Shifting mindsets: How geopolitics, trade and tech innovation could redefine investment opportunities

In today’s world, the definition of national security is expanding to include more than just military defense. Rapid technological advancements like artificial intelligence (AI) are changing the game, and new developments in global trade, supply chains and the energy sector also have an impact.

Here’s a look at how these changes are affecting markets and what investors should pay attention to.

Supply chain resilience and energy security

According to Vinny Amaru, Global Investment Strategist at J.P. Morgan Wealth Management, events over the last five years served to highlight the vulnerability of supply chains and energy.

“When we think back to 2019, we  were living in this really hyper-globalized era, right? Supply chains were judged based on their efficiency. We hadn't lived through big supply chain issues before. But then COVID happens, and all of a sudden supply chains and that efficiency come under pressure,” he said.

Aside from COVID-19, recent global conflict has also impacted energy security. When Russia invaded Ukraine, Europe – and especially Germany – lost a huge source of natural gas. Electricity prices rose significantly for households and industry in some parts of the continent.

In response to both events, impacted countries passed legislation to address these vulnerabilities. The U.S. passed the CHIPS Act in 2022 to bring semiconductor manufacturing closer to home. And under the current Trump administration, tariffs have also been introduced as a way to incentivize domestic manufacturing. Meanwhile, countries across Europe invested in renewable energy, producing their own energy and forging new alliances to ensure they had the energy they needed.

But the response didn’t end there. It was just the start of what could be referred to as a “supply chain revolution,” completely changing how companies operate and plan for the future, and introducing new technologies and investment opportunities.

“It's become critical that [companies] focus strategically on having supply chains where they don't have to rely on what are viewed as adverse areas in the geopolitical order,” said Abigail Yoder, U.S. Equity Strategist at J.P. Morgan.

She continued, “[Companies are] building out these new supply chain logistics that make them less vulnerable to [shortages], and that requires technology. And that technology requires energy. It's renewables in Europe and China. For us it's been more on the fossil fuel side with oil and natural gas.”

Tapping into fossil fuels in the U.S. helps fuel the building of massive AI data centers, a whole new type of infrastructure designed to increase productivity, efficiency and most importantly, profitability, across industries. 

Defense spending

Although national security goes beyond just the military, defense spending is still a critical component. And according to Amaru, defense spending is increasing all over the world. No surprise, that includes the U.S.

“Defense spending has always been a large portion of government spending in the United States,” he said. “But more recently what's interesting is that the defense budget is going to approach a trillion dollars for the first time next year, which is around 3.5% of GDP.”

This newly inflated defense budget includes big spending on tech. The One Big Beautiful Bill Act (OBBBA), signed into law July 4, allocates $25 billion to a new Golden Dome missile defense system, as just one example.

“That is a completely new program,” Amaru added. “The total cost of that is likely going to either be a few hundred billion to a few trillion once it's all said and done, but I think the point is that it's about seeding these new technologies, seeding these new defense initiatives to broaden out the way that we think about military spending.”

Europe is also taking defense very seriously. The U.S.’s NATO allies spent about 2% of their collective gross domestic product (GDP) on defense in 2024, and this figure was upped to 3.5% at the beginning of 2025. Looking at specific countries, Germany is allocating 650 billion euros to be spent over the next five years on traditional defense, with an almost equal amount set aside for infrastructure upgrades.

As far as what that means for investors, Yoder said, “We're at this inflection point where we're going to continue to see that [defense] spend [go] higher.”

She estimates that the $2.5 trillion being spent annually on defense in the U.S. and Europe will increase valuations across the defense sector. This includes securities focused more on traditional defense, as well as those focused more on AI defense.

Technological competitiveness

Virtually every sector is being driven by new technologies. When talking about tech in relation to national security, Amaru keyed in on two aspects in particular: cybersecurity and the build-out of the AI ecosystem.

“[Cybersecurity] is almost one of the first pillars to building out the AI ecosystem, because if you think that this build-out is going to give you military dominance, then you want to make sure you protect that at all costs,” Amaru said. “But on the AI build-out, to me this is the thing that is going to matter for who controls the military landscape going forward.”

He continued, “Right now it is really a race between two major powers, and it's the U.S. and China. And with the build-out, you can see who controls what part of it in a better way. Rare earth elements are a great example [to look at] because we can talk about the technology itself, and say OK, maybe the U.S. has this model that is this fast, and China has this model that's this fast. Well, maybe you can't build those models if you don't have the rare earth elements that go into building them. And we know that China refines around 90% of all rare earth metals in the world.”

This is one reason trade negotiations are so important between the U.S. and China – if China has very stringent export controls, it can hinder U.S. AI progress. But that's also the reason we’re seeing so much investment from the U.S. government into rare earth metals and processing.

All of these factors come together to drive investments across interconnected sectors. We need AI data centers to stay competitive globally; we need energy to run AI data centers; we need cybersecurity to protect this data. These areas are ripe for investors to place their money, as they’re only expected to grow in the coming years.

The bottom line

The COVID-19 pandemic and other recent global events have completely transformed our concept of national security. Countries across the world have implemented new supply chain logistics and domestic manufacturing practices, and are pouring trillions of dollars into defense, including AI-driven technologies.

The current climate, while full of uncertainty, has proved a boon for AI investors. Related sectors like energy, cybersecurity and traditional defense are also growing.

For investors who want to take advantage of potential gains in these sectors, consider reaching out to a J.P. Morgan financial advisor or using self-directed tools like exchange-traded fund (ETF) screens and price alerts on the Chase website or mobile app.

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