The AI Genie Is Unlikely to Go Back in the Bottle
Nancy Tengler sees the pause in AI model development as a hiccup. From construction to retail, businesses are already finding ways to use AI to improve productivity and lower costs.
Filed under:
Perspective
So, the three amigos who are not actually amigos have agreed to put the brakes on AI model development. Investors will be sorting out exactly what that means for tech stocks and just stocks in general.
But for market veterans like me this feels more like a hiccup than an end to the AI disinflationary trade. The technology has already spread across sectors. Our team has identified emerging themes we are hearing from the companies on earnings. Adoption has been widespread and exciting. Companies across sectors, as diverse as DE and CVX to SBUX to WMT or AXP are citing the productivity enhancing attributes of AI application in their businesses.
Applications we are not thinking about
A small business owner who is testing “remotely controlled demolition equipment” to offset the costs of insurance and litigation by injured or disgruntled workers. Why not?
Other applications will enhance workforce productivity, improve new product development and streamline legal, insurance, and supply chain costs. A correction is welcome but let’s recall that earnings growth has far outpaced stock returns this year and over the last 5-years. The PEG ratio on the SPX has fallen to the lowest reading in the past 30-years at 0.75.
You can question the technology, but this is most definitely not a valuation bubble. The AI genie is not going to be put back in the bottle.
The chart below shows the data center buildout across the country and attendant natural gas pipelines. Note the number of data centers in early-stage development.
Source: Bloomberg NEF; DC Byte 1Q 2026 data; Bloomberg Terminal.
A once in a generation technological revolution
The pace of innovation is exponential. Robotic surgery has taken off. Surgeons performed 85,000 operations robotically in 2007. By 2025 that number jumped to 3.1 million annually or one robotic surgery every 10 seconds.
And watch prices come down (we have consistently asserted that the AI trade is disinflationary). For example, the battery in an electric car cost $89K in 2010. Today it costs about $8K.
New business applications are accelerating and dwarfing concerns about the labor fallout from AI. Starting a business once involved hiring someone to build a website, do the books, and set a communication strategy. No more. One person and an AI subscription will do the trick.
Nancy Tengler
CEO and Chief Investment Officer
Disclosure: Laffer Tengler Investments, Inc. (“Laffer Tengler”) is an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC or state securities authority does not imply a certain level of skill or training. More information about Laffer Tengler can be found on the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov. Videos may discuss performance, limited to a partial list of strategies offered by Laffer Tengler Investments, and a limited list of securities that are held in client portfolios. The strategies discussed are not representative of all the strategies offered, nor do they represent all securities owned in strategies recommended by Laffer Tengler Investments.
The comments expressed represent the personal views of Laffer Tengler’s investment professionals based on their broad investment knowledge, experience, research, and analysis. The comments are not specific advice tailored to the specific circumstances of a particular individual. The comments are general and for informational purposes only, based on information and conditions prevalent at the time of publication, and are subject to change without notice due to changes in the market or economic conditions that may not necessarily come to pass. Forward-looking statements cannot be guaranteed. This is not a recommendation to buy or sell a particular security, nor is this financial advice or an offer to sell any product. Viewers should not consider or place specific reliance on the content presented as comprehensive advice nor as an offer or solicitation to buy or sell securities.
Do not use this information solely when making investment decisions nor select an asset class or investment product on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs, and investment time horizon. There can be no guarantee that any listed objective is achievable nor assurance that any specific investment will be profitable. Laffer Tengler does not undertake to advise you of any change in its opinions or the information contained in this appearance. Different types of investments involve varying degrees of risk, and there is no guarantee that a portfolio will achieve its investment objective. Always consult a financial, tax, and/or legal professional regarding your specific situation. Past performance is no indication or guarantee of future results.
Laffer Tengler does not control and has not independently verified data provided by third parties, including the data, charts, and graphs presented in this appearance. While we believe the information presented is reliable, Laffer Tengler makes no representation or warranty concerning the accuracy or completeness of any data presented herein.
More Perspectives
How we research a company before investing
Two companies can have the same dividend yield for different reasons. We explain how valuation and fundamental research help us decide whether a company fits an equity strategy.
What happens when cheap debt comes due?
A low borrowing rate can buy a company time. When the debt comes due, cash flow and the timing of other payments help determine how much room it has to refinance.
AI’s next test: Turning investment into earnings
AI spending is substantial. Laffer Tengler Investments examines how companies are turning that commitment into revenue growth, productivity and earnings.
Stay informed
Perspectives delivered to your inbox.
Receive curated market commentary, investment perspectives and educational insights from the Laffer Tengler team.