#63: Opportunities Because of AI That Aren’t AI
One word: tangible
The Magnificent 10 make up almost 40% of the S&P 500 as of 2025, which is the most concentrated the S&P 500 has been in history. You know, companies like NVIDIA, Apple, and Microsoft have cemented themselves as many multiples more valuable than any other company outside the top 10. Big Tech is driving most of the market’s momentum this year, which has been great for investment portfolios, but there are cracks appearing in the ecosystem. Circular finance agreements among the leading AI companies and their Big Tech investors suggest value is being created on shaky ground (for example, NVIDIA investing in OpenAI). With that said, there are plenty of less AI-dependent investment opportunities.
I see it as simple: focus on tangible products. Let’s dive into a few industries and trends that are less correlated to the whims of AI.
The Consumer-Packaged Goods (CPG) Industry
As someone who works in the CPG industry today, AI has changed my workflow. My coworkers and I leverage AI every day as an advisor and as an automation tool. AI has served as an accelerant to experimentation, ultimately enabling us to arrive at the best idea sooner.
However, we aren’t selling AI, so the core product we’re marketing isn’t going anywhere.
People are always going to need toothpaste or moisturizer. Last I checked, I haven’t heard any talking head on the internet say AI was going to eliminate bad breath or dry skin.
Initially, AI will help CPG companies become more labor efficient. As tasks become automated, they’ll need fewer people on staff as these people will be inherently more productive. Next, AI will have an impact on marketing through hyper-personalization. This has already been happening for a few years in the way of Meta’s Advantage+ Shopping Campaigns (ASC) or Google’s Performance MAX (PMAX) offerings; however, I imagine we will continue to see improvements in ad targeting via personalization.
How does this show up in the P&L? Delivering more relevant ads to a consumer likely means brands will see a higher conversion rate on their campaigns, leading to a lower advertising cost of sales. So, margins will increase thanks to AI.
Yet only in the long run will AI be able to have material effects on other parts of a brand’s P&L via increasing the efficiency of shipping routes or manufacturing. And unless AI can decrease the cost of resource extraction or manufacturing facility construction, it’s unlikely we will see a large cost savings.
And even if manufacturing becomes more efficient thanks to AI’s impact on process improvement, there’s likely a hidden cost. AI requires significant computing power, which in turn raises a factory’s energy consumption.
In summary, consumer goods businesses are more susceptible to macroeconomic swings and international trade regulations (*cough* Trade War *cough*) than they are to actual disruption by technology.
GLP-1 Adjacent Industries
Discussed often, but still underappreciated, is the effect that weight-loss drugs (and their ability to mimic the hormone GLP-1, which reduces cravings and hunger) will have on the economy. Rapid weight loss and loss of appetite produces many second-order effects that will have material economic consequences.
Reduced hunger means less food consumption. But the effects of this will be uneven. I believe grocers like Walmart and Kroger are insulated as they sell many products besides food itself. With that said, some of the brands they stock on their shelves have a cloud over their outlook.
Processed food businesses face pressure from both the weight-loss movement and the broader push toward healthy eating. Think Nabisco, Kraft, and Mondelez. I wouldn’t want to be shilling potato chips covered in vegetable oil right now. Your top customer isn’t looking to down a sleeve of Pringles in one sitting anymore. Granted, that’s an assumption that some people now on GLP-1 drugs no longer want to take down a full sleeve of Pringles, but I think you get the point.
On another note, have you noticed protein frenzy sweeping the American food market lately? Every new granola bar, smoothie, and waffle brand boasts a high-protein option these days. Although the protein craze has ridden the coattails of the health & wellness movement, I see it as a trend with real might since it pairs well with GLP-1. As people lose weight quickly, they’ll look for ways to preserve muscle. Protein will help mitigate muscle loss and support those transitioning to a fitter lifestyle.
However, when it comes to natural protein, I believe meat purveyors that rely on high volume are in a precarious spot. Companies like Tyson or Cargill are unlikely to fare well as there will be overall less consumption (this take is validated by their stock performance over the past year). Nonetheless, I would bet that premium-branded meat companies like ButcherBox are poised to do well here. We continue to see the health & wellness movement push transparency in food ingredients and origin, so the grass-fed beef branding works out well. Now, the devil’s advocate is that weight-loss drugs are expensive, thus reducing the amount of disposable income consumers can spend on premium protein sources. Either way, I believe food transparency wins out, and people put a larger emphasis on what they’re putting into their bodies.
Beyond food, apparel and fashion are poised to perform, especially those offering workout clothes and athleisure. Think of companies like Alo Yoga, Lululemon, and even Dick’s Sporting Goods (their stock is up nearly 4x over the past 5 years). As GLP-1 drug users settle into their new bodies, they’ll likely need new clothes. Making a bit of an assumption but having a slimmer body may encourage people to participate in more physical activity as it will be easier than before.
Real Estate
Broadly speaking, AI shouldn’t have a drastic effect on the real estate industry. Well, besides bidding up the cost of homes in the Bay Area where new AI multi-millionaires seem to be printed every day.
Like CPG, AI can’t digitize physical assets (or perhaps I’m not thinking creatively enough). AI’s biggest impact will likely be on the search and discovery process, as well as property management.
What people buy isn’t going to change since AI isn’t a roof over our heads, but it will change how we find our next single-family home or apartment. I’m curious to see if companies like Zillow or Streeteasy change their front-end to mimic an AI prompt-style interface. Instead of sifting through pages of links (think Google search results format), you’ll be able to type in everything you’d like and receive curated suggestions based on your wish list.
Furthermore, I imagine companies that supply equipment for plumbers and electricians will start creating “smart” equipment that trigger an alert in property management software if a problem is detected. That way, landlords can sleep with more peace of mind that the equipment can identify an issue and then either fix itself or trigger an alert to the property management software to book an appointment for the plumber or the electrician to go out and fix the problem. AI can turn this idea into a reality. Some of this likely exists today.
But what I do feel confident about is that AI won’t drastically change the underlying asset that is real estate. What is interesting is that conventional wisdom suggests that technological innovation should be disinflationary as automation and process improvement make labor and capital more efficient. Yet, what remains to be seen is the impact of rising energy bills from AI (via data centers), which will cause inflation. AI may challenge the long-held theory that technological innovation is inherently disinflationary. Thus, real estate is poised to perform well as landlords are typically able to pass off higher input costs to their tenants.
Note: none of the above is considered financial advice, so do your own research.