AI Innovation: Which Inning Are We In?
February 2026, From the Field
- Overview
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In this short video, Paul Greene, Equity Portfolio Manager, discusses:
- AI growth opportunities over multiple decades – not just a few years
- Near-term opportunities for select industries to monetize AI innovation
Paul explores where we stand in the AI technology cycle and what it means for investors.
With AI being such a large part of this, of the discussion in the market these days, we get asked a lot by clients: What inning of the game are we in? And we spend a lot of time talking about that. But frankly, that's a pretty difficult question to answer. Fortunately for us, we don’t actually think that's the most important question.
I think a much more important question is: What game of the season are in? And when you think about it in that perspective, it's actually much easier to come to a conclusion. So if you think about some of the other technology waves that have happened in the past, whether that’s the advent of the internet, mobile computing, or cloud computing, these are all really significant advances in technology. And these are things that didn't play out over just a couple of years. They played out over decades.
So if you think about the internet, it's about three decades old at this point, still growing in the double digits - well above average GDP. If you look at cloud computing, it's about two decades old, still growing north of 20% as an industry. I think AI is going to be very similar. I think it's going to play out over multiple decades.
Historically, technological trends don't just stop on a dime. So I think it's likely that we continue to see really strong improvement in the technology itself. However, that's only one piece of what's important.
Behind the technology investment is actually product creation, and product creation lags the technology. If the technology stopped improving today, I think we would see years and years of runway for the product to actually catch up with what the technology is already able to do. So there's going to be a lag on that, and then product adoption follows product creation.
And then, of course, monetization ultimately follows behind product adoption. So when we think about what's already happened with the technology, we think basically the foundation is laid and there's a lot of potential stored energy in the system that's going to turn into kinetic energy over time. It's also instructive to look at certain areas of the market where that lag is actually pretty short.
So there's a couple of areas we could point to today. One would be code generation and software development. We're also seeing it in digital advertising. And then we're actually even seeing it in some more mundane areas that people wouldn't think of such as in the insurance industry, where we're seeing the product and the product adoption and the monetization follow very quickly, and we see very promising things there, and we think that's going to play out more broadly over the next several years.
So, while there's a lot of tension on the current cycle and where we are, we do think that's important as something we think about. But we think for long-term returns, the most important thing for our investors is to stay focused on the multi-year outlook and what's possible over time with this technology.
Paul Greene, II
Portfolio Manager
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