AI Stocks May Diversify Portfolios Better Than FinTech

Since the public release of ChatGPT in 2022, investing in AI stocks has been a dominant thematic for many, if not most, investors. At first, this has been mostly a speculative bet on a new promising technology.

A bet shared by the tech giants and the market at large, as global spending on AI is estimated to have reached USD 1.5 trillion in 2025 and is expected to exceed USD 2.6 trillion in 2026

However, as the industry matures, the position of AI stocks in a portfolio is changing as well.

For example, it is coming into comparison with FinTech (financial technology) stocks as a way to get exposure to innovative IT technology and diversify portfolio risk.

A recent study by Turkish researchers at Şırnak University and Istanbul Nişan Taşı University quantifies how AI stocks can play such a new role in risk management for investors. It was published in Borsa Istanbul Review¹, under the title “The diversification benefits of FinTech and AI stocks in portfolio management: A performance analysis based on investor risk preferences.”

Investing In The Fourth Industrial Revolution

We are currently in the so-called fourth industrial revolution, a process that is radically reshaping the economy in the same way the previous three industrial revolutions did (steam, oil/electricity, computers & Internet). It is driven by technologies like AI, biotech, robotics, drones, IoT, 3D printing, spacetech, etc.

For investors, FinTech has been an early segment of the nascent 4^th industrial revolution, radically changing how money and payments are processed, disrupting decades-old paradigms at banks, funds, and insurance companies through the use of blockchain, cloud computing, and big data.

Thanks to their remarkable growth profile, FinTech companies have been a successful investing theme in the past decade, and even more so if the definition of FinTech is broadened to cryptocurrencies. The same can be said more recently about AI stocks.

But past the initial successes, the maturation of these sectors brought one question relevant for long-term investing and portfolio construction: do FinTech and AI stocks enhance portfolio diversification and investment performance, and which of the two delivers superior diversification benefits?

Analyzing Economic Literature

Gathering And Processing Investment Data

The researchers in this study used monthly data from June 2018 to April 2026 to incorporate equity indexes representing 23 developed economies (most OECD countries), traditional investments, and FinTech and AI indexes.

This included the MSCI Developed Markets Index, data on traditional investment instruments (S&P 500 Index, Gold, US 5-Year Government Bond, WTI Crude oil, etc.), and FinTech and AI index data compiled by S&P Global (S&P Kensho Global Artificial Intelligence Enablers Index and Global Democratized Banking Index).

The researchers deployed a complex multi-step analysis:

• Standardizing these data so they can be compared.
• Testing different possible portfolio constructions.
• Analysis of risks and performance using various mathematical models and measurement methods, as well as how they match different investors’ profiles.
• Checking robustness of the results for exceptional events like the Covid pandemic, for example.

Source: Borsa Istanbul Review

Correlations & Risks

The first results that came out of the analysis were that for the period and data analyzed, the AI index had a higher average return (1.55%), median (2.25%), and standard deviation (6.90%) than the FinTech index (0.53%, 0.62%, and 6.58%, respectively).

Although crypto had the highest returns (2.64%) of all asset classes, it also had the highest risk (18.06%).

Source: Borsa Istanbul Review

Overall, FinTech and AI investments have positive but relatively low correlation with international equity indexes, making them a good option for diversification in a portfolio with more “traditional” assets.

“This finding suggests that FinTech and AI investments might contribute to risk reduction in internationally diversified equity portfolios. However, the high correlation between FinTech and AI (0.879) indicates that they are not entirely independent diversification channels. ”

Another insight was the rejection of a normal distribution for FinTech, AI, oil, and several international equities, not a surprise for asset classes that tend not to act in an average, “moderate” way.

Building The Ideal Portfolio

While of course such analysis is always looking at the past, it can be insightful to see what ideal portion of a portfolio should have been dedicated to FinTech and AI in recent years.

It appears that the inclusion of AI generates a notable improvement in portfolio performance, with a simultaneous increase in return and decline in risk.

However, this improved performance is not without a price. It comes with an increase in volatility and risks. So the capacity of investors to tolerate such additional risk exposure should condition their decision to get exposure to AI stocks in particular, as well as FinTech stocks to a smaller extent.

“When variance minimization becomes the sole objective, traditional assets such as bonds, gold, and forex dominate the optimal allocation and fully crowd out FinTech and AI investment.”

How risk is measured or considered also matters. This study discovered that technology-oriented assets did not provide effective protection during the highly volatile normalization phase after the pandemic.

So the data shows that the risk-reduction benefits of AI are more pronounced in volatility-based measures than in historical tail-risk estimates.

In that respect, the study supports dynamic allocation and periodic rebalancing, not indiscriminate exposure to AI stocks.

AI Vs FinTech

When analyzing possible portfolios’ performance in more detail, it appeared that the inclusion of FinTech alone produces only a marginal change in the investment opportunity set.

Meanwhile, AI-enhanced portfolios with no FinTech exposure showed significantly superior performance.

This supports the idea that when picking an exposure to new IT technologies, investors have been better off picking either FinTech + AI, or AI alone. This effect was particularly pronounced in the international portfolios.

“The economic value of technology-oriented assets is driven primarily by AI, rather than FinTech. Across both traditional and international portfolio universes, AI shifts the efficient frontier outward, enabling investors to achieve higher expected returns without a commensurate increase in risk”

AI’s Place In Future Portfolios

The study shows that integrating AI stocks into a portfolio is not just a speculative bet, but has become an integral part of building a balanced portfolio optimized for higher returns.

It also showed that if a choice has to be made, picking AI stocks over FinTech stocks might make more sense and deliver more of the expected results, illustrating the importance of distinguishing between technology subsectors.

This is, however, not a blanket statement supporting any sort of investing allocation toward AI stocks for any time period or at any size.

Exposure to AI can be detrimental in specific periods, like the unwinding of the post-pandemic boom, a risk likely to materialize again in the future at some point, considering the recent run-up of anything AI-related in financial markets in the past few years.

“Whereas AI-enhanced portfolios frequently outperform benchmark portfolios in-sample and during specific market regimes, the rolling-window OOS and regime-shift analyses demonstrate that these advantages vary over time and across market conditions”

Portfolio constraints also influence the optimal technology allocation. The higher volatility created by capital allocations means investors should align technology allocations with their risk preferences, as well as with practical portfolio restrictions and concentration limits.

Investing In Technology & AI

Broadcom

The discourse around progress in AI is often structured around either computing hardware (notably Nvidia (NVDA ) GPUs) or AI models (OpenAI vs Anthropic vs xAI/SpaceX (SPCX ), vs Chinese models).

This can make investment in AI extremely difficult to understand for investors with a non-technical background, as even experts seem to disagree on what constitutes a durable competitive edge in the race to create more competent and useful AIs (model quality, data, compute infrastructure, open vs closed models, etc.).

An alternative is to invest in the infrastructure and hardware that is less open to debate when it comes to powering AI compute. No matter whether the perfect AI hardware is GPUs or TPUs, or the model used, there will be a massive need for optical fiber connections, power supply, routers, switches, data center racks, sensors, etc.

Which is why an option for investing in AI’s “pick and shovel” is Broadcom (AVGO ), an “old” tech company that was already at the forefront of building IT infrastructure during the dot-com boom. It is a key player in connectivity, and its revenues exploded during the boom in AI data center construction.

Source: Broadcom

The company’s dividend followed suit, with a 30% CAGR rise between 2016-2025. The central reason for this success is summed up simply in the company’s catchphrase: “The Network IS the computer”, with its Ultra Ethernet initiative (alongside other key giants of the sector) the standard for AI computing. The company can also provide hardware and software for operations at almost every level of AI data centers.

Source: Broadcom

Overall, this makes Broadcom a good way to get exposure to the AI sector while not having to pick a specific hardware technology or AI model.

(You can also read more about Broadcom in our investment report dedicated to the company, or find other options for the next step of AI development, physical AIs, in our article on the top 10 physical AI stocks)

Latest Broadcom (AVGO) Stock News and Developments

Study Referenced

^{1. Serdar Yaman, et al. The diversification benefits of FinTech and AI stocks in portfolio management: A performance analysis based on investor risk preferences. Borsa Istanbul Review. 1 July 2026, 100865. https://doi.org/10.1016/j.bir.2026.100865}