Macro Markets and Machines_The Economic and Market Transformation Driven by AI_GWM report - Flipbook - Page 10
Macro, Markets, and Machines
November 2025
Section 2: Investing in the Age of Artificial Intelligence
Walid Khalid, CFA | Director, Investment Strategy, Scotiabank Global Wealth
Juan Manuel Herrera | Senior Economist, Scotiabank Global Wealth Management
•
Transformative technologies tend to boost productivity growth and output, while lowering costs for
businesses and expanding profit margins. In a world where margins face headwinds from fragile supply
chains, tariffs, protectionism, nearshoring, environmental transition, and rising labour costs, AI offers a
potential counter.
•
AI is a capital-deepening technology, suggesting that the incremental output generated will accrue more to
owners of capital than to workers, continuing the trend of a rising capital share and a declining income share.
This makes the case for owning equities.
•
Concerns about a bubble akin to the dotcom era have emerged. While similarities exist, today’s AI leaders are
fundamentally stronger, profitable, and cash-rich, with diversified revenue streams and sustainable
competitive advantages.
•
However, risks remain due to market concentration, policy and regulatory uncertainty, elevated valuations,
the possibility that the technology does not unfold as expected, and geopolitical risk. As such, investors
should maintain exposure to fixed income (attractive yields, portfolio stability) and alternative assets
(infrastructure, real assets, commodities) to hedge against volatility and capture opportunities in the physical
side of the AI economy.
•
From a regional perspective, advanced economies like the United States and Canada will likely reap the initial
benefits from AI-driven productivity gains, making these markets more attractive. Over time, other markets
may become more appealing as the technology becomes more diffuse.
Scotia Wealth Management
9
