Smart Investors Backing The "Picks And Shovels" Of AI

When we hear about Artificial Intelligence (AI) in the news, our minds often jump to the big-name companies like Google or the makers of ChatGPT. Sometimes, we think about the fancy new software that can write emails or create images. But a seasoned investment manager overseas, Saurabh Mukherjea, is taking a different approach that's worth a look.

He's not interested in buying shares in those well-known AI software companies or even the chip giant, Nvidia, which makes the powerful computer chips that fuel much of AI. Instead, he's looking at what he calls the 'boring' companies – the ones that build the actual physical groundwork AI relies on. Think of it like a gold rush: everyone wants to find gold, but the smart money was often made by selling picks and shovels to the miners. This strategy is similar, but for AI.

Mukherjea is focusing on businesses that manufacture turbines, make equipment for building computer chips, or distribute crucial industrial components. These are the companies providing the essential infrastructure and tools without which AI couldn't even exist. They're not making headlines, but they're quietly enabling the entire AI boom from the ground up.

For everyday Aussies or small business owners thinking about their investments, this presents an interesting way to think about new technologies. It’s about diversifying and looking beyond the obvious 'winners' to the less glamorous but equally vital parts of a growing industry. It suggests that sometimes, the most stable and profitable opportunities aren't in the flashiest new products, but in the fundamental building blocks that support them.