For the past two years, whenever someone has asked me how to invest in artificial intelligence, the conversation usually starts the same way.
"Nvidia."
Don't get me wrong. Nvidia (NVDA) has been one of the greatest stocks of this bull market and remains one of the most important companies in the world. But here's the mistake I think many investors are making…
They're treating AI like it's one industry.
It isn't.
Artificial intelligence is an entire economic ecosystem. And just like the internet created winners in networking, software, e-commerce, semiconductors, cybersecurity, and cloud computing, AI will create winners across multiple industries over the next decade.
That's why this week I want to take you on a journey through what I call the five layers of AI. By understanding each layer, you'll begin to see opportunities that most investors haven't even started looking for yet.
Today, let's start with the big picture.
The Internet Taught Us This Lesson Already
Think back to the early days of the internet.
Many investors knew it would be important. But very few understood where the biggest investment opportunities would emerge. Some bought internet service providers. Others bought networking companies. Eventually the biggest winners expanded into search, e-commerce, social media, cloud computing, and smartphones.
The same thing is happening today with AI.
Most investors are focused on a handful of household names. Meanwhile, a much larger investment opportunity is quietly taking shape underneath the surface.
The Five Layers of AI
The first is AI Infrastructure: the chips, data centers, electricity, cooling systems, networking equipment, and fiber that make artificial intelligence possible.
The second is Intelligence: the companies building the foundation models, AI software, and autonomous agents that will increasingly perform knowledge work alongside humans.
The third is Physical AI: humanoid robots, autonomous vehicles, industrial automation, warehouses, and smart factories where AI leaves the computer screen and enters the real world.
The fourth is Applications: healthcare, finance, cybersecurity, education, legal services, and thousands of industries that will become dramatically more productive by embedding AI into everyday work.
And finally, the fifth layer…
These are the companies almost nobody associates with AI today, yet they may become some of the biggest winners over the next decade because they supply the raw materials, power, components, and infrastructure needed to support this technological revolution.
That's where I believe some of the biggest opportunities still exist.
You Haven't Missed It
One of the biggest mistakes investors make during transformational technology cycles is assuming they've already missed it.
I heard it during the internet boom. I heard it after the iPhone launched. And now I hear it almost every day about AI.
Yes, some stocks have had incredible runs.
But history shows that the early leaders are rarely the only winners.
In fact, many of the largest gains often come from the companies enabling the next phase of adoption.
We've already started to see that happening.
AI Needs Far More Than Chips
While Nvidia has captured most of the headlines, companies like Broadcom (AVGO), Marvell Technology (MRVL), Vertiv (VRT), Eaton (ETN), GE Vernova (GEV), and many others have generated exceptional returns as investors recognize that AI requires far more than just graphics processors.
It requires enormous amounts of electricity.
Massive data centers.
Advanced networking.
Liquid cooling.
Power management.
Memory.
Optics.
Fiber.
And that's before we even begin talking about robotics, autonomous systems, healthcare, or the countless industries that will soon be transformed by AI.
Not One Trend — Dozens
That's one of the reasons I've built so many of our portfolios around long-term themes instead of chasing headlines. Whether it's Electricity of Everything, robotics, quantum computing, healthcare innovation, or digital infrastructure, many of these themes are connected by one powerful force…
Artificial intelligence.
Over the next four days, we're going to dig much deeper into each layer of this ecosystem.
Tomorrow, we'll begin at the foundation with what may be the single biggest investment opportunity of all: the companies building the infrastructure that powers AI. Without chips, electricity, cooling, networking, and data centers, none of the rest happens.
And as you'll see, I believe we're still in the early innings.
The AI revolution isn't one story. It's five.
And I think we're just getting started.
Here’s to the future,
Matt McCall
Founder, NXT Wave Research
