Don’t want to be a ‘peasant’? Try thematic investing

Shuli Ren, Bloomberg

You’ve got five more years — maybe less. In a fast-changing world turbocharged by President Donald Trump’s executive orders and AI, people need to make investments that can transform their lives, or risk being left behind.

The speed of wealth creation by the privileged few is there for all to see. In just a few weeks, the Trump family racked up about $1.3 billion from two crypto ventures, each less than a year old. With the Bitcoin price hitting a record high — thanks in part to the president’s Genius Act, which allows for the broader adoption of digital assets in traditional finance — the newly wealthy are splurging on luxury travel, flying private jets, and cruising the Mediterranean.

As for the rest of us, even well-paid professionals are having a tough time finding a safe harbor. Artificial intelligence is disrupting the white-collar labor market. While top AI researchers can make $100 million a year, thousands of tech jobs are being cut by the likes of Salesforce Inc. and Microsoft Corp. The situation is even more dire in China, where those in their mid-30s already worry their careers are near an end. There is now talk of overproducing elites and computer programmers. New graduates from China’s prestigious Tsinghua University are certainly not getting good financial returns on their schooling.

In a world where, in former Google executive Mo Gawdat’s words, “unless you’re in the top 0.1%, you’re a peasant,” how can families ensure that they stay in the shrinking middle class? These days, even households making $300,000 a year struggle to pay for elite college tuition bills.

One solution is to have a small slice of thematic investing in your wealth portfolio, which involves identifying technology trends and the stocks that might benefit.

Recent sharp price upswings in some of China’s tech stocks have gotten some commentators worried about irrational exuberance. On Sept. 1, Alibaba Group Holding Ltd.’s shares soared 18% after the company reported a sales surge in the cloud division — the business most closely tied to the AI boom — even though quarterly earnings were mediocre at best, with total revenue growth largely flat. Meanwhile, some say that chip designer Cambricon Technologies Corp., a new market darling that trades at 250 times 2025 earnings, has become way too expensive.

This is not the right way to look at China’s AI opportunities. Think of thematic investing as poor man’s venture capital. Silicon Valley’s financiers do not look at a startup’s near-term earnings. Rather, they are more interested in total market size, an industry’s competitive landscape, as well as whether the company has a technological edge.

Through this lens, Alibaba and Cambircon are not necessarily bad bets. AliCloud has the most comprehensive product offerings among its peers and might gain more sales as Anthropic stops selling AI services to Chinese companies. Meanwhile, Nvidia Corp.’s decision to halt production related to its H20 AI chips, tailor-made for China, can also bring new clients to Cambricon.

To be sure, venture capital funds routinely make risky bets that don’t pan out. So someone readying herself for thematic investing must be prepared to lose everything. As a result, these stocks should only be a small slice of a portfolio.

In a world of rising wealth inequality, we have to play a bit offensive to be defensive. When a revolutionary technology has descended upon us, have no fear. Position yourself for a seismic shift and make AI your friend, not foe.

[Abridged]

Courtesy Bloomberg/Shuli Ren