Chipmakers, data-centre builders and power generation are some of the areas that investors are backing as the next AI trades, but strategists at Ruffer are more excited by stocks that will benefit from the ‘wealth effect’ of the technology's rise.
Markets have reached historic highs, with much of that value concentrated in companies building AI infrastructure, but Ruffer investment specialist Oliver Shale said the absolute return manager is looking beyond crowded AI stocks to identify where the profits of the AI build-out will be spent next.
Shale said the resulting wealth creation of the AI boom has been "staggering" in scale and suggested that the wealth effect (the tendency for rising asset prices to encourage people to spend more as they feel richer) could be a boon for non-tech sectors, such as travel and luxury retail.
"Whilst the impact of this is contested and difficult to measure, more visible is the extreme profitability that AI infrastructure spending is driving across parts of the supply chain," Shale said. "And it's not just paper wealth; performance bonuses, profit-sharing agreements and blockbuster IPOs are creating large income gains."
South Korean chipmaker SK Hynix is set to pay average bonuses of nearly $500,000 per employee this year while Samsung agreed a similar payout after its labour union threatened to strike. Accordingly, the Bank of Korea estimated that retail consumption in regional semiconductor hubs is already running well above the national average.
"It's no secret that memory chip companies are experiencing soaring demand and profits. Perhaps the more interesting question for a valuation-conscious investor is where these gains will be spent," Shale added.
Profits are already visible in South Korea's national accounts, he said, and Ruffer expects household consumption to follow the same trend.
Shale noted that demand for high-end goods has historically tracked wealth creation, much of it originating in East Asia. "Companies in sectors such as European luxury goods and hospitality are therefore well placed to benefit from this cash accumulation," he said.
The same dynamic is playing out in the US. Mega IPOs have created new fortunes for employees and founders, while data-centre developers are making large payments to rural landowners.
Morgan Stanley's wealth management division said more than half of the $148bn in new assets it gathered in the second quarter of 2026 came from recent IPOs, which helped the division post record net revenues.
"In tech-heavy regions such as the San Francisco Bay Area, investment advisers are recruiting aggressively with the prospect of managing future windfalls and the impact is already being seen in sectors like the luxury housing market," Shale added.
"So far, the effects are localised, but it's reasonable to expect some of the spending to make its way into broader consumer-sensitive sectors."
AI hyperscalers have driven most of the recent growth in global capital spending, concentrated heavily in IT. Ruffer thinks continued data-centre construction could broaden demand into other industrial goods, with earnings expectations for makers of electrical components and cooling systems already climbing sharply.
Shale said that if the build-out drives non-tech investment and jobs in the US, the effects could spill into higher incomes and household spending, mirroring the pattern already seen in South Korea.
"Thinking about what companies are exposed to the second-order benefits of AI-related wealth creation is one way we are building asymmetry into our equity portfolio," the investment specialist said.
"We believe these profits could show up next in consumer-sensitive sectors such as retail, luxury goods, travel and hospitality, home improvement and asset management."
Shale cautioned that these dynamics can also work in reverse. Falling tech valuations or a retrenchment in AI capital spending could squeeze the wider economy, while consumers are still facing headwinds such as a higher cost of living and periodic energy price spikes.
"The Ruffer portfolio is well protected against these risks but, while markets are rallying, we are also seeking to identify the next beneficiaries of the current capital cycle that are not yet priced for it," he finished.
"With some forecasting AI-related capex to top $1trn in 2027, the broadening-out dynamics could well continue."