The first phase made millionaires. The AI trade’s next leg will make billionaires. But here’s the catch—it won’t look anything like what came before.

Introduction: Why the AI Trade Is at a Turning Point

Let me paint you a picture. It’s late 2025, and the financial world is buzzing with a question that feels almost heretical: Is the AI trade over?

The short answer? Absolutely not. But the AI trade’s next leg requires a completely different playbook. Understanding the AI trade’s next leg is essential for any serious investor. The AI trade’s next leg represents the most significant opportunity shift in technology investing this decade.

Think about it this way. The first wave of the AI trade was like a gold rush—everyone scrambled for the obvious picks, the shovels and pickaxes of the digital age. Nvidia soared. Data center stocks exploded. The “Magnificent Seven” dominated headlines. It was narrow, concentrated, and infrastructure-heavy.

But here’s where things get interesting. According to recent Bloomberg analysis, the AI trade’s next leg is already shifting toward “pick-and-shovel” stocks in new categories—data storage companies like Sandisk (up nearly 580% in 2025), power providers, and cable producers. Meanwhile, Goldman Sachs Research expects the AI trade’s next leg to involve AI platform stocks and productivity beneficiaries rather than pure hardware plays.

The central question for you, dear reader, is simple yet profound: What defines the AI trade’s next leg, and who benefits most?

Let’s dive in.

The First Leg of the AI Trade: What Just Happened

Before understanding where we’re going, we need to acknowledge where we’ve been. The first leg of the AI trade was a historic phenomenon—and understanding its mechanics helps us decode the AI trade’s next leg.

The Infrastructure Explosion

Between 2023 and 2025, the AI market experienced an infrastructure explosion unlike anything we’ve seen since the early internet days. GPUs became the new oil. Data centers sprouted like mushrooms after rain. Networking equipment manufacturers couldn’t keep up with demand.

The numbers tell the story. Hyperscaler capital expenditure hit $106 billion in Q3 2025 alone—a 75% year-over-year growth rate. The $100 billion “Stargate” supercomputer project set new benchmarks for the scale of AI clusters.

Why Capital Piled Into a Few Names

The first leg of the AI trade concentrated wealth in remarkably few hands. Why? Three reasons:

1. Clear earnings visibility – Companies like Nvidia had order books stretching years into the future
2. Tangible demand signals – Every enterprise wanted GPUs, and supply couldn’t keep pace
3. Simple narrative – “AI needs chips, buy chip stocks” was an easy story to tell

This simplicity made the first leg accessible but also limited. Understanding the AI trade’s next leg requires recognizing that simplicity is fading.

The Limits of the First Leg

Every trade has an expiration date—not in the sense that it ends, but in the sense that it evolves. The first leg faced three critical constraints:

The AI trade’s next leg emerges precisely because these limits demand evolution.

Why Markets Are Searching for the Next Leg

The transition to the AI trade’s next leg isn’t arbitrary—it’s driven by fundamental shifts in how enterprises approach AI spending.

AI Spending Is Shifting From Capex to ROI

Here’s the uncomfortable truth that’s reshaping the AI trade’s next leg: CFOs are now asking, “What do we get back?”

The hype phase is ending. Enterprises spent lavishly on AI infrastructure through 2024 and 2025, but as Wedbush’s Dan Ives puts it, “2026 will be the year of AI monetization.” The AI trade’s next leg will reward companies that can demonstrate return on investment, not just capability.

This represents a seismic shift. The AI trade’s next leg favors practical applications over theoretical potential.

Earnings Matter More Than Vision Now

During the first leg, narrative drove valuations. Investors bought the dream. The AI trade’s next leg demands something different: margins and cash flow.

According to CNBC analysis, the market is beginning to differentiate between “companies with a product but no business model, those burning cash to fund AI infrastructure, or those on the receiving end of AI spending.” This differentiation is the defining characteristic of the AI trade’s next leg.

Broadening Participation

The AI trade’s next leg involves a democratization of gains. While the first leg concentrated wealth among chipmakers, the AI trade’s next leg spreads opportunity across:

• Platform companies
• Software providers
• Integration services
• Edge computing specialists

What Defines the “Next Leg” of the AI Trade

The AI trade’s next leg is not about more AI—it’s about useful AI at scale.

This insight from market analysts captures everything you need to understand about positioning for the AI trade’s next leg. Let me break it down.

From Compute Scarcity to Compute Efficiency

The first leg was defined by scarcity. Everyone needed GPUs, and there weren’t enough to go around. The AI trade’s next leg pivots toward efficiency.

Cost per inference is becoming the critical metric. Companies that can deliver more intelligence per watt will capture the AI trade’s next leg. Nvidia’s Blackwell refresh offered a 10x improvement in performance-per-watt—signaling that even hardware leaders recognize the AI trade’s next leg favors optimization over raw power.

From Models to Workflows

The AI trade’s next leg emphasizes deployment over demonstration. During the first leg, impressive demos drove stock prices. The AI trade next leg rewards companies embedding AI into actual business processes.

Gartner predicts 40% of enterprise apps will feature task-specific AI agents by end of 2026, up from less than 5% in 2025. This workflow integration defines the AI trade next leg.

From One-Time Spend to Recurring Revenue

Here’s where the AI trade next leg gets really interesting for investors. The business model is shifting from:

The AI trade next leg creates predictable, recurring revenue streams—exactly what investors value most.

Where the Next Leg of AI Value Is Emerging

The AI trade next leg is already creating winners in unexpected places. Let me show you where to look.

AI Software & Platforms

The application layer captured $19 billion in enterprise spending in 2025—more than half of all generative AI investment. The AI trade next leg is powered by:

• Copilots and assistants – $7.2 billion market
• Vertical-specific AI – Healthcare, legal, and finance applications
• Workflow automation – Agent platforms like Salesforce Agentforce

Coding tools alone represent $4 billion in spending—55% of all departmental AI investment. The AI trade next leg makes software the star.

AI Services & Integration

The AI trade’s next leg creates massive opportunities for:

• Consulting firms specializing in AI implementation
• AI operations (AIOps) providers
• Model tuning and deployment services

Enterprises prefer buying over building, and the AI trade next leg rewards companies that bridge the gap between capability and implementation.

Inference & Edge AI

Real-time AI closer to users represents a critical dimension of the AI trade next leg. On-device processing means:

• Lower latency
• Reduced costs
• Enhanced privacy

Apple’s long-promised Siri revamp and Qualcomm’s edge AI chips illustrate how the AI trade next leg is moving AI from cloud to pocket.

Sectors Poised to Benefit Most

The AI trade next leg will create sector-specific winners. Here’s my breakdown:

Enterprise Software

CRM, ERP, and productivity tools are ground zero for the AI trade next leg. Microsoft Copilot, Salesforce Einstein, and similar integrations are transforming enterprise workflows.

Healthcare

The AI trade next leg hits healthcare through:

• Diagnostic automation
• Documentation efficiency
• Operational optimization

Financial Services

The AI trade next leg enables:

• Fraud detection at scale
• Risk modeling improvements
• Compliance automation

Manufacturing & Supply Chains

Predictive maintenance and demand forecasting represent industrial applications of the AI trade next leg.

What Investors Are Getting Wrong About the Next Leg

Let me be direct: many investors are making critical errors in their approach to the AI trade next leg.

Assuming AI Growth Is Linear

The AI trade next leg is cyclical and uneven. Don’t expect the straight-line gains of the first leg. The AI trade next leg involves more volatility and more selectivity.

Confusing AI Adoption With AI Monetization

This is perhaps the biggest misconception about the AI trade next leg. Usage does not equal profit. Many companies are adopting AI without monetizing it effectively. The AI trade next leg rewards monetizers, not adopters.

Overlooking Execution Risk

The AI trade next leg involves significant implementation complexity. Integration challenges, change management, and talent shortages can derail even promising AI initiatives.

Editorial Insight: The AI Trade Next Leg Winners Will Look “Boring”

Here’s my honest take: the AI trade next leg will disappoint headline-seekers but reward patient investors.

The Next AI Winners Will Look “Boring”

The companies capturing the AI trade next leg won’t generate breathless media coverage. They’ll quietly deliver:

• Operating leverage
• Margin expansion
• Revenue per employee improvements

AI Is Becoming a Productivity Layer, Not a Product

The AI trade next leg embeds intelligence invisibly. You won’t see “AI” in product names—you’ll see better outcomes. This invisible AI approach defines the AI trade next leg.

The Real AI Trade Is a Margin Story

Ultimately, the AI trade next leg is about:

• Cost reduction
• Scalability
• Efficiency gains

The AI trade next leg rewards operational excellence over technological flash.

How to Think About AI Valuations in the Next Leg

Valuing companies for the AI trade next leg requires new metrics.

Metrics That Matter Now

What to Ignore

The AI trade next leg deemphasizes:

• Model size arms races
• Vanity benchmarks
• Parameter counts

Timeline Reality

Here’s the honest truth about the AI trade next leg: monetization lags adoption. The 2025-2027 window represents the earnings inflection point. Position accordingly.

Risks That Could Derail the Next Leg

No investment thesis is complete without acknowledging risks. The AI trade next leg faces:

1. AI cost inflation – Delivery costs undermining profitability (70% of companies report this challenge)
2. Regulatory pressure – EU AI Act and similar frameworks creating compliance burdens
3. Talent shortages – Not enough skilled workers to implement AI at scale
4. Security and trust issues – Governance becoming essential

What Comes Next: 2025-2030 AI Market Arc

Looking beyond immediate positioning, the AI trade next leg connects to longer-term trajectories.

The Long View

• Fewer AI headlines, more AI profits
• Consolidation across AI stacks
• AI becomes table stakes, not a differentiator
• Winners defined by execution, not imagination

The AI trade next leg is just one phase in a multi-decade transformation.

Conclusion: The Big Picture

Let me leave you with this: the AI trade next leg won’t look like the first leg. It will be quieter. It will be broader. It will be harder to spot.

The biggest gains from the AI trade next leg may come not from those who build AI, but from those who turn AI into sustained business value.

The AI trade next leg rewards patience, selectivity, and a focus on fundamentals over hype. It demands that you look past the obvious plays toward companies executing on monetization.

In the end, AI is not the trade—the outcomes are.

The AI trade next leg has already begun. The question is: are you positioned to capture it? If you understand what drives the AI trade next leg, you’re already ahead of most investors.

Frequently Asked Questions

What is the AI trade next leg? The AI trade’s next leg refers to the evolution from infrastructure-focused AI investing toward software, applications, and monetization-focused opportunities.

When will the AI trade next leg fully materialize? Most analysts expect the AI trade next leg to deliver earnings inflection between 2025-2027, with monetization becoming the primary driver.

Which sectors benefit most from the AI trade next leg? Enterprise software, healthcare, financial services, and manufacturing are positioned to benefit most from the AI trade next leg.

How is the AI trade next leg different from the first leg? The first leg focused on hardware and infrastructure. The AI trade next leg emphasizes software, services, and return on investment.

What metrics matter for the AI trade next leg? AI revenue contribution, gross margin impact, and customer retention are key metrics for evaluating AI trade next leg opportunities.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always conduct your own research before making investment decisions.’s’