Episode summary
AI Stocks After Nvidia: The Industries I Think Win Next
Summary
The host argues that the AI trade is moving from the companies that enabled adoption to the companies that will now use it best. So far, the biggest gains have gone to power stocks and semiconductor names such as Micron, Nvidia, and Broadcom, but he thinks that advantage is increasingly priced in and the market is starting to ask where the next return on investment will come from.
He says the fourth quarter of 2025 was when AI “grew up,” and that 2026 is the year bigger organizations begin changing internal processes around it. In his view, the winners next will be adopters with oligopoly-like pricing power, proprietary data, and a physical or regulatory moat, because AI can help them get faster, better, and cheaper while expanding margins.
The host highlights insurance underwriting and claims, large banks and asset managers, healthcare payers and scaled providers, exchanges and data franchises, and asset-heavy logistics incumbents such as FedEx and UPS. He is more skeptical of professional services and horizontal software, where AI may either be hard to value or weaken the moat. He does not think the Microsofts of the world fit that bearish software view.
Key takeaways
- The host thinks the AI trade is rotating from enablers like Nvidia, Broadcom, and Micron to adopters that can monetize AI internally.
- He expects insurance, banking, healthcare, exchanges, and logistics to benefit most because they have pricing power, proprietary data, and regulatory or physical moats.
- He says 2026 is when bigger organizations begin changing processes, making AI a direct margin-expansion tool.
- He is skeptical of professional services and horizontal software because AI may be difficult to model there or may erode the moat.
- He believes the next leg of the S&P 500 rally could come from adopters, not the semiconductor winners already priced in.
Notable quotes
“In 2025, the fourth quarter of 2025, AI really grew up. It was like a step function in ability”
“I think next year is the year where a lot of bigger organizations start to filter through and change a lot of their processes”
“adopters, of course, with oligopoly-like pricing power, proprietary data, and a physical or regulatory moat, those are going to benefit the most”
“the value add will go to house service providers that sell software, you know, like Microsoft”
How the episode opens
Good morning. This is Dylan Jovine with Behind the Markets. Happy Thursday.
Today is Thursday, October 22nd. It is like God flipped on the AC in Florida today. So, I get to wear my hoodie.
Yay! Anyway, today I'd like to talk about how the AI trade is shifting. And you know, I've been really really looking at this, waiting for this really.
It's really starting to shift right now from enablers to adopters. We're going to see that really in front of us over the next uh months. And when you think about what we've had in the AI trade so far, the benefits have accrued primarily to enablers.
And you think about power stocks, obviously semiconductor stocks, etc. AI firms that benefited the most. And when you look at the impact it's had on profits in the S&P 500, all of these companies, you know, you think Micron, you think Nvidia, Broadcom, all these companies have these enablers.
These companies that facilitate adoption of AI, they have benefited very very well. That is starting to shift. Now, the AI trade or sophisticated investors are starting to ask, and we've been asking this for a while really, is you know, who's going to benefit most from this?
How's the IRR going to play out? How are the economics of this going to play out? And I think that's really, as I think about this a little bit more, I think that's really been one of the things that has been shaking up this market right now in a lot of ways, this correction that we've had.
But what I am anticipating happening is that really, as the market finishes separating some of these winners from some of these losers, the attention, the thing that keeps profits driving higher next year, are really how the adopters are managing the AI trade, the rollout, the return on their investment.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai stock rotation
- semiconductors
- roi in ai adoption
- insurance and banking adopters
- skepticism on professional services and horizontal software
Companies and tickers mentioned
- NVDA
- MU
- AVGO
- MSFT
- FDX
- UPS
- Nvidia
- Micron
- Broadcom
- Microsoft
- FedEx
- United Parcel Service
Watch the episode
Watch “AI Stocks After Nvidia: The Industries I Think Win Next” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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