Welcome to our next article in our “Signal vs. Noise” series, which examines popular claims circulating online or in print. Our goal is to help you separate the signal from the noise. At Hill Investment Group, we believe good advice should be simple, clear, and grounded in evidence — not hype.

“The biggest risk is not having exposure to this transformational technology.” — JPMorgan Wealth Management, January 2026

The story feels so obvious: transformative technology, dominant companies, get in now. But a compelling technology story and a compelling investment are two totally different things. Thus far in 2026, three of the largest AI companies on the planet reported some of their best quarters ever – and watched their stock prices drop. Here’s why that’s not as surprising as it sounds.

A stock’s price is the market’s collective best guess at everything a company will ever earn, discounted to today. It’s like how you can’t get a bargain on a house in a neighborhood that everyone knows is great – that desirability is in the asking price. In general, AI companies’ stocks trade at steep premiums compared to the broader market. That’s not necessarily right or wrong; it’s the market saying, “We expect extraordinary things.”

Exhibits A, B, and C

NVIDIA Corp – the designer of the AI chips that power the data centers behind virtually every major AI application in use today

• February 2026 – beat all earnings estimates and set all-time records for revenue, profits, and future earnings guidance – the stock fell 5.5%

Taiwan Semiconductor (TSMC) – the company that physically manufactures chips for NVIDIA, Apple, and virtually every major AI company

• April 2026 – beat all earnings estimates and set all-time records for profits for the fourth consecutive quarter – the stock fell 3%

ASML Holdings – the Dutch company that makes specialized machines used to produce TSMC’s chips; without ASML, there is no modern semiconductor industry

• April 2026 – beat revenue and profits estimates, while increasing their full-year guidance for 2026 – the stock fell 6%

These three companies are worth ~$5.5 trillion combined and are critical parts of the global AI backbone. They delivered, but the market said, “We already knew.”

These examples aren’t a reason to avoid AI investments entirely. Instead, they serve as a timely reminder that stock prices already reflect the market’s expectations, and that expecting a great company to keep being great isn’t the same as expecting a great return.

The more useful question for your financial future isn’t “will AI change the world?” It probably will. The better question is: “Is my portfolio built to succeed regardless of whether these companies meet the market’s sky-high expectations for them?”

Your portfolio already owns AI. At Hill, we invest in global capitalism, which means that you already own NVIDIA, TSMC, ASML, and every other company driving or benefiting from this technology as part of a diversified portfolio. Put simply, you get to participate in the upside if AI exceeds expectations, but you’re also not overexposed if these companies fall short.

Decades of financial research show that the most reliable path to investment success is owning the whole market, staying diversified, and tilting toward companies that are attractively priced with strong profits. Instead of taking a bet on (or against) AI, you have a strategy built to succeed whether or not AI stocks live up to the hype.

Our job is simple but critically important: put the odds of investment success in your favor by sticking to the evidence, not the headlines.

Disclosure

Firm policy is we don’t share quarterly letters beyond our client base. We consider these communications special and more personal, reserving them only for Hill Investment Group client relationships. We decided that a modified version of the most recent letter could be shared because the lessons are especially relevant to investors at large.

Enjoy the rest of the letter by clicking here!

It’s certainly not the “Dow” as Allan Sloan so excellently covered in his recent piece. (You can also find the perfect summary by The Week here.) It’s not even the S&P 500—which is just the 500 largest companies in the U.S. Add in nearly all US, International, and Emerging Market stocks, bringing your total in the neighborhood of 12,000 companies, and then you’ll have a feel for what we call global capitalism. That’s also what we at Hill consider to be the true market. The image above shows the percent that each country represents in world market capitalization as of December 31, 2014. Note where some markets might be much smaller that expected. Even the U.S. only represents 52% of the total, whereas most investors we meet come with portfolios that have little other exposure outside of that.