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Everyone knows that the AI Boom has been producing some major winners — like Nvidia (NVDA) — in the stock market. But did you know that the biggest gains in this AI Boom are probably still to come? As we look toward 2025, the market is primed for a seismic shift, with a new type of AI-driven company at the forefront. Follow me here. Everyone compares this AI boom of the 2020s to the dot-com boom of the 1990s. And for good reason, as that comparison feels spot-on... The internet was a revolutionary technology that emerged in the 1990s which proliferated throughout the global economy and changed how we work, play, travel, and communicate – it changed everything about everything. Lather, rinse, and repeat with AI. If we're right, the stock market in 2025 could be dominated by AI-driven innovation, with the potential to dwarf even the impressive gains we've seen from AI stocks like NVDA. But only investors who position themselves strategically in this burgeoning sector can reap the substantial rewards in this next phase of the AI revolution. History Repeats With the AI Boom AI is a new revolutionary technology that has emerged in the 2020s and is proliferating throughout the global economy, changing how we work, play, travel, and communicate – it is changing everything about everything. The AI and internet have very strong parallels as revolutionary technologies. The AI boom and the dot-com boom on Wall Street also have very strong parallels. The S&P 500 rose more than 20% in 2023 – the first year of this AI boom. It rose more than 20% again in 2024 – the second year of the AI boom. That's two consecutive years in which the market has soared more than 20%! You know the last time it did that? Yup, the first two years of the dot-com boom in 1995 and 1996. Just look at the price action of the S&P over the past two years and the price action of the S&P in the first two years of the dot-com boom in 1995 and 1996. Those lines match up almost perfectly. 
Stocks today—in the AI boom—are tracking the exact footsteps they followed in the dot-com boom. We therefore think it is fair to say that the AI boom is essentially the second coming of the dot-com boom. The dot-com boom played out in two phases: the Builder Phase and then the Applier Phase. When the internet first emerged in the 1990s, telecom and internet infrastructure companies rushed to build the infrastructure to support the buildout of the internet. This was the Builder Phase. It was all about building the infrastructure necessary to facilitate the internet revolution. That was Phase One. This played out in the 1990s, and it's why in that decade, the dot-com boom's biggest winners were Internet Builders—or the companies building that internet infrastructure. Qualcomm (QCOM) rose almost 6,000% from 1995 to 1999. AppliedMaterials (AMAT) popped about 1,000% over that same stretch. Semtech (SMTC) rose almost 7,000%. And Verisign (VRSN) soared about 3,000%. 
These were Internet Builder stocks, and they stole the show in Phase 1 of the dot-com boom. They were big-time winners. But they weren't the winners that we think of today when it comes to the dot-com boom or the Internet Revolution. The Next Phase of the AI Revolution Who are the companies that we all think of when it comes to the big winners of the internet revolution? Amazon (AMZN), Netflix (NFLX), Meta (META), Alphabet (GOOGL), and Microsoft (MSFT): These are the largest and most powerful companies in the world. They are the biggest winners from the internet revolution. And yet, none of them are so-called internet builders. They are internet appliers. As I mentioned earlier, the dot-com boom played out in two phases... The first phase was the Builder Phase, where companies like Qualcomm, Applied Materials, and Semtech rushed to build the infrastructure necessary to facilitate the internet revolution. Then, once that infrastructure was built, we pushed into the Applier phase – where companies like Amazon, Netflix, Meta, Alphabet, and Microsoft actually applied the internet to various industries to create entirely new business models. Internet business models that turned into internet empires. Amazon applied the internet to the commerce industry and created an internet commerce empire. Netflix applied the internet to the entertainment industry and created an internet entertainment empire. Meta applied the internet to the communication industry and created an internet communication empire. Alphabet applied the internet to the information services industry and created an internet information empire. These companies innovatively applied the internet to industry to create global business empires. They became the world's largest companies and the stock market's biggest success stories. And they were all internet appliers. They weren't internet builders. They were internet appliers. I think we are just now getting to the Applier phase of the AI Boom. Over the past two years, we've been in the AI Builder phase. Companies have been rushing to spend billions upon billions of dollars to create the infrastructure necessary to facilitate the AI Revolution. They've been building new data centers, constructing new chip fabs, creating new chips, and so on. The past two years of the AI Boom – the first two years of the AI Boom – have been dominated by building out the infrastructure necessary to facilitate the AI revolution. And, as a result, AI Builder stocks have been on fire. Semiconductor stocks are a good proxy for AI Builder stocks. They comprise the semiconductor firms that build the chips, equipment, and more necessary for AI infrastructure. Semiconductor stocks led the AI Boom from early 2023 to summer 2024, with semiconductor stocks soaring about 130% higher. Meanwhile, AI Applier stocks – or the software stocks looking to apply AI – rose just 70% over that same time frame. 
But that has changed in the past few months. Since mid-July 2024, AI Applier stocks have been crushing AI Builder stocks. Software stocks are up 20%. Semiconductor stocks, meanwhile, are down 20%. We have “phase-shifted” into the Appliers Boom. 
The Final Word on the AI Stock Boom This is where we predict the biggest winners of the AI boom will emerge. Remember: As great as Internet Builders were, Internet Appliers were better. Therefore, we predict that the biggest winners of the AI boom will emerge from the AI Appliers. Qualcomm – the quintessential Internet Builder stock – has soared about 10,000% since 1995, which is an excellent return. But Apple – an Internet Applier – is up about 67,000% since 1995. Netflix – another Internet Applier – is up about 84,000% since its initial public offering (IPO). Amazon – another Internet Applier – is up about 264,000% since its IPO. Just like how Apple, Netflix, and Amazon outperformed Internet Builders, we believe AI Appliers could produce similarly impressive returns. These companies, by integrating AI into practical, market-ready solutions, are likely to generate exponential returns that could potentially eclipse even the impressive gains of Internet Appliers. As investors and innovators look to capitalize on the AI boom, focusing on AI Appliers may prove to be the most lucrative strategy in this new technological frontier. Sincerely, | 
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