Q3 2025
October 15, 2025
The markets continue to push forward. The S&P 500’s return of 13.72% and the S&P 500 Equal Weight’s return of 8.35% year-to-date reflects the resilience of the broader economy and the extraordinary influence of innovation-driven growth that has defined much of 2025.
Over the past year, nearly 80% of the market’s total gains have been driven by a handful of companies connected to artificial intelligence (AI). It’s a remarkable concentration of performance — and a reminder that, just as in the early 1990s, innovation often begins in clusters before radiating outward.
Back then, fiber-optic cables and data servers laid the groundwork for the digital economy. Today, we’re watching a similar industrial buildout — only this time, the infrastructure is designed to power intelligence itself. The scale is staggering: OpenAI has reportedly committed over $1 trillion in deals for computing power, securing capacity equivalent to more than 20 nuclear reactors of energy over the next decade. Each gigawatt of AI computing power carries an estimated cost of $50 billion, underscoring how energy, water, and physical resources are quickly becoming the backbone of this digital revolution.
In the near term, these investments have fueled extraordinary stock market activity. Shares of major semiconductor, software, and infrastructure firms have soared — sometimes adding hundreds of billions of dollars in market capitalization within days. Oracle’s partnership with OpenAI, for example, briefly increased its market value by $255 billion in a single session. Advanced Micro Devices added nearly $100 billion in one day after announcing a similar deal. These are breathtaking moves for companies already among the world’s largest — and reminiscent of the late-1990s dot-com era, when exuberance occasionally outran earnings.
Yet beneath the momentum lies a deeper transformation. What we are witnessing is not merely a technology cycle; it is an industrial one. Data centers are the new factories. Energy grids are the new highways. And water — once an afterthought in tech — is now a vital input in cooling and sustaining the AI infrastructure being built at an unprecedented pace. Utilities, chipmakers, and energy innovators are finding themselves at the center of a modern gold rush. Companies like Fermi Energy are designing campuses that can produce over 10 gigawatts of power — more than some nations consume. Global asset managers such as BlackRock are raising billions for AI-related infrastructure, joining a movement that is reshaping not just markets, but the physical economy itself.
It’s no surprise, then, that AI investment now accounts for nearly 40% of U.S. GDP growth this year. The buildout has become both an economic engine and a mirror, reflecting the optimism — and the uncertainty — that accompany all major industrial shifts. As more capital pours in, the tension between innovation and sustainability grows sharper. How much energy can we produce? How quickly can we adapt? And who will thrive when the dust settles?
The answer, as history reminds us, will likely be uneven. During the dot-com years, some companies became the backbone of the modern economy, while others faded into memory. Today’s AI surge may follow a similar path — leaving behind enduring infrastructure, new efficiencies, and a transformed economic landscape.
Our role, as always, is to stay grounded amid the noise. While markets chase what’s next, we focus on what lasts — disciplined fundamentals, diversified positioning, and a long-term view that allows us to participate in innovation without being swept away by euphoria.
There’s no denying that we are living through an extraordinary moment in technological history — one where data centers hum like power plants and the line between science fiction and reality feels increasingly thin. We may not have flying cars or robotic maids just yet, but on some days the markets make it seem as if we’re inching closer to The Jetsons than we ever imagined.
Sincerely,
Janet Wills
Adam Mehrer
