2 Stocks to Buy for AI's Next Stage

Core Insights - The article discusses the shift in investment focus from hardware suppliers to experience-driven companies in the tech sector, particularly in the context of the iPhone and artificial intelligence [1][3][22] Group 1: iPhone Supplier Dynamics - Companies like Skyworks Solutions, Cirrus Logic, and Universal Display saw stock price surges when named as iPhone suppliers, but Apple often imposed low prices and high quality demands, leading to profitability challenges for these suppliers [2] - The real beneficiaries of the iPhone boom were companies providing services and experiences, such as Uber and ByteDance, which have outperformed traditional hardware suppliers [3] Group 2: Current AI Market Trends - A recent selloff in AI infrastructure companies, including chipmakers and data center developers, occurred due to concerns over profitability in a rapidly evolving industry [4] - Analyst Louis Navellier warns of a potential market dislocation for AI companies, suggesting that expectations for "Stage 1" infrastructure firms are overly optimistic [5] Group 3: Investment Opportunities in AI - A select group of "Stage 2" companies in the AI sector is believed to offer significant upside potential, with estimates of around 500% growth [6] - Thomson Reuters, with its established legal research platform, is expected to recover from a 60% selloff, as it combines AI with human expertise to maintain accuracy in legal research [9][14] - ServiceNow, which serves over 85% of Fortune 500 companies, is experiencing rapid growth with a 21% revenue increase in 2025 and projected 20% growth for the current year, driven by its AI capabilities [15][16] Group 4: Comparisons with 5G Technology - The article draws parallels between the 5G technology rollout and the current AI landscape, noting that the biggest winners are not the infrastructure providers but the companies leveraging these technologies for consumer experiences [20][21] - OpenAI's GPT-5 is highlighted as a significant advancement in AI, similar to the leap made by 5G, with the potential for "Stage 2" companies to dominate the market [22][23]