Remember when everyone was losing their minds trying to find the next iPhone supplier? Yeah, that didn’t end well for most people.
Back in the 2010s, Wall Street went absolutely bonkers every time Apple picked a new component maker. Skyworks, Cirrus Logic, Universal Display – these companies would rocket up double digits on a single rumor that Tim Cook’s team had blessed them with a contract.
Plot twist: Apple turned out to be a terrible customer. They demanded Ferrari quality at Honda prices, squeezing suppliers until their profit margins looked like a pancake. Most of these “iPhone plays” ended up looking like Mount Everest – what goes up, must come crashing down.
The real winners? Companies like Uber, TikTok’s parent ByteDance, and mobile ad king AppLovin. They didn’t make the phones – they made the experiences that made people actually want to use them.
Fast forward to today, and we’re watching the exact same movie, just with AI instead of iPhones.
Last week, AI infrastructure stocks got absolutely demolished. Chipmakers, data center companies, power utilities – basically anyone selling shovels in this AI gold rush – dropped like rocks when investors realized they’re spending billions to chase profits that might not exist.
But here’s where it gets interesting: while everyone’s panicking about the “picks and shovels” companies, the real opportunities are hiding in plain sight.
Take Thomson Reuters (TRI) – yeah, the boring legal research company. They own Westlaw, which is basically Google for lawyers, except it actually works and won’t hallucinate fake court cases (looking at you, ChatGPT).
Here’s the thing: Google tried to muscle into legal search back in 2009 with Google Scholar. Spoiler alert – it didn’t work. Turns out lawyers need more than just fast search results. They need accuracy, analysis, and the kind of deep expertise that takes decades to build.
Thomson Reuters has been quietly buying AI companies and integrating them into their platform. They’re not trying to build the next ChatGPT – they’re using AI to make their existing moat even deeper. Smart move.
Then there’s ServiceNow (NOW) – the company that makes enterprise software actually usable. They’ve got 85% of Fortune 500 companies as customers with a 98% retention rate. That’s not luck, that’s a monopoly with good customer service.
ServiceNow figured out something crucial: AI is only as good as the system it plugs into. You can have the smartest chatbot in the world, but if it can’t actually do anything useful in your company’s workflow, it’s just an expensive toy.
The pattern is clear: while everyone’s fighting over who builds the best AI engine, the smart money is on companies that control the experience of actually using AI.
It’s like the 5G rollout all over again. The telecom companies that built the infrastructure? Their stocks went nowhere. Netflix, TikTok, and Apple – the companies that gave people reasons to use all that bandwidth? They absolutely crushed it.
So while Wall Street has a collective meltdown about AI infrastructure spending, maybe it’s time to look at the companies that will actually make money when the dust settles. Because the gold rush might be over, but the real money is just getting started.