The speed of technological changes happening around us are hard to miss. It's easy to get caught up in the headlines and lose sight of the promises artificial intelligence are making around revolutionizing industries, redefining workflows, and reshaping the future. As investors, it's imperative that we not only understand the principles of artificial intelligence but also grasp its implications across industries. Below we'll explore artificial intelligence's transformative potential and uncover opportunities for investors.

How the Emergence of AI is Impacting Our Investments

The emergence of AI as a transformative force in various industries underscores the potential for a fundamental shift in the investment landscape. As long-term investors, we do not change our philosophy nor our approach. However, we’ve closely monitored the shifts happening, especially as technology continues to impact everything around us. Part of identifying long-term investment opportunities is doing our due diligence on individual companies.

AI_Vertical.jpgWe deeply research each security and consider the secular shifts happening in the market. The AI boom is the latest technological advancement grabbing attention, but we consistently seek out those moments of innovation and look for where companies are building durable competitive advantages. The rise of AI is faster than any other recent advancement, so it not only presents compelling prospects for the larger market, but it also reinforces our conviction in getting to know our companies and keeping a long-term view.

We recognize that while the Technology sector and industry giants like Microsoft, Nvidia, and Amazon often dominate discussions surrounding AI, and with good reason, we are also seeing great potential within "Old Economy" industries. These sectors, which include Industrials, Financials, and Health Care, represent the backbone of our economy, and we believe are poised to benefit significantly from AI-driven innovations. Additionally, while some industries are experiencing disruption, some will feel less of the effects of AI. That’s why our long-term, multi-cap philosophy includes a mix of both in our portfolios.

Old Economy Names & Investment in AI

We believe the integration of AI technologies in "Old Economy" industries is a fundamental shift that could have profound implications for the stock market. Companies within these sectors are harnessing AI to enhance operational efficiency, drive innovation, and deliver value. From optimizing supply chain management in Industrials to revolutionizing customer service in Financials, AI is reshaping traditional business models and creating new avenues for growth.

As we evaluate investment opportunities, we prioritize companies building durable competitive advantages, like what’s happening with AI, while maintaining a focus on long-term sustainability. But we’re not only focusing on AI. We examine companies based on Porter’s Five Forces:

  • Competition
  • The threat of new entrants
  • Supplier bargaining power
  • Customer bargaining power
  • The ability of customers to find substitutes for the sector's products

Equity Process

We note that AI won’t impact companies equally across industries. We also see that the scale and speed at which AI technology is getting adopted means the disruption potential is great, and we want to identify companies thinking ahead with their approach to AI, which we believe will set clients for up for success in an increasingly digital and interconnected world.

We believe this technological advancement is here to stay and not simply hype. Some of the largest companies in the world are pouring billions of dollars into AI models and tools, hoping to create efficiency and profitability for years to come. In fact, at NVIDIA’s GTC Conference, which two of our investment managers attended to research companies we can’t find regionally, 71 different companies were showcased as NVIDIA’s partners in AI development. Our Mairs & Power holdings with special mention included:

  • Amazon
  • Honeywell
  • JPMorgan
  • Johnson & Johnson
  • Medtronic
  • Rockwell Automation
  • Wells Fargo
  • Verizon

This group is a perfect example of how we approach our long-term, multi-cap, regional process.

We take the time to get to know our companies well including direct visits with management and factory tours. Yet, when we’re unable to do so as easily, we still take the time to deeply research our portfolio companies, including attending conferences like NVIDIA’s and Microsoft’s 365 Community Conference where we can meet with a larger contingent of companies. Our extended investment horizon gives us the opportunity to build conviction in portfolio holdings and better understand the competitive landscape of their industries.

3 Companies Poised for AI Success

Let's explore a few companies leveraging AI to take market share and set themselves up for success in the future:

Rockwell Automation (ROK): Leading the Charge with Reshoring

Rockwell AutomationRockwell Automation stands at the forefront of manufacturing returning to North America. As they build out efficiencies in shipping and creating warehouses of the future, Rockwell has partnered with NVIDIA to create greater AI integration (see sidebar for more information on how NVIDIA is impacting AI advancement). A large part of that work is the utilization of what are called “digital twin” systems. This process creates virtual reality duplicates of production machines and factories. This AI-driven technology monitors the performance of virtual machines and compares them to real machines in factories and warehouses. It’s essentially a video game that allows for a side-by-side comparison of the two environments with the ability to uncover potential problems in advance and present opportunities for continuous and substantial efficiency improvements. This allows industrial manufacturing plants to eliminate roadblocks before they happen, while the automation capabilities can help overcome the lack of labor force in the manufacturing space. It’s a promising, practical, and exciting application of an emerging technology.

JPMorgan Chase & Co.: Harnessing AI for Strategic Advantage

JpMorganJPMorgan Chase's commitment to innovation is evident in its substantial investment in AI analysts and data-driven initiatives. Utilizing its position as the largest bank in America, JPMorgan is spending $15.3 billion on technological innovation and looking to employ 1,500 data scientists. With access to vast troves of data, JPMorgan Chase is leveraging AI to optimize internal processes and enhance customer service delivery. The company knows the efficiencies won’t show up immediately, but with a large store of data and the scale of its business touching everything in the financial industry, we believe JPMorgan is well positioned to create value from AI. By harnessing AI for customer service and data analysis, we believe JPMorgan Chase is poised to maintain its position as a leader in the financial services industry.

Roche Holdings (RHHBY): Transforming Healthcare with AI

Roche HoldingsThe process for discovery and creating new drugs and treatments often takes years of research and development. In response, Roche is leveraging AI to drive innovation in the process. There are billions of combinations of proteins and small molecules and pathways involved and by harnessing AI algorithms to expedite the identification and optimization of novel therapies, Roche is attempting to reshape pharmaceutical innovation. In an effort to continuously improve the algorithms, they have integrated computational biologists into every lab and every molecule team in development. The company is using AI in antibiotic research, antibody research, and in tumor mutation. Roche aims to address unmet medical needs and improve patient outcomes through the power of AI-driven research and development.

Sticking to Our Knitting

The era of AI holds the potential for a true paradigm shift. This is the fastest pace of technological advancement many of us have seen in our lifetimes. Most changes, such as transportation and the internet, created massive disruption and efficiency, but they also took years to take hold. We’re at the front end of this revolution with AI and we’re already seeing the impact potential for productivity, profitability, and efficiency.

As the investment landscape undoubtedly experiences the effects of this technology, we believe our long-term philosophy and regionally focused multi-cap process will continue to bring our clients the success they’ve historically expected from us for more than 90 years. Our collective history gives us a unique perspective on entire investment cycles and the pace at which these changes are happening. Our strategy emphasizes the entire market cycle, not shifting from one fad to another.

By focusing on companies with durable competitive advantages, we can continue to leverage the investment opportunities that come from cutting-edge technologies such as AI, as well as what comes next. Looking beyond the short term helps us see the potential for companies, and investors, willing to embrace innovation.


The mention of specific securities is not intended as a recommendation or an offer of a particular security, nor is it intended to be a solicitation for the purchase or sale of any security.


Top 10 Fund Holdings (subject to change)

Mairs & Power Growth Fund

Mairs & Power Balanced Fund

Mairs & Power Small Cap Fund

Mairs & Power MN Municipal Bond ETF