The Existential Spending Battle | Adrian Helfert on What You’re Missing in the AI Arms Race

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Dec 21, 2025

Adrian Helfert, an investment professional at Westwood known for his expertise in portfolio construction, joins the discussion to dissect the impact of AI on investing. He explores how AI-driven capital spending is reshaping return profiles and presents a framework for portfolio construction. Adrian discusses the dual nature of AI as both opportunity and risk, the debate over market concentration, and challenges traditional recession indicators. He also suggests a rethink of the classic 60/40 portfolio and emphasizes the importance of tactical international diversification.

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INSIGHT

Three-Bucket Portfolio Framework

Westwood classifies securities by capital appreciation, event-driven returns, and income to clarify portfolio return drivers.
This framework helps decide weighting and tactics like covered calls to boost income and manage risk.

INSIGHT

Scale Of AI Data-Center Spending

AI and data-center capex through 2030 may total $7–8 trillion and could drive large productivity gains.
Adrian estimates even conservative productivity gains could justify much of that spending and expand operating margins.

INSIGHT

AI As Risk And Opportunity

Investors must consider not just who can implement AI but who will have their lunch eaten by native AI competitors.
Adrian warns AI is as much a risk factor as an opportunity for incumbents.

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In this episode of Excess Returns, we sit down with Adrian Helfert of Westwood to discuss how investors should be thinking about portfolio construction in a market shaped by artificial intelligence, high levels of concentration, shifting interest rate dynamics, and evolving economic signals. The conversation covers how AI-driven capital spending is changing return profiles across markets, why traditional investing rules are breaking down, and how investors can balance growth, income, and risk in an uncertain environment. Adrian shares his framework for understanding return drivers, his views on market concentration and valuation, and how to think about diversification, macro risk, and income generation going forward.

Main topics covered
• How Westwood frames portfolio construction around capital appreciation, income, and event-driven returns
• Why AI spending is both a major opportunity and a growing existential risk for large companies
• The sustainability of market concentration and what it means for future returns
• Whether higher interest rates really hurt growth stocks the way investors expect
• How massive data center and AI capital expenditures could translate into productivity gains
• The case for market broadening beyond the Magnificent Seven
• Why traditional recession indicators have failed in recent cycles
• How inflation, labor markets, and Federal Reserve policy interact today
• Rethinking the classic 60/40 portfolio and the role of private markets
• Using covered calls and active income strategies to manage risk and generate yield

Timestamps
00:00 Introduction and near-term opportunities versus long-term risk
02:40 Capital appreciation, income, and event-driven investing framework
06:30 Have markets structurally changed to support higher returns
09:30 Intangible assets, AI, and margin expansion
10:20 The scale of AI and data center capital spending
13:00 Productivity gains and return on investment from AI
16:00 AI as both opportunity and risk for companies
19:30 Market concentration and diversification concerns
23:30 Will market leadership eventually broaden
25:30 Growth stocks, duration, and interest rates
29:30 International diversification and global investing
33:30 Why recession indicators have failed
39:00 Inflation outlook and Federal Reserve policy
46:00 Rethinking the 60/40 portfolio
53:00 Enhanced income strategies and covered calls
59:00 One investing belief most peers disagree with