Last week, Elon Musk’s xAI released the long-awaited Grok 4. And from our perspective, it likely marked the moment AI officially shifted into a higher gear.
In the span of just a few months, xAI went from Grok 3 – a smart but still rough-around-the-edges AI – to Grok 4, a model now outperforming Gemini, Claude, and OpenAI’s o3 baseline on multiple academic and reasoning benchmarks.
And it’s not a subtle outperformance…
Grok 4 scored up to 50% higher than its peers on “Humanity’s Last Exam” – a rigorous AGI benchmark designed to test deep logical reasoning – and crushed math olympiad questions.
It’s also running in multi-agent mode, orchestrating separate instances of itself to reason more like a team of specialists than a singular expert.
Considering the progress we’ve seen from LLMs so far, this was a clear sign that AI model development is speeding up fast.
And that one fact changes everything about how you should be thinking about the AI market heading into 2026 – and what AI stocks you should be buying…
When Models Start Designing the Next Ones
The jump from Grok 3 to Grok 4 is stunning. But it’s not unique.
OpenAI’s GPT-4o, Anthropic’s Claude Opus 4, and Google’s Gemini 2.5 have all followed similar exponential arcs. Each new model isn’t just marginally better; it’s shockingly so.
Faster, smarter, multimodal, more agentic, more context-aware… These are thinking machines edging closer to real autonomy.
And what’s becoming clear is that we’re not witnessing a linear progression. We’re watching a compounding curve, where each generation of models is improving not just in performance, but in the ability to enhance themselves.
The models are getting better at building better models.
Welcome to the flywheel.
If current trends hold – and all signs suggest they will – then 2026 could be a watershed year for AI.
In that time, we could see:
- GPT-5 with full multimodal capabilities, real-time reasoning, and memory.
- Claude-Next, rumored to be 10x more powerful than Claude Opus.
- Grok 5 or Grok Agent evolving into a full autonomous AI assistant, not just a model.
- Gemini 3 deeply embedded into Android, Search, Workspace, and Chrome.
- Open-weight competitors flooding the ecosystem with faster, cheaper, fine-tuned open models.
This is the stated roadmap of the world’s top AI labs.
And if Grok 4 is any indication, these next releases could blow past today’s benchmarks — ushering in a new class of AI applications that weren’t viable even six months ago.
Grok 4’s Leap Could Unlock a New Era of Enterprise AI
Every leap foundational models make unlocks new frontiers in applied AI.
Think about it: GPT-3 made content generation viable. GPT-4 made coding and legal drafting viable.
Now Claude 4 and Grok 4 are making autonomous multi-step reasoning viable.
Imagine what happens if GPT-5 or Claude-Next can plan, act, and improvise like a junior analyst or product manager.
Suddenly, entire industries start to shift:
- Banking automates risk modeling and loan approvals.
- Insurance automates claims processing and fraud detection.
- Retail uses AI to predict demand, manage inventory, and run autonomous ad campaigns.
- Healthcare uses multimodal AI to analyze scans, suggest diagnoses, and design treatment paths.
- Logistics becomes a robotic orchestra of AI-coordinated fulfillment, routing, and fleet management.
Each enhanced iteration opens the door to another wave of vertical-specific disruption.
And that’s where the next big investment opportunities lie.
The Real AI Opportunity Lies in Industry-Specific Appliers
As these models get more powerful, it’s not just the builders who win.
It’s the appliers: the companies that embed foundational models into highly specific industry workflows, creating sticky, high-value software as a service (SaaS) and automation tools.
Some prime examples?
- Guidewire (GWRE) – already integrating AI into insurance workflows through its “Predict” product suite, which uses machine learning to assist insurers with risk scoring and claim triage. As foundational models improve, expect Guidewire to automate even more, like dynamic policy pricing, real-time fraud flagging during claims intake, and natural language intake for customer service.
- Q2 Holdings (QTWO) – powering digital banking for community and regional banks. Its Q2 Innovation Studio supports AI-driven features like behavioral analytics to detect fraud and ML-based insights for personalized product offers. With more advanced LLMs, Q2 could enable always-on AI chatbots that handle complex banking queries and build automated compliance reporting for small institutions.
- Symbotic (SYM) – deploys AI-driven robotics systems for warehouse automation at Walmart (WMT), Target (TGT), and others. Its platform uses computer vision for item identification and machine learning for route optimization. Expect near-total warehouse autonomy in time, with robots coordinating without human oversight and adapting to real-time changes in inventory and layout.
- Monday.com (MNDY) – recently launched “Monday AI Assistant,” enabling teams to auto-generate emails, task summaries, and workflows using OpenAI’s models. As AI agents evolve, Monday could become a centralized ops brain, automatically scheduling resources, prioritizing tasks, or even drafting client reports with minimal input.
- AppLovin (APP) – leverages its AXON machine learning engine to optimize mobile ad placements in real time. AXON uses reinforcement learning to maximize revenue per user. In the future, AppLovin may offer predictive creative optimization, generating or modifying ads based on user behavior and performance trends.
These are revenue-producing businesses that should only grow faster and stickier as AI capabilities surge.
Why Grok 4 Undermines the AI Bubble Narrative
Of course, there’s been a lot of hand-wringing lately about an “AI bubble” – that valuations are frothy and that it’s 1999 all over again…
But let’s be clear: We think that’s utter nonsense.
Yes, some AI stocks have run hot. But the underlying technology is compounding faster than expected, expanding the addressable market in real time.
This is looking more like a supercycle than a bubble.
The AI models of the future will be vastly smarter, faster, and more useful than anything on the market today. And the companies building and applying them will grow accordingly.
Remember: Amazon (AMZN) looked expensive in 2003. Nvidia (NVDA) looked expensive in 2019.
But as it turns out, true technological revolutions reward those with vision – and patience.
The Grok 4 Wake-Up Call: Don’t Miss What Comes Next
Consider Grok 4 a warning shot.
The models are getting stronger, faster. The cycles are getting tighter. The use cases are getting more real. The economic gravity of AI is growing.
Foundational model growth is becoming a predictable force that’s driving capital flows, reshaping industries, and minting new stock market winners.
If you’re waiting for a “pullback” to get serious about AI investing, you might be waiting forever.
The time to lean in is now…
Because soon, the biggest risk won’t be overpaying. It’ll be missing out entirely.
And behind the scenes of every technological leap – from Grok 4’s reasoning to GPT-4o’s multi-agent coordination – there’s a deeper trend emerging…
These aren’t just better models. They’re blueprints for embodied intelligence.
We’re now crossing into a new frontier: humanoid robotics – machines that move, see, and reason like humans, powered by the same models dominating the headlines today.
We believe that these bots are the next great AI wave… and that the market for intelligent machines could rival the smartphone boom of the 2010s. And we’re not the only ones who think so.
Morgan Stanley estimates the humanoid robotics market could reach $5 trillion by 2050, with over a billion units deployed. Goldman Sachs is just as bullish.
There’s plenty of reason to believe that this investment opportunity is a massive one.
