The biggest tech boom since the dot-com era is unfolding right now … and if you play it right, it could hand you enormous gains before others even realize what’s happening. 

But this same boom is stretching a financial rubber band that could eventually snap, leaving unprepared investors in the dust. 

Consider that Big Tech is poised to spend an astronomical $3 trillion on AI infrastructure by 2028, even as everyday Americans are falling behind on bills (credit card delinquencies hit their highest rate in over a decade last year). JPMorgan CEO Jamie Dimon is warning about “cockroaches” in the economy after a string of auto-loan bankruptcies.

What if the same forces driving AI stocks to record highs are also planting the seeds of the next crash?

In this week’s podcast, we’ll break down the five key forces powering the AI revolution, and show you how to ride this wave for potential profit now, while staying alert to the warning signs that others ignore. These are the 5 Profit Forces in AI that every hypergrowth investor must know today.

At the heart of this revolution is the concept of the “K-shaped economy,” where the AI-driven sector is thriving, while the traditional economy struggles to keep pace. This dichotomy presents both challenges and opportunities for investors navigating the complex landscape of AI-related stocks and investments.

Watch our latest Being Exponential With Luke Lango to learn more:

The Big Tech Bazooka of Spending

Imagine a financial bazooka loaded with hundreds of billions of dollars – that’s what the AI boom looks like. Tech giants from Nvidia to Microsoft are firing an unprecedented cash cannon into building AI supercomputing infrastructure.

In 2023 alone, combined capital expenditures by big tech firms will approach $500 billion, and Wall Street expects annual AI outlays to hit $1 trillion by 2027-28. This is comparable to the cost of building the entire U.S. interstate highway system – except it’s happening in a fraction of the time. The money is gushing into “AI factories” – data centers packed with advanced chips – at a pace and scale never seen before.

Why does this matter for investors? Because that cash blast radius creates clear winners. From cloud suppliers to chipmakers and equipment firms, many companies are lining up with their buckets out.

In short, follow the money: one of the best ways to profit in the AI boom is to invest in the picks-and-shovels providers who are directly in the blast radius of Big Tech’s spending spree.

The Energy Crunch Fueled by AI

We are fast approaching an energy crunch where power demand outstrips supply, thanks to the AI build-out.

Analysts forecast U.S. data centers will need an extra 30–40 gigawatts of electricity by 2030 – beyond what’s currently available. It’s already showing up in the numbers: wholesale electricity prices have surged as much as 267% in areas near big data centers over the past five years.

Even regular consumers are feeling it – in parts of Maryland near “Data Center Alley,” residents’ power bills jumped ~80% in just three years. This AI-driven energy demand is piling additional costs on households already strained by food, rent, and other inflation.

For investors, this crunch creates an opportunity. Someone has to build more power supply – and fast. That shines a light on utility and energy companies that can add generation capacity. Traditional power producers like Vistra Energy or Constellation (major electricity generators) stand to benefit as society races to keep the lights on in the AI era

The Resource Race and “Portfolio of the President”

AI might seem like pure software magic, but it has a very real-world supply chain: exotic metals, minerals, and magnets that make advanced hardware possible. Right now, the supply of these critical resources is dominated by one country – China, which produces over 90% of the world’s processed rare earth elements and magnets.

These materials (like neodymium, dysprosium, lithium, etc.) are the secret sauce in everything from AI chips to electric vehicles. And Beijing knows it – recently expanding export controls to choke off supply of key rare earths needed for tech and defense. In other words, the AI race has a resource front, and it’s turning into a geopolitical tug-of-war.

The U.S. government has responded with what some dub the “President’s Portfolio.” In a throwback to WWII-era industrial policy, Washington is investing directly in companies that can secure domestic supplies of critical materials.

Over the past two months, at least four such firms have received federal support – and their stock charts went vertical. For example, when an Alaskan mining firm, Trilogy Metals, got an unexpected White House investment, its stock doubled overnight.

Love or hate the idea of “nationalizing” parts of the tech supply chain, it’s happening – and it’s creating enormous trading opportunities.

The Applications: AI’s Killer Apps and the Software Shake-Up

All the fancy hardware and massive spending would be pointless without real applications delivering value. This is the layer of software and services where AI meets the end-user.

Already, we’re seeing AI-driven applications transform industries from medicine to finance to customer service. One big success story is Palantir (PLTR), whose AI-enabled data analytics platforms are helping corporations and governments make smarter decisions – and rewarding shareholders handsomely.

However, investors need to tread carefully here. The world of AI software is hyper-competitive, and today’s killer app can be tomorrow’s afterthought. The rise of general AI models – like OpenAI’s GPT-5 – means that some niche software might get commoditized.

In short, the Application layer of AI is where incredible growth will happen – but choose wisely. Look for firms that are becoming indispensable in their domain thanks to AI. And keep an eye on the big players too (like Microsoft, Google, Adobe), which are rapidly infusing AI into their platforms to fend off disruption.

The Embodiment of AI: Robots, Drones, and Beyond

The final profit force is perhaps the most exciting – the physical embodiment of AI. We’re talking robots and autonomous machines moving AI out of the cloud and into the real world.

This year has seen an explosion of progress in this arena. Self-driving cars are no longer a sci-fi promise; Alphabet’s (GOOGL) Waymo is now offering driverless rides in multiple cities (and even expanding overseas), while startups like Aurora (AUR) are piloting autonomous semi-trucks on highways.

In warehouses and retail, Symbotic’s (SYM) robotic systems (which power Walmart’s distribution centers) are in such high demand that the company’s order backlog is through the roof – no wonder the stock hit all-time highs.

And perhaps the most fascinating example: humanoid robots. Tesla’s (TSLA) Optimus robot project was initially met with skepticism, but as the company teases new demos, investors have started to assign real value to it – it’s one reason Tesla’s stock defies skeptics even when car sales slow.

For investors hunting the next big opportunity, the embodiment trend offers multiple angles. You could invest in the end products (like an automaker leading in self-driving tech or a drone manufacturer), or in the enablers (for instance, chip companies that design the AI “brains” for robots, or sensor companies making lidar/radar).

One word of caution: as always, hype can outrun reality. Not every robot startup will succeed – some will flop due to technical hurdles or safety issues. So focus on companies with real deployments and revenue, or those with deep-pocket partners. But make no mistake, the age of AI robots is dawning, and it’s poised to mint winners in the stock market in the coming years.

Bottom Line: Embrace the Boom but Keep an Eye on the Bust

These five forces – the Bazooka of spending, the Energy crunch, the Resource race, the Application boom, and the Embodiment of AI – are the engines driving what can only be called a K-shaped economy.

On one arm of the “K,” we have the AI economy soaring to new heights. On the other arm, the “everything else” economy is struggling with high interest rates and weary consumers.

Consider the contrast: While AI firms strike billion-dollar partnerships and tech stocks rally, consumers are falling behind on basic expenses. One stark example: Buy-Now-Pay-Later services report that some Americans are even missing payments on takeout meals. When people are financing burritos in four installments, it’s clear many households are scraping by.

Meanwhile, corporate America is pouring money into automation that could ultimately replace those very workers

This split-screen economy cannot continue indefinitely without tension snapping. Where does it all lead? Our analysis suggests that the AI boom likely has 12 to 24 months of runway left to mint fortunes.

Bottom Line: We are bullish that the AI-driven melt-up still has legs – there’s real money to be made by surfing the five profit forces outlined above. By all means, take advantage of this historic moment. But do so with a game plan. Stay vigilant to economic warning signs (e.g. rising defaults, resurging inflation, weakening job markets) and have an exit strategy. The best part of the ride is often right before it ends… so enjoy it, but don’t linger too long after the music stops.

To dive deeper into these insights and hear the full discussion, be sure to check out our latest Hypergrowth Investing podcast episode. The conversation is packed with more examples and stock ideas stemming from these very trends… it’s a must-listen for anyone serious about tech investing in 2025.