Look, we get it. You’ve been watching Nvidia’s stock price like it’s your ex’s Instagram stories – obsessively and with a mix of regret and FOMO. While everyone’s been throwing money at the “Magnificent 7” like they’re tipping a really good bartender, some smart money managers are quietly building positions in the AI companies that actually do the boring (but profitable) work.
Here’s the thing about AI that nobody talks about at cocktail parties: it’s not just about making ChatGPT write your breakup texts. All that artificial intelligence needs somewhere to live, and spoiler alert – it’s not in the cloud. It’s in massive data centers that need more storage than your friend who still has photos from 2015 on their phone.
The Unsexy Heroes of the AI Revolution
Que Nguyen from Research Affiliates (fancy title, smart lady) is betting on companies like Western Digital (WDC), Seagate Technologies (STX), Hewlett Packard Enterprise (HPE), and Micron Technology (MU). These are the companies that make hard drives and memory chips – basically the filing cabinets of the digital world.
“Think about it,” Nguyen says, probably while sipping coffee that costs more than your lunch. “AI needs to store massive amounts of data and access it quickly. You can’t run machine learning on hopes and dreams.”
The best part? These stocks aren’t priced like they’re going to cure cancer and solve world hunger by Thursday. Unlike their flashier cousins in the Mag 7, you won’t need to sell a kidney to afford a decent position.
The Hardware Heroes
Meanwhile, Brian Mulberry from Zacks Investment Management is eyeing Amphenol (APH) and Emcor (EME). These companies make the specialized electrical connectors and infrastructure that keep data centers from becoming very expensive paperweights.
“They’re basically the plumbers of the AI world,” Mulberry explains. “Not glamorous, but try running your smart home without proper wiring.” These companies are making bank from hyperscalers (that’s tech-speak for the big guys like Amazon and Microsoft) who are spending hundreds of billions building AI infrastructure.
The beauty of these picks? They don’t need to reinvent the wheel or spend billions on R&D. They just show up with their expertise and watch the money roll in as everyone else builds the AI future.
The Bottom Line
While everyone’s fighting over seats on the Nvidia rocket ship, these companies are quietly building the launchpad. Sure, you might not get the same bragging rights at your next dinner party, but your portfolio might thank you when the AI hype settles and people realize someone still needs to make the actual stuff that makes AI work.
Remember: in every gold rush, the people selling shovels made the most consistent money. These might just be your AI shovels.