily replicated by AI |
| Essential services | Utilities, basic consumer needs | Constant demand regardless of technological change |
A Simple Question That Changes Everything
Before making any investment decision today, you should ask one simple question:
Can AI take over this company’s core business, now or in the future?
If the answer is yes, even partially, it should factor into your decision.
This does not automatically mean you should avoid the stock, but it does mean you should think carefully about long-term upside, valuation, and whether investors will continue to assign strong multiples to that business.
Balancing Your Strategy in the AI Era
The fundamentals of investing still matter. Stick to the strategies that fit your goals and your risk tolerance. Continue to buy strong companies at a discount and avoid emotional decisions.
But now, add one more layer to your process.
Evaluate AI risk.
The investors who adapt to this shift will be better positioned to protect their capital and identify new opportunities as the market evolves.
Invest with a Strategy Built for the Future
AI is changing how markets operate, but the right strategy can help you stay ahead of those changes. At Michael Leslie Investments, we help investors evaluate risk, identify durable opportunities, and build portfolios designed for long-term growth.
If you want guidance on how to position your portfolio in the age of AI, contact Michael Leslie Investments today.
