Software Built on AI
Companies building useful products on top of the AI models. These are the applications people and businesses actually interact with.
Foundation models are useless on their own. Someone has to wrap them in a product, point them at a problem, and sell the result to a buyer with a budget. The application layer is where that happens. It is also where the picks and shovels argument starts to wobble. Unlike chips or power, application companies have to keep winning customers every quarter to stay relevant.
Palantir
AI analytics for governments and large enterprises. Heavy defence and intelligence contracts. Controversial but deeply embedded.
ServiceNow
Enterprise workflow software baking AI into everything. The quiet but essential layer of corporate IT.
Pega Systems
Enterprise software with AI automation. Slower moving and less exciting, but well embedded in large organisations.
Tesla
As much an AI company as a car company. Full Self Driving and the Dojo supercomputer are massive AI bets sitting inside a car manufacturer.
Robinhood
Fintech that benefits from retail enthusiasm around AI stocks. A meta play on the whole trend.
ImmunityBio, Lemonade
AI applications in biotech and insurance. Niche bets on AI transforming specific industries.
What is agentic AI?
This is the next big shift. Most AI today is reactive, you ask it something, it answers. Agentic AI takes actions autonomously on your behalf. You give it a goal and it figures out the steps, uses tools, browses the web, writes code, sends emails, and loops until the job is done, without you prompting each step. Think less chatbot and more digital employee. Palantir, ServiceNow, and Microsoft are all building agentic products. It's where most of the enterprise money is heading right now.
Isn't this just another tech bubble?
Possibly, at the margins. Valuations on some names are clearly pricing in perfection. But the infrastructure buildout, chips, power, data centres, is happening regardless of which AI application wins. The picks and shovels argument is that you don't need to know who strikes gold, you just need to own the people selling the shovels. That said, some of the application layer bets are speculative and the market is not uniformly rational right now. Caveat emptor.