The AI story has changed dramatically, and Wall Street has yet to catch on.
That’s great news for individual investors, because the “big money” is made when institutions begin to allocate capital to a new theme. By moving now, before Wall Street, you have the opportunity to be properly positioned in advance.
Let me explain…
The Artificial Intelligence (AI) investment theme first grabbed the investing public’s attention in November 2022 with the launch of ChatGPT. From that point onward, AI was all anyone talked about from an investing perspective: a new, revolutionary technology that had the potential to unleash productivity, cut costs and boost corporate profits in ways not seen since the introduction of the internet in the late 1990s.
However, there was one major caveat to this issue…
The actual technology involved was extremely sophisticated, which meant that few investors understood it or how to profit from it. To counter this, investors opted to allocate capital to the AI-related companies that were easiest to understand: the Big Tech/ hyperscalers like Meta (META), Alphabet (GOOGL), Microsoft (MSFT) and Amazon (AMZN) who were investing hundreds of billions of dollars building out AI infrastructure.
You can see this clearly in the below chart. The Mag-7 dramatically outperformed the broader S&P 500 throughout this period.
This theme began to change in mid-2025.
At that point, the investment herd began to question whether all of the capital being spent building out AI networks (over $500 billion per year) was actually going to translate to increased growth/ profits for Big Tech. From September 2025 onward, the MAG-7 struggled.
There is a critical point to note here… while there are plenty of valid concerns about whether AI will eventually translate to increased productivity or corporate profits, Big Tech/ hyperscalers have committed to the AI-build regardless.
Put another way, the $500+ billion in annual Big Tech capital expenditures is going to be spent no matter what… which means the “picks and shovels” plays for the AI-buildout (the smaller companies producing the chips, fiber optics, energy, etc. needed for this build-out), will be signing contracts and generating rapid growth regardless of whether or not AI actually results in any meaningful boost to Big Tech’s results.
Let me show you…
Bloom Energy (BE) makes solid oxide fuel cells (SOFCs) — essentially on-site power generators that produce electricity through an electrochemical reaction rather than combustion. These cells are seen as a potential source of energy for AI-related datacenters. And thanks to its deals with Oracle and other companies, Bloom has seen its share price EXPLODE higher, dramatically outperforming the MAG-7, including Nvidida (NVDA) which has been the fastest growing Big Tech play for four years straight.
Another company of note is AAOI (Applied Optoelectronics) which makes optical transceivers — the components that convert electrical signals into light and shoot data through fiber-optic cables inside and between data centers. Here again, the growth relative to even NVDA has been extraordinary.
My point here is that if you are looking to see outsized gains from the continued AI-buildout, you need to look outside of Big Tech to the “picks and shovels” plays: the companies that will profit from the AI even if the technology doesn’t result in a productivity boom.
On that note, we recently published a special investment report outlining three AI plays Wall Street has yet to understand. The report is title The AI Plays Your Broker Doesn’t Know About and we are making just 99 copies available to the investing public.
To reserve one of the remaining copies…
Best Regards
Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research
