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Hello, Reader.
The AI boom is still pouring billions of dollars into infrastructure, but the economics of that infrastructure are already changing.
Companies are racing to build data centers, buy chips, and add computing capacity, much like telecom companies raced to bury the world in fiber-optic cable during the dot-com boom.
And history tells us something interesting about what happens when that race eventually slows down:
One category of companies tends to thrive during the bust that follows every boom: the appliers. They never touch a shovel or a spool of cable. They simply wait for the new technology to become ubiquitous and cheap, then capitalize on it by finding ways to apply the new technology to their own business.
The dot-com telecom boom ran on the same playbook.
Companies like Global Crossing, 360Networks, Williams Communications, and WorldCom raised and spent billions laying fiber-optic cable on the assumption that bandwidth would stay scarce enough to keep generating gaudy returns.
During the boom, telecom companies spent close to $1 trillion installing a staggering 80 million miles of fiber. But fiber itself never stopped working after the dot-com bust. What stopped is the boom that justifies laying more of it.
That’s when the appliers seize their moment… and begin to reward investors.
I ran an institutional research service through the dot-com era, and a few of my calls from that period illustrate the pattern cleanly.
Humana Inc. (HUM), a health insurer whose entire business runs on moving information, seized the opportunity the internet provided by digitizing its paper claims, records, and authorizations. Suddenly, these millions of pieces of information whisked through fiber-optic lines to arrive at their destinations in a fraction of the time that paper did.
Less than a year after the dot-com bust started, Humana’s stock doubled, on its way to soaring 1,000% in eight years and more than 5,000% over time. Sierra Health Services, same logic, climbed 10-fold in just five years – a period in which many high-profile tech stocks were still nursing losses of 50% or more.
Half a world away, Indian Hotels Co. Ltd. (INDHOTEL.NS) thrived by wiring a global booking system through high-speed internet connections. As the company’s annual net income skyrockets from $5 million at the end of 2001 to $70 million by 2006, its stock jumped more than 1,000%.
None of these companies contributed to building the internet. They applied it. That’s the whole trade. But here’s the catch:
During the boom, applier stocks rarely attract much attention or a premium valuation. Only when the bust arrives do they begin building names for themselves… and wealth for their shareholders.
The lesson isn’t that investors have to wait for the next bust to find these companies. It’s that history shows us where to look.
Once infrastructure becomes abundant and cheap, the real opportunity shifts to the businesses that can suddenly do more with it. And with AI, we can already see that shift beginning.
That brings us to today’s emerging class of AI Appliers.
I’ll share where I’m looking for these plays below, but first let’s take a look at what we’ve covered here at Smart Money recently…
Smart Money Roundup
September 24, 2026
How to Position Before the Oil Cushion Hits Empty
The 1999 cargo ship Hope I ran aground after its crew ignored a low-fuel alarm – a fitting warning for today, as the U.S. Strategic Petroleum Reserve falls to its lowest level since 1982. In this issue, I get into why the West’s combined oil reserves leave us dangerously exposed to any supply shock – and the real opportunity being the renewable buildout racing to fill the gap.
September 26, 2026
If You Can Kick It, You Can Pick It
Technology used to evolve slowly. Now, AI is reshaping everything in real time, especially amidst the rise of agentic AI. As agents like Meta Platform Inc.‘s (META) Muse move from answering questions to acting on our behalf, they threaten whole industries; financial stocks already felt the sting. Here’s why you should invest in the tangible.
The Gradual Shift I Recommend
We don’t need to wait for the next bust to identify the businesses that could benefit from what comes after it. We can look at what happened after previous infrastructure booms and ask a simpler question: Who becomes more profitable when the technology gets cheaper?
That’s why I keep recommending a gradual shift: out of the headline-grabbing companies building AI infrastructure, and into the overlooked companies already learning to apply it. The pharmaceutical and medical-technology sectors are early adopters of AI. I expect both industries to produce extraordinary breakthroughs over the next few years, riding on infrastructure that companies like Oracle Corp. (ORCL) and Microsoft Corp. (MSFT) are borrowing hundreds of billions of dollars to build.
A pharmaceutical company doesn’t need to own a single data center to benefit from AI-driven drug discovery. It only needs AI compute to get cheap enough to operate at the scale discovery actually requires.
The pharma companies hold no monopoly on AI adoption, of course. The growing cadre of AI Appliers is becoming an increasingly wide-ranging group
When the AI boom ultimately ends in a bust, history gives us a useful clue about what happens when revolutionary infrastructure becomes abundant and cheap. And the investors who come out ahead will be the ones who recognized early that the winners of the next act were never going to be the ones building the stage, but the ones dancing upon it.
Move now, while moving is easy.
Regards,
Eric Fry
