The AI Trade Is Shifting: Adoption, Infrastructure Risk, and Hidden Concentration in the S&P 500

In this episode of Lead-Lag Live, I sit down with Kai Wu, Founder and CIO of Sparkline Capital, to break down why the AI boom may be entering a new phase and why investors concentrated in infrastructure stocks could be taking more risk than they realize.

With nearly half of the S&P 500 tied directly or indirectly to AI infrastructure buildout, Kai explains the dangers of crowded positioning, excessive capital spending, and valuation expansion. Drawing on historical technology cycles from railroads to the internet, he outlines why the biggest long-term winners often aren’t the builders, but the early adopters who use new technology to gain efficiency and market share.

We also dive into enterprise adoption rates, proof-of-ROI versus hype-driven AI mentions on earnings calls, and how to distinguish companies generating measurable productivity gains from those simply telling the story.

In this episode:
– Why the AI cycle may be shifting from buildout to adoption
– How only about 10 percent of firms are currently using AI in production
– The valuation risk embedded in infrastructure-heavy portfolios
– Why early adopters may outperform the AI builders
– How advisors can rethink AI exposure without abandoning the theme

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