投稿人
Matt Cioppa, CFA
VP/Portfolio Manager and Research Analyst
Franklin Equity Group
United States
Key takeaways
- Pullback creates opportunity: Recent market declines have reset tech valuations, offering a chance to invest ahead of the next growth cycle.
- Lessons from history: Decades of investing reveal three enduring insights—exponential growth, quality focus and maintaining conviction—that remain vital today.
- Intelligence-age opportunity: Rapid advances in artificial intelligence (AI) and related technologies are transforming industries, unlocking vast growth potential for long-term investors.
From the digital age to the intelligence age
Investors have faced a turbulent start to 2025, contending with trade tensions, shifting US policy and fresh tariffs. Technology, the standout performer of 2024, has also seen a sharp pullback as markets reassess the near-term impact of generative AI.
Yet for long-term investors, we believe this moment offers reason for optimism. Technological innovation—particularly in AI—continues to advance rapidly. And after recent corrections, valuations have reset, creating potential entry points for those looking to position for the next era of growth.
Decades of experience investing in technology have taught us that today’s volatility often precedes tomorrow’s breakthroughs. Here, we explore three enduring lessons—and where we see opportunity as we move into what we call the “intelligence age.”
Lesson 1: Think exponentially
A defining feature of many breakthrough technologies is exponential growth—slow early adoption followed by a steep S-curve.
Exhibit 1: Technology Has Grown Exponentially
Adoption Rates by Consumers Can Follow “S” Curves
Analysis by Franklin Templeton. For illustrative purposes only. References to particular securities are only for the limited purpose of illustrating general market or economic conditions and are not recommendations to buy or sell a security or an indication of any portfolio holdings. There is no assurance that any projection, estimate or forecast will be realized.
Initial scepticism is common. High costs, unproven models or steep learning curves often deter early adoption. But as barriers fall, growth can far exceed expectations—as seen with ecommerce in the 2000s and cloud computing in the 2010s. We’re now seeing a similar pattern with generative AI.
While some question AI’s commercial potential, we see echoes of past transitions. The innovation cycle is accelerating, tools are becoming more accessible and costs are falling. In our opinion, recognizing these patterns early—and maintaining conviction—can give investors a powerful edge.
Lesson 2: Quality is critical
Identifying the right technologies is important. But long-term success depends on backing the right companies. That means looking beyond short-term momentum to find businesses with enduring competitive advantages.
In our experience, leadership matters. Visionary founders and CEOs often drive lasting innovation. Just as important is ecosystem strength, where platforms become so deeply embedded in user experiences that switching becomes difficult.
These qualities continue to set long-term winners apart. When we identify a company with a visionary team, defensible moat and a massive market opportunity, our strategy is clear: stay invested and let compounding do the work.
Lesson 3: Stay the course
Volatility is part of the journey. Historically, the tech sector experiences a 10%+ correction every year—yet patient investors have historically been rewarded over the long term.
Exhibit 2: There Will Be Volatility, but Historically It has Paid to Stay Invested
MSCI World Information Technology Index and MSCI World Index Performance
May 29, 2015–May 29, 2025
Source: Bloomberg. Analysis by Franklin Templeton. The MSCI World Index captures large- and mid-cap representation across 23 developed market countries. The MSCI World Information Technology Index is designed to capture the large- and mid-cap segments across 23 developed market countries. All securities in the index are classified in the Information Technology sector as per the Global Industry Classification Standard (GICS®). Indexes are unmanaged and one cannot invest directly in an index. Past performance is not an indicator or a guarantee of future performance. See www.franklintempletondatasources.com for additional data provider information
Missing just a few of the best trading days in a decade can significantly erode returns. And it’s often during periods of uncertainty—when sentiment is low—that the most attractive long-term opportunities arise.
The market tends to overreact during foundational shifts. We saw this in the early days of the cloud, and we see it again today with AI. But the fundamentals are intact, in our analysis. The earnings power of leading tech firms continues to grow.
Looking forward to the intelligence age
We believe we are on the cusp of a new era—the intelligence age—where AI is embedded into the very fabric of our lives. Generative AI is just the beginning. The next phase, known as agentic AI, will see models not just assisting, but acting autonomously. Meanwhile, physical AI applications, from robotics to autonomous vehicles, are advancing quickly.
These advancements promise profound change—in how we work, deliver health care, manage logistics, and more. Like past revolutions, there will be challenges. But for investors with a long view, we believe the opportunities are abundant.
Decades of experience have taught us to look through the noise, focus on fundamentals and stay invested through the cycles. These lessons have guided us through past transitions—and will shape how we navigate what comes next.
There are also risks in investing. The initial potential of any asset class may not carry over to any specific company or the entire asset class chosen for investment, over any time period. Any of the stated assumptions may or may not come to fruition, and any companies referenced may or may not have future successes. Investors should be prepared for potential losses as well as the possibility of investment gains. Ideas, products, companies, themes or entire asset classes with positive attributes are not indicative of future results. Discussions should not be regarded as any type of trading recommendation, or as a signal about any past, current or future trading activity in any fund or strategy, by Franklin Templeton and its affiliates.
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal.
Equity securities are subject to price fluctuation and possible loss of principal.
Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks.
Focusing investments in the information technology (IT) and/or technology-related industries carries much greater risks of adverse developments and price movements in such industries than a strategy that invests in a wider variety of industries.
Investment strategies which incorporate the identification of thematic investment opportunities, and their performance, may be negatively impacted if the investment manager does not correctly identify such opportunities or if the theme develops in an unexpected manner.
Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.
WF: 5562458