AI Stocks for Retirement Portfolios: How Lexington Investment Advisors Balance Innovation with Conservative Risk Management
Introduction
What happens when four generations of investment wisdom converge in one portfolio? At Dupree Financial Group, we’re proving that retirement investors don’t have to choose between innovation and security. In the latest episode of The Tom Dupree Show, we explored how AI stocks for retirement portfolios can work alongside traditional conservative investments—and why learning from younger perspectives might be the smartest move seasoned investors can make.
Tom Dupree, Mike Johnson, and James Dupree—the fourth generation of the Dupree family in the investment business—give insights into artificial intelligence investing, revealing how Lexington investment advisors are helping clients over 50 navigate this complex technology sector without abandoning the income-focused, risk-managed approach that has served retirees well for decades.
Warren Buffett’s Lesson: Why Age Shouldn’t Limit Your Investment Perspective
Tom Dupree opens the conversation with a powerful story that resonates with every investor who has ever felt overwhelmed by new technology. For years, Warren Buffett avoided tech investments entirely, convinced they fell outside his circle of competence. Then something changed: he started listening to Todd Combs, a younger member of his organization who helped him see Apple not as a confusing tech company, but as a consumer products powerhouse.
The result? Apple became Berkshire Hathaway’s largest investment—a position that has generated billions in returns.
“I’ll be honest with you, a lot of the stuff that James has come up with, I’ve thought, you know, it’s just a quick way to lose money,” Tom admits. “But then as you begin to dig deeper into some of these tech companies that are related to AI, we have begun to see some ideas that I never would’ve come up with because I don’t fish in that pond.”
This multi-generational approach to investment research has become a cornerstone of how Dupree Financial Group evaluates AI stocks for retirement portfolios.
Understanding AI Investment Opportunities Without the Jargon
One of the biggest barriers preventing retirement investors from considering AI stocks is the complexity of the technology itself. James Dupree breaks down artificial intelligence into two understandable categories:
Generative AI creates and translates information—think ChatGPT providing answers to questions or generating content.
Agentic AI makes independent decisions—like high-frequency trading robots that execute trades for hedge funds or autonomous systems that manage complex operations.
But rather than investing in the headline-grabbing companies everyone knows, Dupree Financial Group focuses on what Mike Johnson calls “the picks and shovels” of the AI revolution—the infrastructure companies that provide essential services to the entire industry.
The Conservative Approach to AI Stocks for Retirement Portfolios
Here’s what sets Lexington investment advisors at Dupree Financial Group apart: they’re not betting the farm on speculative technology. Instead, they’re using a disciplined, conservative methodology that treats AI investments as a small but strategic component of a diversified retirement portfolio.
Position Sizing That Protects Your Future
“We’re not talking about putting a huge part of the portfolio into this,” Tom emphasizes. “Maybe a quarter of a percent here, a quarter of a percent there. We’re nibbling very, very small amounts.”
This approach allows the portfolio to benefit from the growth potential of AI technology while maintaining the low-volatility profile that retirement investors need. In fact, the Dupree Financial Group portfolio maintains a beta of approximately 0.65 to 0.70—meaning it’s 30-35% less volatile than the S&P 500, even while incorporating select growth opportunities.
Buying During Corrections, Not At Peaks
Rather than chasing momentum, the team has been strategically adding positions as AI stocks have corrected significantly from their highs. James notes that many AI infrastructure companies have pulled back 40-50% from recent peaks—creating what Mike Johnson calls “financial crisis-type corrections” that present opportunities for patient investors.
“When you look at some of these things that have dropped 40% plus, these smaller companies are the picks and shovels,” Mike Johnson explains. “These are companies that offer a service or a product that the hyperscalers need.”
The Infrastructure Play: Where Retirement Portfolios Can Find AI Opportunities
Rather than investing in the most talked-about names like Nvidia, James Dupree focuses his research on three critical areas of AI infrastructure:
Data Center Companies
These firms build and lease the physical space where AI processing happens. While not yet profitable, some are showing strong revenue momentum and approaching profitability—exactly the kind of inflection point long-term investors look for.
Connectivity Solutions
Companies that manufacture high-speed connection devices are experiencing explosive revenue growth. One company James researched recently beat revenue expectations by $30 million and raised guidance substantially for the coming quarter—showing genuine demand beyond the hype.
Computing Power Providers
Firms that rent out computing capacity for data storage, transfer, and AI training are building substantial recurring revenue streams, though they often trade at high multiples that require careful evaluation.
“The biggest problem with most of these companies is the multiples that they trade at,” James notes, highlighting why position sizing and patience matter so much in this sector.
Balancing Growth and Income in Retirement Portfolios
One of the most important insights from this episode is how AI investments fit within an income-focused retirement strategy. Mike Johnson articulates the philosophy clearly:
“The cornerstone of the portfolio is income. But with income, you also have to have price appreciation within the portfolio. Because ultimately if you have price appreciation later on, that price appreciation can be converted into income.”
This approach allows Dupree Financial Group to maintain their focus on generating reliable income for retirees while strategically positioning portfolios to benefit from long-term growth trends. The portfolio includes:
- Mortgage REITs for current income
- Treasury bonds for capital preservation
- Dividend-paying stocks across multiple sectors
- Select growth positions in emerging technologies
All working together toward client-specific retirement goals, not arbitrary benchmark-beating.
The Research Process That Makes Small AI Positions Work
What separates professional management from individual speculation is the depth of research backing each decision. The Dupree Financial Group team doesn’t just read headlines—they conduct earnings calls with companies, analyze quarterly reports, study competitive positioning, and evaluate balance sheets before making any investment.
“That’s where the research comes in,” Mike Johnson emphasizes. “It gives you the conviction to emotionally be able to withstand that. If you see something drop 40% in a matter of a week, it’s a gut punch. You pause and you fall back on the research.”
This research-driven approach also informs another crucial discipline: knowing when to add to positions versus when to exit entirely. As Tom points out, sometimes companies decline for good reasons—which is why understanding revenue sources and balance sheet health matters so much.
Why Multi-Generational Perspectives Create Better Portfolios
Throughout the episode, the interplay between Tom’s 47 years of investment experience, Mike’s analytical rigor, and James’s knowledge of emerging technologies illustrates why collaboration produces better outcomes than any single perspective could achieve.
“We have to get ideas from every place we can. Nobody has all the ideas,” Tom acknowledges. “That’s why working as a team is so valuable. You don’t just have one mind working on the portfolio. You’ve got a bunch of different people contributing.”
This collaborative approach prevents the portfolio from becoming too conservative (missing legitimate opportunities) or too aggressive (taking unnecessary risks with retirement capital).
The Flexibility Advantage of Independent Investment Management
Unlike mutual funds bound by rigid mandates or ETFs locked into specific indexes, Dupree Financial Group maintains the flexibility to pivot as opportunities emerge or risks develop.
“If we could buy a fund or an ETF that mimicked what we do in the portfolio, we’d do it in a heartbeat because that’d be a lot easier,” Mike Johnson jokes. “But there wouldn’t be one out there.”
This flexibility has been tested twice in 2024 alone—in April and again from late October through the recording of this episode—with the portfolio maintaining its low-volatility profile while continuing to outperform the S&P 500.
De-Risking While Staying Opportunistic
One of the most sophisticated insights from the episode is how the team simultaneously de-risks the portfolio while selectively adding growth positions. Over recent months, they’ve been:
- Taking profits in positions that have reached target valuations
- Adding 10-year and 30-year Treasury bonds for capital preservation
- Purchasing mortgage bonds for income and stability
- Selectively adding small positions in corrected AI infrastructure stocks
“While we have been taking profits in certain things and buying bonds, we’ve been de-risking the portfolio,” Mike Johnson explains. “But in the same vein, we’re looking at opportunities in these AI companies, which would be considered aggressive—but we believe we’re buying them in a more conservative way.”
This tactical bond position serves a dual purpose: preserving capital during uncertain periods while maintaining dry powder for future opportunities. As Tom notes, “If we saw one that we thought was a slam dunk, we’d sell some of our treasury bonds and buy it.”
Key Takeaways for Retirement Investors
- Multi-generational perspective matters: Combining decades of experience with fresh insights on emerging technologies creates more balanced portfolios
- Small positions limit downside: Quarter-percent positions in speculative areas allow upside participation without risking retirement security
- Buy corrections, not momentum: The best entry points often come when stocks have declined 40-50% from peaks
- Infrastructure beats headlines: “Picks and shovels” companies often offer better risk-reward profiles than the most talked-about names
- Research provides conviction: Deep analysis enables investors to add to positions during declines rather than panic-selling
- Income remains paramount: Growth positions ultimately serve the goal of generating reliable retirement income
- Flexibility creates opportunity: Independent management allows pivoting between defensive and opportunistic positioning as conditions change
- Low volatility is achievable: A 0.65-0.70 beta demonstrates that incorporating growth doesn’t require accepting market-level volatility
Understanding What You Own: The Foundation of Successful Retirement Investing
Tom Dupree returns throughout the episode to a central theme: investors must understand what they own and why they own it. This transparency stands in stark contrast to the sterile, black-box approach many firms take with client portfolios.
“I think a lot of people in this business screw up in that they don’t tell the clients what they own, why they own it. They make the business very sterile and not very interesting,” Tom observes.
At Dupree Financial Group, clients receive detailed explanations of portfolio holdings, the research behind each position, and the strategic rationale for the overall allocation. This education-focused approach helps clients stay committed during market volatility rather than making emotional decisions at precisely the wrong time.
FAQs About AI Investing for Retirement Portfolios
Q: Are AI stocks too risky for retirement portfolios?
AI stocks as a sector can be volatile, but small, carefully researched positions in AI infrastructure companies can add growth potential without significantly increasing portfolio risk. The key is position sizing—keeping individual AI holdings to a quarter or half percent of the overall portfolio limits downside while allowing meaningful upside participation.
Q: How do Lexington investment advisors choose which AI companies to invest in?
Dupree Financial Group focuses on AI infrastructure companies—the “picks and shovels” of the AI revolution rather than the headline names. The team conducts deep research into revenue sources, balance sheets, competitive positioning, and growth trajectories, looking for companies with strong fundamentals trading at temporarily depressed valuations.
Q: Should I sell my AI stocks if they drop 40-50%?
Not necessarily. As Mike Johnson explains, “Sometimes companies go down for a reason,” which is why research matters so much. If the fundamental thesis remains intact and the company’s long-term prospects haven’t changed, significant corrections can present opportunities to lower your average cost. However, this requires understanding the business deeply enough to distinguish temporary market volatility from genuine business deterioration.
Q: How do AI investments fit with an income-focused retirement strategy?
AI growth positions complement income-focused holdings by providing price appreciation that can eventually be converted into income. The Dupree Financial Group approach maintains income as the cornerstone through mortgage REITs, dividend stocks, and bonds, while strategic growth positions create opportunities for capital appreciation that enhances long-term income generation capability.
Q: What’s the difference between investing in Nvidia versus AI infrastructure companies?
While Nvidia dominates AI chip manufacturing, it trades at a premium valuation reflecting its market position. AI infrastructure companies—those building data centers, providing connectivity solutions, or renting computing power—often trade at lower valuations while still benefiting from AI growth. They represent more diversified exposure to the sector’s expansion rather than concentration in a single, high-profile name.
Q: How does a multi-generational investment team improve portfolio outcomes?
Different generations bring different expertise and perspectives. Experienced advisors provide decades of market wisdom, risk management discipline, and understanding of how various market cycles play out. Younger analysts bring familiarity with emerging technologies, new business models, and changing consumer behavior. This combination prevents portfolios from becoming either too conservative (missing legitimate opportunities) or too aggressive (taking unnecessary risks).
Q: Why maintain bonds in a portfolio when adding growth stocks?
Bonds serve multiple purposes in the Dupree Financial Group approach: they generate current income, reduce overall portfolio volatility, preserve capital during uncertain periods, and provide liquidity for opportunistic purchases when attractive valuations emerge. Rather than viewing bonds and growth stocks as contradictory, they work together to achieve risk-adjusted returns appropriate for retirement investors.
Take Control of Your Retirement Portfolio With Expert Guidance
The conversation between Tom Dupree, Mike Johnson, and James Dupree reveals a sophisticated approach to modern retirement investing—one that respects both the wisdom of traditional risk management and the potential of emerging opportunities.
If you’re wondering whether your current portfolio reflects the right balance between growth and preservation, income and appreciation, or familiar holdings and new opportunities, now is the time to find out.
Dupree Financial Group offers complimentary portfolio reviews for retirement investors who want to understand exactly what they own and why. With 47 years of investment experience and a multi-generational team analyzing opportunities across market sectors, they bring the depth of research and strategic thinking your retirement deserves.
The key to successful retirement investing isn’t timing the market—it’s understanding what you own and having a clear strategy that aligns with your goals.
Schedule your complimentary portfolio analysis today by calling (859) 233-0400 or visiting www.dupreefinancial.com to book directly through the homepage.
Don’t let your retirement portfolio operate on autopilot. Discover how Lexington investment advisors at Dupree Financial Group can help you navigate today’s complex investment landscape with confidence.
Listen to the full episode of The Tom Dupree Show at www.dupreefinancial.com/podcast for more insights on retirement investing, market commentary, and wealth management strategies.
Learn more about the Dupree Financial Group investment approach at www.dupreefinancial.com/about-us/.