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Here’s something I’ve been thinking about as AI continues to dominate market headlines: Companies are under tremendous pressure to show a return on the money they’re pouring into AI.
That pressure creates risk — risk you don’t necessarily need to take.
I prefer stocks that benefit from AI but don’t have their noses too close to the fire. Let me explain using a historical example that played out in a similar way.
Lessons From the Internet Boom
Remember when the internet began catching fire in 1994 and 1995? Everyone knew it would be transformative, but few people understood exactly how. AOL became a household name while internet stocks surged and crashed as investors tried to predict which companies would survive.
Meanwhile, online brokers and dating sites flourished. The internet itself kept going up and down as an investment theme, but people still wanted to use it to trade stocks, meet others and access new services.
Those businesses didn’t need to build the internet or predict every technological development. They simply used the new infrastructure to deliver something customers already wanted.
That’s the parallel investors should consider with AI.
The Smarter Way to Play AI
Don’t necessarily look for the company positioned to gain the most from AI itself. Instead, look for established businesses that can use it to improve their products, services or operations.
Veeva Systems (VEEV) offers one example.
Its cloud software helps life sciences companies manage clinical, regulatory and commercial workflows. AI may allow platforms like these to organize information, streamline processes and help customers work more efficiently. The investment case doesn’t have to depend on the company creating the next breakthrough AI model — it can benefit by applying the technology within a valuable existing business.
The long-term setup: A slew of companies can benefit even if AI adoption takes three months longer than expected, slips by a year or encounters financing and implementation hurdles. Delays may create short-term volatility, but companies with durable products, paying customers and useful data don’t need every AI project to proceed perfectly.
That’s the key distinction. You’re looking for businesses that can gain from broader adoption without being at the mercy of every development cycle, regulatory hurdle or technological setback.
Think of it this way: You get exposure to the AI revolution without shouldering the risk that any particular AI project fails to deliver. You’re betting on the wave — not on who builds the best surfboard.
That’s how you trade AI without getting burned.
I hope that helps!
Roger Scott
Roger Scott Trading
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