The AI antidote

As you’ve read above, the AI trade is getting increasingly overheated. On one hand, AI companies keep posting record results quarter after quarter. On the other hand, hyperscalers are raising eye-popping sums to keep the spending spree going. That leaves investors with a difficult question: What do you do now?

Rather than chase the Nvidias, Microns, and other AI darlings dominating headlines, Lazard is taking a decidedly less flashy approach. The asset manager is looking at lower-risk infrastructure businesses across energy, water, transportation, and communications—think roads, bridges, power grids, and cell towers—via a series of infrastructure-focused funds, including the new Lazard Listed Infrastructure ETF.

The appeal is predictability. Lazard targets companies whose regulatory agreements or long-term concession contracts can generate steady cash flows, giving investors something that sits somewhere between the stability of bonds and the upside of stocks. More than half of Lazard’s Global Listed Infrastructure Portfolio is concentrated in Europe and the UK, where the firm sees particularly strong long-term investment needs.

That has led the portfolio managers to some not-so-household names like toll-road operators Ferrovial and Vinci, British utility National Grid, Illinois-based Exelon, telecom tower owners American Tower and Crown Castle, and New York utility Consolidated Edison.

The healthcare hedge

Those companies offer a picks-and-shovels way to benefit from AI without betting directly on the hottest chip stocks. But for investors looking to diversify away from the AI trade altogether, healthcare might be the move, according to the Wall Street Journal.

Healthcare and semiconductor stocks have recently started moving more sharply in opposite directions: When chip stocks sell off, healthcare tends to catch a bid. That relationship makes some intuitive sense: Semiconductors are highly cyclical and increasingly tied to expectations for massive AI spending, while demand for medicines, treatments, and insurance tends to stay relatively steady regardless of what the economy—or Nvidia—is doing.

A healthy outlook

The growing inverse relationship is another sign that investors are getting more cautious around AI—and they’re increasingly putting money behind that caution. According to LSEG Lipper data, roughly 50 US healthcare funds attracted $1.5 billion in June and another $2.44 billion in July, reversing three straight months of withdrawals.

Wall Street is warming to the beaten-down sector, with analysts pointing to historically cheap valuations and an improving earnings outlook. In Bank of America’s July survey, global fund managers reported a net 32% Overweight position in healthcare, more than double June’s 14%. LSEG also expects S&P 500 healthcare earnings to return to double-digit growth beginning in the fourth quarter of 2026 and to continue through the end of 2027, following a 16.7% decline in the second quarter.

That said, the AI trade is certainly not going away anytime soon. But for investors feeling a little queasy about AI, healthcare may be just what the doctor ordered.—SY