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.

Amid uncertainty about which AI applications will win, Blackstone's strategy is to invest in the essential infrastructure all AI companies need. This "picks and shovels" approach targets data centers and electricity, guaranteeing exposure to the boom without betting on specific, high-risk application companies.

Instead of betting on specific AI models like ChatGPT, a more robust strategy is to invest in the underlying infrastructure that all AI development requires. This 'onion' approach focuses on second-order essentials like semiconductors and data centers, which are poised to grow regardless of which consumer-facing application 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.

Instead of betting on which AI models or applications will win, Karmel Capital focuses on the infrastructure layer (neocloud companies). This "pick and shovel" strategy provides exposure to the entire ecosystem's growth with lower valuations and less risk, as infrastructure is essential regardless of who wins at the top layers.

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.

Beyond being an inflation hedge, infrastructure represents a key constraint on AI's growth. Investing in areas like power capacity and data compute allows investors to "own the constraint on AI," providing a diversified way to gain exposure to the dominant technology theme.

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.

To capitalize on the AI boom while mitigating risk, investors should focus on 'enablers'—companies providing essential infrastructure like semiconductors, data centers, and cloud services. This 'picks and shovels' strategy avoids betting on specific application-level winners, which was a losing strategy for many dot-com investors.