A Pragmatist's Approach to AI Investing
So, why do I find this "boring" side of AI so appealing? It comes down to the business model. Unlike a speculative AI startup that might burn through cash for years, these infrastructure players often operate on long term contracts. Once a company builds its operations on a particular cloud or data platform, it is incredibly difficult and expensive to switch. This creates predictable, recurring revenue streams, which is music to any sensible investor's ears.
Furthermore, these companies are not one trick ponies. The same infrastructure that powers AI also supports general digital transformation, cybersecurity, and remote working. This provides a degree of diversification. If corporate AI spending were to slow, these firms still have plenty of other business to be getting on with.
Of course, no investment is without its risks. The tech giants are fiercely competitive, and valuations in this space already reflect a great deal of optimism. A broader economic downturn could certainly see companies pull back on their tech spending. But as a way to gain exposure to one of the most significant technological shifts of our time, I think you could do a lot worse than betting on the people selling the plumbing. After all, every palace, no matter how grand, needs it.
