GE Vernova (power generation/SMR) and ASML (chip fab equipment) emerge as leading 'picks and shovels' AI winners.
Recent weakness in AI-related stocks following reports that OpenAI could delay its initial public offering is reinforcing a shift in investor leadership rather than signalling the end of the AI trade. According to equity fund manager Hans Albrecht at Option Pit, investors are increasingly looking at companies expected to benefit from broader AI adoption, beyond the purveyors of AI themselves.
Albrecht argues that several major technology companies, including Uber and Microsoft, have announced they're cutting back on spending. More significantly, Microsoft said it would consider using cheaper open-source models and Chinese models, signalling competitive pressures ahead. OpenAI faces particular challenges as a company that loses substantial money on every transaction. "For every $200 or $300 plan, they probably give away thousands, four- or $5,000 in token usage. So they're really losing money on every single sale," Albrecht explained. As compute costs decline and alternatives proliferate, users are likely to switch to more affordable options. The concept of "good enough" is increasingly viable—many existing models are terrific and cost significantly less.
Rather than a rotation out of AI entirely, Albrecht sees a shift in the texture of AI investing. Equal-weight indices and small-cap stocks are performing well despite elevated interest rates, evidence that investors are moving away from pure AI companies facing margin compression and intense competition, toward real-world assets that cannot be easily replicated. Companies like Live Nation and Madison Square Garden offer something AI cannot replace. Simultaneously, the broader market benefits from the price war as AI becomes cheap and subsidized. Business formation numbers are exploding, with people excited to access AI tools at 80 to 90 per cent discounts. Investors are moving into the beneficiary side of the AI ecosystem.
If forced to choose between mega IPOs, Albrecht would pick SpaceX over OpenAI without hesitation. While aggressively priced, SpaceX is becoming reality and taking market share on the compute side. With a massive total addressable market—estimates range from $28 trillion to $30 trillion—SpaceX can execute launches for 30 per cent of competitors' costs and operates in multiple high-margin spokes. OpenAI and Anthropic face headwinds as AI models converge toward similar capabilities and become commoditized. Without ecosystem integration like Google's Gemini, which benefits from deep integration into personal and business life, these companies face easy switching costs. Chinese competitors like GLM 5.2 and Kimi K2 deliver strong performance at five to ten per cent of the cost.
On power and electrification, Albrecht favours GE Vernova. Gas turbine suppliers are essentially sold out, with some turbines booked through 2028 and into 2029—GE Vernova's lane. The order book is full and difficult to substitute. Whether building the AI economy on Earth or in space, power demand is essential and only ramping up.
In semiconductors, ASML Holding stands out. It is the only company globally manufacturing EUV lithography machines—every leading chip designer and maker, including Nvidia, AMD, and Apple, relies on them. Machines cost $150 million to $200 million and take months to install. China has struggled to compete. As globalization recedes, these machines remain essential and agnostic to geopolitical outcomes. Albrecht would avoid Oracle, which faces a precarious position: its massive customer OpenAI's challenges create uncertainty around data centre revenues and customer concentration risk.