98% of Investors Miss The REAL AI Winners (My Full Map)
Summary
Alex argues that institutional investors are using outdated maps to predict AI spending, leading to estimates that are hundreds of billions of dollars too low. Alex notes that while Goldman Sachs predicts a slowdown in spending growth, record earnings from Nvidia and Broadcom suggest that the five largest cloud companies alone will outspend Wall Street's global forecasts. Alex introduces a "five-layer cake" model to explain the AI economy: Energy (the foundational constraint), Chips (processors like GPUs and ASICs), Infrastructure (networking and cooling), Models (foundational reasoning systems), and Applications (economic value creation).
Alex highlights the following key stock sectors and companies:
Mentioned Stocks
Reasoning: Alex identifies Broadcom as a leader in custom AI accelerators (ASICs) for major tech firms like Google and Meta. Alex points out that Broadcom is experiencing 221% year-over-year AI revenue growth. Alex argues that Broadcom has clear visibility into $230 billion in AI revenue over the next two years, making Alex very bullish on its long-term prospects.
Reasoning: Alex highlights Nvidia as the dominant provider of the universal AI compute platform. Alex notes that the top five cloud companies are on track to spend $1.3 trillion next year, primarily on Nvidia chips. Alex believes the new Blackwell and Vera Rubin platforms will drive continued record growth as AI factories are increasingly priced by their gigawatt capacity.
Reasoning: Alex views TSMC as an essential play because the company manufactures chips for both Nvidia and Broadcom. Alex notes that two-thirds of the company's revenue is now derived from AI and high-performance computing. Alex argues that TSMC wins regardless of which specific AI chip architecture becomes the industry standard.
Reasoning: Alex mentions that Alex has been buying Coherent as part of the infrastructure layer. Alex highlights that Nvidia invested $2 billion into the company for its laser and transceiver technology. Alex argues that the AI buildout is adding optical ports faster than new technologies can consolidate them, ensuring demand for Coherent's products.
Reasoning: Alex argues that Constellation Energy is a major winner in the energy layer because it operates America's largest nuclear fleet. Alex notes that the company is restarting a reactor at Three Mile Island specifically to supply Microsoft. Alex believes the company is perfectly positioned to profit from the grid's shortage of always-on power.
Reasoning: Alex explicitly states that Alex is starting a position in Powell Industries. Alex favors the company because it builds industrial-grade switchgear required for massive data center power delivery. Alex notes the company has a low market cap under $7 billion, very little Wall Street coverage, and a backlog that has grown 69% year-over-year.