How to Build AI Portfolio Gains Either Way in Today's Market

The artificial intelligence sector has powered remarkable gains over recent years, driving the S&P 500 to three consecutive annual increases. As of October, the bull market marked its third anniversary. Yet beneath this optimism lies a critical question many investors are grappling with: Can we continue profiting from AI whether valuations hold or the sector experiences a correction? The answer is yes — but it requires strategic positioning either way.

Market Fundamentals Still Support the Momentum

Before discussing risks, the encouraging reality is that corporate earnings are backing up the AI enthusiasm. Recent quarters have shown Nvidia and Taiwan Semiconductor Manufacturing delivering climbing revenues alongside robust demand for their products. This earnings power suggests that current market excitement has foundation in operational reality, not pure speculation.

However, valuations remain elevated. The S&P 500’s Shiller CAPE ratio sits at historically lofty levels — a threshold reached only once before in recorded history. This combination — strong earnings paired with premium valuations — creates an environment where investors need either way strategies.

Build Diversification Across Sectors and Risk Profiles

The first move is ensuring your portfolio doesn’t concentrate all capital into AI-dependent holdings. Yes, owning shares of AI infrastructure leaders like Nvidia makes sense, but simultaneously holding positions in defensive sectors such as healthcare or established financial firms like American Express provides ballast either way the market moves.

When an AI slowdown occurs, such diversification cushions your portfolio. When AI momentum accelerates, your growth holdings capture those gains. This dual positioning lets you win regardless of which direction unfolds.

Seek AI Exposure Without Full Dependence

Within the AI space itself, prioritize companies that benefit from AI trends but don’t rely solely on them for growth. Amazon and Apple exemplify this approach — both have meaningful AI initiatives, yet their revenues flow from diverse business streams including cloud services, consumer devices, and ecosystem services.

Similarly, Meta Platforms trades at 21x forward earnings estimates and generates the majority of its revenue from advertising rather than AI directly. This insulates shareholders against AI-specific downside risks either way you position your holding period.

Match Stock Selection to Your Risk Tolerance

Not all AI investors operate identically. Aggressive investors comfortable with volatility can overweight high-growth, unprofitable AI plays betting on future dominance. Conservative investors seeking steadier returns should limit exposure to speculative positions and instead focus on profitable AI players with established revenue models.

Your comfort with drawdowns determines your exact allocation. Calculate whether you could maintain positions through a 30-40% decline, or whether such losses would force panic selling. This self-assessment prevents either way uncertainty from paralyzing your decision-making.

The Path Forward Either Way the Market Moves

Whether the AI sector continues climbing or experiences a pullback, your preparation determines outcomes. A well-diversified portfolio spanning multiple industries and valuations — combined with thoughtful security selection — positions you to capture gains either way. The key is moving beyond worry about what might happen and instead constructing a framework that profits from whatever does unfold in the quarters ahead.

Data as of January 25, 2026. Past performance of historical investments like Netflix and Nvidia — returning $464,439 and $1,150,455 respectively on $1,000 investments from their Stock Advisor recommendation dates — should not be considered predictive of future results. Stock Advisor’s average 949% return vastly outpaced the S&P 500’s 195% during comparable periods, though individual results vary.