Over the past 25 years throughout the technology revolution that has seen Amazon take over retail, Social Media proliferate, and Software companies worth billions creating solutions including CRM, automated customer service, and digital design, the atom has increasingly been LESS important to building large businesses. In fact, “capital intensity” (another term for “needing to invest in assets”) has been viewed as a negative to the largest companies in the world. This lack of capital also has allowed companies to scale at unbelievable speed leveraging “the cloud” by renting power from “Hyperscalers” including Amazon, Microsoft, and Google. Against this backdrop, a new-breed of companies, termed “Asset Light” have led the stage. Across the economy, these “digital native” companies providing a nice user interface and effective technology platform, have captured most venture capital funds and stock market returns over the past two decades.
While these businesses are not going away tomorrow, we are seeing a sea-change in the markets that is bringing the importance of “assets” back to the forefront. This catalyst? Artificial Intelligence. After years of growth in computer programming, one of the first meaningful impact in AI has been the advent of “natural language processing” to create computer code. Through products like “Claude Code” and “Cursor”, the need for humans to be able to write computer code has begun to fall.
However, these solutions are bringing new issues to the fold. Namely, the large-scale production of chips, data centers, and all of the infrastructure needed to support them. Across the ecosystem for Artificial Intelligence we’re now seeing returns to “making things” at a scale unlike the last 20 years. Among them:
- Taiwan Semiconductor – manufacture of cutting edge chips is booked beyond capacity & building additional fabrication facilities. (Thomson One)
- Turbine Companies including GE Vernova have multi-year wait times for power infrastructure for AI Data Centers. (Seeking Alpha)
- After 20 years of low to no growth in power infrastructure, electricity, water, and cooling infrastructure are all not available for many new potential Data Center locations.
To provide context to the capital being invested, the US cloud platforms including Meta, Amazon, Google, Microsoft, and Oracle have announced expected 2026 Capital Expenditures will exceed $600 Billion Dollars. (SEC Company filings) That’s 2% of total US GDP! After years of companies focusing on the minimization of “assets” or “Capital investments”, not only are assets now enabling companies to protect against being “disrupted” by new AI companies, the demand for Assets is growing at such a rate that those able to meet the demand are seeing incredible growth.
So, how do we invest against this quick moving backdrop? In our view this may be a return to the golden age of Dividend Growth Investing. The economics of investing capital are in many ways a call back to the golden years of value investing from the likes of Warren Buffett and Benjamin Graham. In a world where investing in profitable projects is rewarded by the markets, we would expect Dividend Growth firms to fare well.
Specifically, one of our favorite metrics to screen for is companies that BOTH have a high return on invested capital (profitability on existing investments) & have a high amount of capital investment going into the business. These types of companies appear likely to fare well and have the barriers to entry to make new competitive entrants less likely.
As we look ahead, it’s likely as an investing public we’re overestimating the impact of AI in the near-term and underestimating its impact in the long-term. Nevertheless, we remain principled in our approach as we work to identify firms that have the capacity to deliver profitable growth and persistent dividend growth to our clients.
February 2026
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
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