AI could become the next general purpose technology, reshaping economic growth, inflation, interest rates and portfolio construction. Vanguard Global Chief Economist Joe Davis joins Excess Returns to explain why AI, demographics, fiscal deficits and globalization may define the next decade for investors, and why the biggest market winners may eventually come from outside the technology sector.

Coming into View: How AI and Other Megatrends Will Shape Your Investmentshttps://amzn.to/4v8L7OfVanguard Megatrends Research Hubhttps://explore.vanguard.com/megatrends.html

Topics Covered:

AI as a potential general purpose technology
Why long-term megatrends can affect short-term market returns
The four forces shaping the next decade: technology, demographics, deficits and globalization
Why Vanguard believes AI could lift U.S. growth above consensus
How AI could offset aging demographics and rising debt
Why great technology cycles often include major stock market drawdowns
The difference between AI automation, augmentation and new industry creation
Why the next AI winners may be in healthcare, financial services and other service industries
The risk that AI disappoints and fiscal deficits dominate the outlook
How tariffs, oil prices and AI investment interact in the macro outlook
What AI could mean for 60/40 portfolios, value stocks, fixed income and international markets
Joe Davis’ lesson for average investors: the power of compounding

Timestamps:

00:00 Why every great technology eventually faces a market drawdown
04:28 The four megatrends shaping the economy
08:56 How megatrends explain short-term S&P 500 moves
13:22 Why AI may be in the 1996 or 1997 stage
18:29 Where the next AI winners could emerge
21:44 AI, fiscal deficits and the danger of kicking the can
26:17 Why 2% growth and 2% inflation may be unlikely
30:31 How to tell if AI augmentation is really working
33:19 AI, globalization and which countries could benefit
38:14 Why investors need a multi-factor macro scorecard
41:23 What AI means for the 60/40 portfolio
44:12 Joe Davis on investing, compounding and Vanguard’s megatrends research

We Asked Vanguard’s Chief Economist Why AI Has Two Huge Tails — And Which One Wins

Excess Returns

We Asked Vanguard’s Chief Economist Why AI Has Two Huge Tails — And Which One Wins