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Disclosure: The author of this article used artificial intelligence to edit and adapt their original draft of this article.
There is a growing disconnect at the heart of many investment portfolios today. Clients often believe they are diversified because they own multiple funds, work with different managers, and allocate across a range of sectors. However, when they look beneath the surface, they frequently discover that a significant portion of portfolio performance is tied to the same handful of technology companies driving today's market returns.
This concentration is not necessarily intentional. The largest technology companies have become such a significant share of major indices that many diversified portfolios now carry substantial exposure to the same underlying forces such as artificial intelligence adoption, semiconductor demand, and digital infrastructure expansion.
An Accelerating Trend
These exposures are connected to a common investment thesis — that AI adoption will continue to accelerate and that the companies enabling it will capture substantial value creation and productivity gains. This remains a concentrated thesis, and portfolios heavily exposed to it may carry risks that traditional sector classifications fail to fully capture.
Consider some of the emerging constraints. Data center electricity demand is growing rapidly, placing pressure on aging grid infrastructure in many regions. Transmission bottlenecks are delaying new power connections. Water availability and cooling requirements are becoming increasingly important considerations for large-scale computing facilities.
Supply chain disruptions, from geopolitical tensions affecting key maritime trade routes to climate-related constraints such as reduced water levels in the Panama Canal, have demonstrated how interconnected the technology ecosystem has become. Advanced semiconductors and the infrastructure supporting AI deployment rely on global supply chains that can be simultaneously affected by geopolitical, environmental, and resource-related pressures. These are not financial risks isolated to a single company. They are systemic constraints that can influence the pace, economics, and profitability of the broader AI ecosystem.
Looking Beyond the Software Layer
This raises an important question for advisors and investors. If portfolios already have significant exposure to the beneficiaries of AI, do they also have exposure to the infrastructure required to make AI possible? Artificial intelligence has needs that extend beyond the cloud alone. It runs on electricity — and vast quantities of it. The cloud data center also requires transmission networks, energy storage systems, advanced cooling technologies, water resources, and resilient physical infrastructure capable of supporting an increasingly digital economy.
As a result, one of the most compelling yet often-overlooked investment opportunities may lie not only in the software layer of AI, but in the energy systems that enable it. Companies modernizing electric grids and energy storage capacity, deploying distributed energy resources, improving energy efficiency, developing advanced cooling technologies, and strengthening water and resilience infrastructure may all benefit from growing AI-driven demand.
Meeting the energy needs of the digital economy will likely require significant investment in clean energy generation, transmission upgrades, microgrids, battery storage, and other forms of resilient infrastructure over the coming decades.
The Influence of Underlying Forces
Importantly, these businesses are often influenced by different economic drivers than technology companies. Their revenues may be supported by regulated returns, long-term contracts, infrastructure demand, or physical asset utilization rather than software adoption cycles alone. As a result, they can provide exposure to the same structural growth trend while offering genuinely differentiated sources of risk and return.
True diversification means gaining exposure to different drivers of performance rather than simply holding a larger count of securities. For many retail investors, this exposure is available through listed infrastructure funds, utility strategies, and ETFs focused on energy storage and industrial innovation.
For institutional and eligible investors, private market vehicles can provide access to long-duration infrastructure assets that have historically exhibited lower correlation with public equity markets and may provide additional resilience during periods of volatility.
Rethinking Diversification for the Next Decade
The traditional framework for diversification, technology versus healthcare versus financials, was developed during a period when industries and local economies operated more independently. Today's economy is increasingly interconnected in a resource constrained world facing a growing number of costly global warming related crises.
A more useful lens may be to dive deep into the transformation drivers and barriers instead of looking only at the surface of each sector. Rather than asking which sector a company belongs to, investors can dig into where it sits within a broader value chain and what shifts will need to happen to transform, modernize, and improve resilience of that value chain.
Viewed through this lens, a portfolio that captures the opportunity of the investments in distributed energy resources like battery, solar, and vehicle-to-grid charging, with water infrastructure upgrades needed to scale industries and de-risk other parts of the portfolio is more diversified and risk protected. Turning a blind eye to these underlying structural challenges is costing the sector in economic losses, and public trust.
Pushback against AI data centers has blocked hundreds of billions of dollars in planned construction projects in the first quarter of 2026 alone. The solution is not simply pouring more into the builders of more data centers and overindexing on the technologies that cannot succeed without the underlying systems and communities falling apart.
A systems-thinking portfolio approach can help reduce concentration risk while preserving exposure to long-term innovation and growth. This is not an argument for reducing technology exposure or retreating from artificial intelligence per se. The objective is to provoke thoughtful consideration on whether portfolios also need to have exposure to the modern and future-looking infrastructure needed to enable AI to function to our economic and collective benefit.
As capital continues to flow toward the most visible beneficiaries of AI, some of the most durable opportunities may lie deeper in the value chain in the systems that are essential to one of the most significant technological transformations of our time.
Julia Wilkinson is Chief Investment Officer and Managing Partner of LEBEC.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives