AI, the Economy, and a Personalized Approach to Investing

Markets remain supported by strong company earnings and a resilient economy, while investors watch AI spending, interest rates, and the growing shift toward personalized portfolios.

Last Edited by: LPL Research

Last Updated: August 06, 2026

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IN THIS ARTICLE:

The market has faced plenty of crosscurrents lately. Investors are sorting through strong company earnings and continued excitement around artificial intelligence (AI) on one hand, and higher interest rates and questions about where the economy goes from here on the other. But even with those concerns, there are several reasons for investors to stay optimistic about the months ahead.

Company Profits Are Doing the Heavy Lifting

One of the biggest reasons stocks have performed well is that many companies continue to grow their profits. Recent earnings reports have been stronger than expected across a wide range of industries, including healthcare and financial services, rather than being concentrated in a couple of sectors or several companies.

AI remains a major part of that story. Large technology companies are investing billions of dollars into AI tools, data centers, and computing power.

Investors are no longer excited simply by fresh AI spending, but instead they want to know whether companies can turn those investments into real profits. Some companies have shown early signs of success, while others still have work to do.

The good news is that many businesses continue to grow despite these questions. As long as profits remain healthy, stocks may continue to find support even when headlines create short-term market swings.

The Economy Is Sending Mixed Signals

Economic growth has held up better than many people expected. Consumers continue to spend, businesses continue to invest, and the overall economy has avoided a major slowdown so far.

At the same time, investors are paying close attention to inflation and interest rates. If inflation stays higher than expected, the Federal Reserve (Fed) may decide to keep interest rates elevated for longer or even raise rates. Higher rates can increase borrowing costs for consumers and businesses and can sometimes put pressure on financial markets.

Other risks remain on the radar, including global conflicts and rising energy prices. While these issues can create periods of volatility, they do not necessarily change the long-term outlook for investors.

Why Personalized Portfolios Matter

Investment portfolios are becoming more personalized. Instead of using the exact same approach for everyone, investors increasingly want strategies that reflect their specific goals, risk tolerance, and tax situation.

One approach is to use "building block" models. Think of these as individual pieces that can be combined to create a portfolio designed around an investor's needs. Some building blocks focus on stocks, others focus on bonds, and others may target specific investment goals. Investors can combine these pieces in different ways rather than relying on a single broad strategy.

This trend has gained momentum across the investment industry as more people look for solutions that feel tailored to their situation instead of a generic portfolio.

What This Means for You

While markets face challenges from inflation, interest rates, and global uncertainty, the foundation remains relatively solid. Company profits continue to grow and the economy has shown resilience.

For investors, the focus should remain on long-term goals rather than short-term headlines. Market bumps are normal, but strong earnings, economic growth, and a well-built portfolio can help investors stay on track.

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AI, THE ECONOMY, AND PERSONALIZED INVESTING FAQs

AI is attracting attention because many companies believe it can help them operate more efficiently, improve customer experiences, and create new products and services. As a result, some of the world's largest technology companies are investing billions of dollars in AI infrastructure, including data centers and advanced computing systems.

 

For investors, the key question is no longer whether AI will have an impact. The focus has shifted to whether companies can earn enough revenue and profit from these investments to justify the large amount of money being spent today.

 

Recent earnings reports suggest investors are rewarding companies that can show clear business benefits from their AI investments while remaining more cautious toward companies whose spending is growing faster than their profits.

 

Over time, AI could support earnings growth across many industries, not just technology. Businesses in healthcare, financial services, manufacturing, and other sectors may benefit from greater productivity and efficiency as AI tools become more widely adopted. 

Interest rates are important because they influence borrowing costs throughout the economy. When rates are higher, it becomes more expensive for consumers to finance purchases and for businesses to fund growth projects. Higher rates can also affect how investors view stocks and bonds.

 

However, interest rates are only one factor that drives market performance. Company earnings, economic growth, consumer spending, and inflation trends also play significant roles. Recent economic data suggests the economy remains relatively resilient, which has helped support markets despite elevated rates.

 

Rather than focusing solely on whether rates move up or down at the next Fed meeting, investors should pay attention to the bigger picture. A strong economy and healthy corporate profits can often help offset some of the challenges created by uncertainty around the Fed’s rate path. 

A personalized portfolio is an investment strategy designed around an individual's unique situation rather than using the same investment mix for everyone. Factors such as financial goals, time horizon, comfort with risk, income needs, and tax considerations can all influence how a portfolio is built.

 

One way investment firms are creating more personalized portfolios is through a "building block" approach. Instead of selecting a single all-in-one strategy, investors can combine different investment components to create an allocation that better matches their needs. For example, one investor might focus more on growth opportunities, while another may prioritize income or stability.

 

The growing popularity of personalized portfolios reflects a broader shift in the investment industry. More investors want portfolios that align with their specific objectives and circumstances, and advances in portfolio management tools have made that level of customization more accessible than it was in the past.

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. ​

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. ​

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. ​

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. ​

All investing involves risk, including possible loss of principal. ​

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. ​

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio. ​

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio. ​

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.​

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

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