Capture AI Growth While Mitigating Risk

Three years after the ChatGPT-driven surge in interest around artificial intelligence sent tech stocks higher, many investors—especially younger ones—are still asking whether now is the time to buy AI stocks. Alim Dhanji, a certified financial planner with Assante Financial Management, says questions about how to start investing in AI and how much exposure is appropriate come up in almost every client conversation.

The technology sector has been notably volatile as debate continues over whether the AI rally represents a durable shift or an overheated market. For young investors eager to participate, financial professionals say it’s possible to gain exposure to AI without taking on excessive risk—provided you follow a disciplined plan that matches your time horizon and tolerance for volatility.

Align AI investing with risk tolerance and goals

Dhanji begins client conversations by reviewing fundamentals: risk profile, goals and the timeline for each objective. “Not everyone can tolerate the risks of AI companies because they are more volatile,” he says. That volatility makes AI stocks a better fit for long-term goals such as retirement than for short-term plans like saving for a home or a new business.

Investing in AI no longer means owning only the biggest tech names. While firms such as Nvidia, Meta Platforms and AMD have been prominent beneficiaries of the AI wave, businesses across many sectors are investing heavily in AI and related tools. That broadened adoption means investors can access AI exposure through a variety of approaches, from individual equities to funds and ETFs.

Dhanji cautions that rapid technological change can make holdings obsolete quickly. “You have to be careful in terms of what you’re investing in,” he advises—prioritizing companies with durable business models, strong balance sheets and reliable cash flows rather than chasing the latest hype.

Balanced approach recommended for investing in AI stocks

Ryan Lee, a certified financial planner and founder of Twain Financial, hears from many investors who accept the volatility but want to buy in anyway. He warns that picking individual AI stocks can be an “overly risky” strategy and stresses the importance of viewing those holdings within a broader, long-term investment plan.

Many diversified index funds already include exposure to AI-related companies. For example, ETFs tracking the Nasdaq or other broad technology indices naturally allocate to firms advancing AI, which means investors may already have some AI exposure through existing holdings.

Lee says AI is likely to contribute to future economic growth, but the timing and scale of that growth are uncertain. For that reason, some investors prefer AI-focused ETFs that spread risk across multiple companies rather than concentrating on a few single names. Dhanji cautions against over-concentration and suggests allocation guidelines based on risk tolerance and time horizon.

As a rule of thumb for younger investors with a long investment horizon, Dhanji recommends allocating roughly 10% to 15% of a portfolio to the AI sector if they want targeted exposure. More conservative investors should consider capping AI exposure around 5% or avoiding AI-specific funds or stocks altogether if those funds might be needed within three years.

Across risk profiles, both advisers emphasize avoiding the social-media “hype train.” Instead, focus on fundamentals: companies with solid balance sheets, consistent cash flow and stable business models. Investing in higher-quality firms helps portfolios withstand downturns if speculative sentiment fades.

Dhanji also recommends a disciplined approach to investing rather than trying to time the market. Build a financial plan, understand your cash flows and use dollar-cost averaging—investing a consistent amount at regular intervals—rather than committing a lump sum based on short-term excitement.

Read more news:

• The year in money: notable personal finance changes for 2025
• Setting expectations important when lending money to loved ones
• The Wealthy Barber says Canadians face more opportunities—for profit and peril
• Inside Canada’s stalled crypto tax crackdown