Valuations and slow adoption top the worry list as the AI trade faces its proof point
As the world's largest technology companies report quarterly earnings, financial advisors want proof that record spending on artificial intelligence is producing durable business results rather than simply raising expectations.
New polling from Fidelity Investments Canada ULC (Fidelity), conducted during recent FidelityConnects webcasts, found advisors identify stretched valuations and slower-than-expected adoption as the two biggest questions hanging over the AI trade.
In the poll, 42 percent of advisors flagged valuations that look stretched relative to expectations, while 27 percent pointed to adoption running slower than anticipated.
This earnings season, the metric advisors say they are watching most closely is revenue growth tied to AI products and services, cited by 42 percent.
Corporate guidance followed at 21 percent, capital expenditure at 18 percent and profit margins at 17 percent.
Chris Pepper, vice-president of corporate affairs at Fidelity, said AI had been driven by investment and expectations, but advisors now want proof in company results.
He said they are looking for evidence that AI drives growth and adoption.
One advisor put the shift in blunter terms in the poll: "Clients want to see real proof points – measurable revenue growth, improving profitability, widespread adoption and evidence that AI investments are creating durable competitive advantages."
Despite the near-term scrutiny, advisors remain constructive on AI as a long-term theme. Only 8 percent consider it overhyped, per the polling, while 84 percent say it remains attractive and is still in the early stages of its growth cycle.
Where advisors see the biggest opportunity is also shifting beyond the obvious names.
A leading 43 percent said the largest opportunity for clients lies in companies across all sectors using AI to lift productivity and drive growth, ahead of the 34 percent who pointed to AI infrastructure and semiconductors.
Advisors are also applying AI to their own practices, Pepper said, using it "to enhance their expertise, work more efficiently" and spend more time with clients.
That framing was echoed by advisors in the poll.
One advisor said AI should strengthen the advisor-client relationship rather than replace it.
Another said AI processes information faster than humans but "cannot replace trust, empathy and professional judgment," and works best paired with personalized advice.
