AI: Is It Over or Just Beginning?
By: Aaron Anderson, CFP®, CFA, Managing Partner
February 11, 2026
Every year, the editors at Merriam-Webster choose a word that captures the zeitgeist of our culture for that year. Last year it was “slop” which they define as “digital content of low quality that is produced usually in quantity by means of artificial intelligence.” We’ve all seen the content online that we regret watching and feel dumber for having done so. Never our content of course!
If I were to pick a word of the year for the markets last year, it would be “AI”. Turn on any financial news network and you’re bound to hear AI relatively quickly. “AI is driving the market” (tech has for a while). “Are we in an AI bubble?” (maybe). “Is the AI trade over?” (judging by AI adoption rates it doesn’t seem like it).
Of course, AI is not new even though its use has skyrocketed over the last few years. I remember when 74-game Jeopardy champion and current host, Ken Jennings, and highest earning Jeopardy champion, Brad Rutter, lost resoundingly to IBM Watson all the way back in 2010 - an eternity in tech years.
Artificial intelligence in its current form isn’t really intelligence at all. So, despite Ken’s tongue in cheek warning, we don’t have to worry about Skynet sending Terminators to kill us all just yet – although they seem to have developed a survival instinct which is a bit scary.
Current AI is better defined as a “large language model” (LLM). They are fed tons of data scraped from books, videos, the internet, etc. When you ask it a question, it references that data and uses algorithms, scoring, and probability to determine a sequence of words – notice I didn’t say thinks of an answer – as output for the prompt. That’s also why it confidently gives incorrect answers, called hallucinations, and weird outputs at times like this somewhat creepy picture on the right that AI created to “improve” me (it was definitely hallucinating).
This is a good source if you’re interested in reading a “gentle primer” about it with more detail; I used quotes because it’s still complicated.
Even in its infancy stage, it has proven to be extremely useful with a lot of possibilities. For example, self-driving cars have improved steadily to the point where companies are offering driverless taxi services in many cities around the country. We see stories about the cars doing stupid things, like making illegal U-turns and making life difficult for first responders, but as they improve to the point of being better than human drivers – an admittedly low bar – we could get to the point where everyone has self-driving cars and no one even bothers to learn to drive.
Even our business has started to benefit. As those who I’ve had the recent pleasure of speaking with know, we’ve started using an AI notetaking tool during our phone calls. The AI records the call, generates notes from it, and then deletes the recording a week later. Sometimes I need to make small adjustments or correct a hallucination, but it admittedly takes better notes than I would and allows me to focus on the person I’m talking to. I hate to use a cliché, but it’s been a game changer for us.
A few months ago, volatility centered around issues with certain AI exposed companies. One had excessive debt, one issues with lower gross margins for their AI business arm, and another had a long time financial backer of their data center buildout step aside on one location. None seems like a major concern to the overall AI sector and if you delve into their reports, they say capital expenditures on new data centers is still increasing. But, it was enough to spook the market about a sector that has produced phenomenal returns until then.
In fact, in a more recent about face, the current volatility stems from a narrative that AI will replace the need for software companies. Why buy the software that a company is offering when you can just have an AI tool write it for you? Again, a bit overkill with the current state of AI software, but it seems to confirm LPL Research's conclusion that it appears we are in the early innings of a secular trend. The article specifically references AI infrastructure – data centers and power – and says the demand is rising faster than the ability to supply them. According to the Federal Reserve Bank of St. Louis, generative AI has been adopted at a faster pace than PCs or the internet. For better and for worse, it’s here to stay.
As I said in my recent Irrational Exuberance article, 2025 was yet another good year for the markets, better than the modest expectations we had going in. Analysts expect another good year due to strong corporate earnings, more AI investment, and softer monetary policy. I’m hopeful they’re right. Just don’t ask AI what it thinks!
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