Investing in AI: Separating Hype from Opportunity

Artificial intelligence has become Wall Street’s new religion. Every company that utters “AI” in an earnings call is instantly treated like a prophet of progress. Yet, history reminds us that not all technological revolutions reward the same kind of investors.

Some firms use AI to actually enhance profit margins and scalability. Others simply attach the buzzword to their press releases. The difference between AI-driven and AI-decorated companies is where future returns will be made or lost.

What Are “AI Stocks”? Understanding the AI Value Chain

“AI stocks” is an umbrella term tossed around. In reality, there’s a hierarchy each layer of the AI ecosystem captures different levels of profit:

Understanding where a company sits in this value chain not only reveals how much leverage it has on AI’s economic upside, it also helps you grasp what truly drives the business you’re invested in. 

After all, you’re not just buying a ticker symbol; you’re buying into how that company earns, scales, and sustains profit in the AI era.

Learning from the Past: The Second-Order Effect of Technology

Here’s where the pattern becomes clear. Each world-changing technology creates its first-order winners (the builders) and second-order winners (those who exploit the infrastructure for new business models).

The takeaway: the biggest returns rarely come from the tech itself, but from the new behaviors and businesses it enables.

AI’s Ripple Effect: Where the Next Value Wave Emerges

Just as cars birthed mass retail and Wi-Fi spawned the creator economy, AI will unlock a new era of productivity leverage.

We may expect to see massive value creation in:

• Productivity Platforms – Companies amplifying white-collar output (Microsoft, Salesforce, Adobe).
  
  
• Automation Infrastructure – Firms standardizing intelligent workflows (UiPath, ServiceNow).
  
  
• Data Monetization Players – Businesses turning AI insights into economic advantage (Palantir, Snowflake).
  
  
• Energy and Compute Logistics – The unseen backbone powering it all (TSMC, data center REITs).
  
  

How to spot a stock that can potentially benefit from AI

The AI boom has turned almost every company into "AI-powered", whatever that means. But real investors like us know better. Not every business waving the AI flag actually earns money from it. The key is to look past the hype and ask whether artificial intelligence is providing any tangible value to the business fundamentals.

A truly investable AI stock is one where AI improves the bottom line. It should either expand profit margins or generate new streams of revenue, not just promise “innovation” in vague terms. The operational impact must also be visible in measurable productivity gains. For instance, through reduced costs, faster output, or smarter decision-making that clearly benefits the business.

Scalability matters too. Many companies experiment with AI in small pilot projects, but the ones worth owning are those that can scale these initiatives across multiple divisions or even industries. Then there’s the question of defensibility. The best AI adopters use it to deepen their competitive moat. Creating systems, data, or customer experiences that competitors can’t easily replicate. Without that kind of differentiation, even impressive AI features can quickly become commodities.

Finally, consider the company’s position in the broader AI ecosystem. The most sustainable winners are often those at the center of AI’s value chain — firms building chips, data infrastructure, or essential platforms that other businesses depend on to operate.

Final Thought : Beyond the Buzzword

Every technological era starts with hype. The winners aren’t the loudest innovators, they're the ones who capture compounding value.

AI will be no different. Nvidia may be this generation’s Ford, but the next Walmart or Netflix of AI is still emerging. 

In this age where every business claims to “use AI,” few actually profit from it. At the Black Market Event, Adam Khoo will reveal LIVE how to spot the difference.

Join us at BLACK MARKET 2025 and see how smart investors separate AI hype from AI income.