One of the biggest mistakes investors continue to make is viewing artificial intelligence (AI) as a short-term market trade.
It is not.
AI is rapidly becoming foundational infrastructure for the global economy - much like electricity, the internet, and cloud computing before it. And the latest earnings season continues to reinforce that reality.
Over the last several days, a wide range of AI-related companies reported results that showed demand remains exceptionally strong across nearly every layer of the ecosystem.
Importantly, this strength is not isolated to one company or one niche.
It is happening simultaneously across semiconductors, networking, optics, servers, cloud infrastructure, and even industrial construction tied to data centers.
That breadth is important.
The Numbers Don't Lie
Take Advanced Micro Devices $AMD ( ▲ 18.76% ), for example. The company reported another strong quarter driven largely by accelerating demand for AI chips and data center products. Data center revenue surged 57% year over year, while management also issued guidance ahead of Wall Street expectations.
Meanwhile, Arista Networks $ANET ( ▼ 17.11% ) - one of the key providers of high-speed networking equipment used inside AI data centers - reported revenue growth of more than 35%. Companies building massive AI clusters need increasingly sophisticated networking systems to move enormous amounts of data efficiently, and Arista continues to benefit directly from that trend.
The same dynamic is showing up in optical connectivity.
Lumentum Holdings $LITE ( ▼ 5.93% ) reported revenue growth approaching 90% year over year, fueled by demand for optical components used in AI infrastructure. As AI workloads become larger and more complex, the need for faster data transmission inside data centers becomes critical.
We are also seeing continued strength in the physical server market.
Super Micro Computer $SMCI ( ▲ 19.55% ) once again delivered results and guidance above expectations as enterprises and hyperscalers continue investing aggressively in AI server deployments.
Even smaller cloud providers are benefiting.
DigitalOcean $DOCN ( ▲ 4.06% ) raised guidance after reporting strong customer growth tied to AI applications. The company noted AI-related annual recurring revenue growth exceeding 200%, highlighting how rapidly businesses of all sizes are adopting AI tools and services.
AI Is Now Bigger Than Tech
The AI boom is now clearly extending beyond technology companies alone.
Sterling Infrastructure $STRL ( ▲ 7.57% ) - which has exposure to large-scale data center and infrastructure projects - reported revenue growth of more than 90% while also raising full-year guidance. The stock was up 54% yesterday and is now up 390% in the last 12 months.
This is another important reminder that AI is driving real-world capital spending well outside Silicon Valley.
That is a key point investors should understand.
The AI megatrend is no longer just about chatbots or consumer applications.
It is becoming one of the largest infrastructure buildouts in decades.
Why Timing Matters
Data centers are expanding rapidly. Power demand is rising. Networking requirements are increasing exponentially. Companies are investing billions to modernize systems and deploy AI capabilities across industries.
And despite concerns about valuations or short-term market volatility, the underlying spending trends continue moving higher.
This is why trying to perfectly time the AI trade can become so costly.
Major secular trends rarely move in a straight line. There will be pullbacks, corrections, periods of consolidation, and individual companies that fail to execute.
But history shows that transformative technological shifts tend to create far larger long-term opportunities than most investors initially expect.
The internet boom lasted far longer than most imagined. Cloud computing evolved into a multi-trillion-dollar industry. Smartphones reshaped entire sectors of the economy.
AI increasingly appears positioned to follow a similar path.
We Are Still in the Early Innings
The latest earnings reports simply reinforce that we are still in the earlier stages of this transformation - not the end of it.
And that’s exactly why investors need to stop viewing AI as a “trade” and start viewing it as a generational wealth-building opportunity.
Because what we’re witnessing right now is not hype fading away…
It’s the early innings of one of the largest infrastructure booms in modern history.
The companies building the chips, networking systems, optics, power infrastructure, data centers, and industrial backbone powering AI are seeing real revenue growth, rising backlogs, and accelerating demand. That is not hype. That is execution.
Will there be volatility? Of course.
Every major technological revolution experiences pullbacks, corrections, and moments where investors question whether the trend has gone too far. We saw it during the internet boom. We saw it with cloud computing. We saw it with smartphones.
But the investors who stayed focused on the long-term transformation - and used volatility to accumulate leading companies - were the ones who built life-changing wealth.
Bottom Line
I believe AI will prove no different.
That’s why in The McCall Letter, we continue focusing not just on the obvious AI winners, but also on the overlooked “picks and shovels” companies quietly benefiting from this massive spending wave behind the scenes.
Because some of the biggest winners of the AI revolution may not be the companies grabbing headlines today…
They may be the infrastructure companies powering the entire ecosystem tomorrow.
And based on what corporate America is telling us right now, this AI spending cycle is not slowing down.
In fact, all signs suggest it’s accelerating.
Here’s to the future,
Matt McCall
Founder, NXT Wave Research
