Two years into the AGI boom, the vast majority of market value accrued to infrastructure providers like NVIDIA ($3.2T gain). In contrast, major platform players like Microsoft saw minimal gains (4%), proving the "picks and shovels" strategy was the definitive winner.

A safer way to play the AI boom is to invest in companies selling the underlying compute infrastructure rather than the hyperscalers buying it. This strategy captures the upside of the secular trend while avoiding direct exposure to how the massive capital expenditure is funded, which may involve risky credit.

The investment mania has moved beyond AI model providers. The new game for savvy investors is identifying and backing the next inevitable supply chain constraint—like memory chips or data center cooling—which will profit regardless of which AI software company ultimately wins.

In the AI gold rush, don't bet on the "miners" like Google and Meta, who are spending billions on a new, high-risk game. Instead, invest in the "pickaxe makers"—the essential toll bridges like TSMC and ASML that every AI company must pass through, ensuring your investment has a higher probability of success.

While immense value is being *created* for end-users via applications like ChatGPT, that value is primarily *accruing* to companies with deep moats in the infrastructure layer—namely hardware providers like NVIDIA and hyperscalers. The long-term defensibility of model-makers remains an open question.

During the dot-com crash, application-layer companies like Pets.com went to zero, while infrastructure providers like Intel and Cisco survived. The lesson for AI investors is to focus on the underlying "picks and shovels"—compute, chips, and data centers—rather than consumer-facing apps that may become obsolete.

The biggest investment opportunity lies in the beneficiaries of big tech's massive AI capital expenditures. This "food chain" includes data centers, power grid upgrades, and industrial suppliers who are seeing unprecedented demand for the foundational infrastructure AI requires.

Rather than picking a winning AI or crypto, the smarter investment is in the 'picks and shovels.' This means focusing on the infrastructure every autonomous agent will require to transact—such as wallets, custody services, and blockchain rails—regardless of which specific application succeeds.

The vast majority of spending and market capitalization in AI today is in the infrastructure layer—compute (NVIDIA), foundation models (OpenAI), and data services. The entire application layer's revenue combined is a rounding error in comparison, highlighting a massive, though likely temporary, imbalance in where value is currently being captured.