ChatGPT-5 is a major step forward, but AI’s next leap won’t just change the game—it could redraw the scoreboard, concentrating the spoils among a select few platforms while sidelining dozens of would-be contenders.
In this week’s episode of Being Exponential, We argue that OpenAI’s new model—faster and smarter—won’t lift all AI boats.
It will narrow the winners’ circle. As foundation models become more “agentic,” they start doing end‑to‑end work that entry‑level software once handled.
That’s rocket fuel for a handful of platforms—and a headwind for many SMB‑focused apps.
Watch the latest episode by clicking the video below:
Back already? Great! What follows is complementary to today’s podcast, giving you the opportunity to dig deeper into the topics in play…
ChatGPT-5: The Squeeze at the Application Layer
Just a year ago, “AI-powered” SaaS solutions from Wix (WIX) to GoDaddy (GDDY) looked like long-term winners. Now, a $20/month subscription to a leading foundation model can build websites, generate marketing plans, or perform customer service—all in minutes.
That’s great news for infrastructure providers and niche, defensible platforms. It’s a headwind for SMB-focused software trying to do what a foundation model can now replicate instantly.
“When ChatGPT‑5 can generate 80% of what SMB software used to do, only platforms with moats will keep winning.”
Expect a shift toward edge-deployed small language models (SLMs), especially in industrial settings. But in the meantime, generic entry-level SaaS may struggle.
Bottom Line: Investors should lean toward infrastructure and high-moat platforms—not horizontal software that’s easy to replace.
Market Making New Highs—With Bad Breadth
Despite headline highs in the Russell 3000, fewer than half of its constituents trade above their 200-day moving averages. Market leadership is concentrated, and the implications for portfolio construction are clear:
- Trim “maybe”s
- Double down on “must-own”s
This aligns with the pod’s current stance: high-conviction, high-momentum, and high-moat names.
Earnings in the Age of Acceleration
Key takeaways from high-velocity earnings movers:
- Palantir (PLTR): Strong momentum from government and commercial deals. Valuation remains steep but may be warranted.
- Axon (AXON): Remains a vertical leader in public safety; AI can’t displace its niche.
- AMD (AMD): May benefit from modular AI architecture trends even if Nvidia dominates full-stack.
- Arista Networks (ANET) & Astera Labs (ALAB): Core AI infrastructure plays.
- Nebius (NBIS): A boutique AI cloud provider dubbed the “Louis Vuitton of AI.”
- Uber (UBER): Autonomous vehicle partnerships show promise while core ops remain steady.
- Opendoor (OPEN): Still waiting for housing tailwinds to justify the business model.
Consumer, Ads, and Automation Highlights
- Shopify (SHOP): Using AI to boost merchant performance, which shows in margins.
- AppLovin (APP): Expanding, but faces increased competition in the SMB adtech space.
- Symbotic (SYM): Short-term guide cut, but long-term thesis intact.
- Duolingo (DUOL): Threatened by ChatGPT‑5 demos, but its proprietary learning data remains a durable moat.
- Dutch Bros (BROS): Rising as a culture-forward, fast-growth coffee alternative.
Tesla, Rates, and Robots
Dojo’s wind-down was a letdown—but not a dealbreaker. The real story lies in Tesla’s robotics ambitions and macro tailwinds from rate cuts.
Watch autonomy developments—not legacy automakers—for competitive risk.
Healthcare’s Reset Moment
Pharma and insurers alike have pulled back:
- UnitedHealth (UNH), Novo Nordisk (NVO), Eli Lilly (LLY): Regulatory headwinds, sentiment selloffs, and uncertain near-term catalysts.
But obesity and metabolic drug pipelines could support long-term upside, especially for investors with a longer horizon.
The Breakout List
Five names to watch:
- ALAB and NBIS — Infra momentum plays
- ZETA — Rebounding post short-seller attack
- COMM — AI networking beneficiary
- BMNR — Ethereum proxy with volatility appeal
Strategy tip: Buy the dips—not the rips.
Frequently Asked Questions (FAQ)
Q: What is ChatGPT‑5 and how is it different?
A: ChatGPT‑5 is OpenAI’s newest foundation model. It’s faster, more capable, and agentic—meaning it can perform multi-step tasks end-to-end.
Q: Why does AI narrow the winners’ circle?
A: As AI models absorb more functionality, they replace entry-level tools. This benefits large platforms or those with unique, defensible value—while pressuring smaller, horizontal SaaS players.
Q: What sectors benefit most from AI’s next leap?
A: AI infrastructure (like networking and compute), vertical software with moats, and data-rich platforms are poised to gain the most.
Q: Is this bad for SMB-focused software?
A: Likely yes. Many SMB tools that offered templates or light automation are now directly replicable through a foundation model subscription.
Q: What’s the investment strategy in light of this?
A: Favor must-own names in infrastructure and defensible verticals. Be selective. Buy on pullbacks. Avoid chasing generic apps.
