AI Adoption Drives Investment Shift Beyond Chipmakers

Investors are looking beyond semiconductor makers as companies across industries deploy artificial intelligence (AI) to transform their operations and products.

Generative AI reached 50% of U.S. households in just three years, a speed that dwarfs every prior general-purpose technology, according to Alger’s Winter 2026 Capital Markets presentation. The postal system required 267 years to reach similar penetration, and newspapers took 172 years. Even the Internet needed 14 years.

This rapid diffusion is creating investment opportunities among companies that adopt AI technology, not just those building the infrastructure behind it, according to Alger’s research.

Alger’s AI Investment Map divides the landscape into two categories. “Enablers” develop building block components like hardware and software. Meanwhile, “adopters” integrate AI into their businesses to enhance products or improve productivity.

Beyond Infrastructure

Much attention has focused on companies manufacturing chips and building data centers. However, adopters span diverse sectors from medical devices to financial services, according to the research.

Medical device companies are using AI for earlier disease detection while financial services firms are automating compliance processes to improve margins, according to Alger. Other sectors deploying AI include advertising and media for personalized content, aerospace and defense for threat detection, and cybersecurity for automated incident response.

The adoption wave extends to operational efficiency as well. Companies in customer service, logistics, and waste management are deploying AI to streamline workflows and reduce costs, according to the research. This internal productivity focus complements the external product enhancements happening across industries.

The Alger AI Enablers & Adopters ETF (ALAI) invests across both categories, holding companies ranging from infrastructure providers to end users of the technology. The fund carries a 0.55% expense ratio and launched in April 2024.

Top holdings in the ETF include major technology companies like Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), along with semiconductor manufacturers and emerging AI-focused firms.

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The following positions represented the noted percentages of ALAI assets as of February 2, 2026: Microsoft Corporation: 8.51%; Amazon.com, Inc.: 8.84%; Alphabet Inc: 6.18%

The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of February 2026. These views are subject to change at any time and may not represent the views of all portfolio management teams.
They should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. Holdings and sector allocations are subject to change. Past performance is not indicative of future performance.

Risk Disclosures: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors, and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI technology could face increasing regulatory scrutiny in the future, which may limit the development of this technology and impede the future growth.  AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology. A significant portion of assets will be concentrated in securities in related industries, and may be similarly affected by adverse developments and price movements in such industries. A significant portion of assets may be invested in securities of companies in related sectors, and may be similarly affected by economic, political, or market events and conditions and may be more vulnerable to unfavorable sector developments.  Investing in companies of  small and medium capitalizations involves the risk that such issuers may have limited product lines or financial resources, lack management depth, or have limited liquidity. The Fund is classified as a “non-diversified fund” under federal securities laws because it can invest in fewer individual companies than a diversified fund. Private placements are offerings of a company’s securities not registered with the SEC and not offered to the public, for which limited information may be available. Such investments are generally considered to be illiquid. Foreign securities involve special risks including currency fluctuations, inefficient trading, political and economic instability, and increased volatility. ADRs and GDRs may be subject to  international trade, currency, political, regulatory and diplomatic risks. Active trading may increase transaction costs, brokerage commissions, and taxes, which can lower the return on investment. At times, cash may be a larger position in the portfolio and may underperform relative to equity securities.

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