The artificial intelligence (AI) outlook is still bullish despite the market-beating gains that have occurred in the past year. The VanEck Semiconductor ETF has more than tripled over the past five years, and that fund is filled with AI chipmakers. Furthermore, the CoinShares Bitcoin Mining ETF has gained about 30% year to date thanks to crypto mining companies pivoting to AI infrastructure.
These gains show strong investor momentum carrying into the new year and may be a sign of more things to come. These are some of the reasons investors are still loading up on AI stocks despite strong performances in 2025.
Big tech is ramping up AI spending
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One of the biggest catalysts for the AI boom is big tech's commitment to spend more money on AI.
Mark Zuckerberg recently unveiled Meta Compute, a new initiative that emphasizes how much Meta Platforms intends to scale its AI capabilities. The company intends to build tens of gigawatts this decade to manage more AI workloads. Then, the company plans to build hundreds of gigawatts or more over time.
Meta Platforms will have to spend a lot more money on AI over many years to achieve its goal of having hundreds of gigawatts. Microsoft also announced its Community-First AI Infrastructure initiative, which involves substantial AI data center investments. Microsoft even referred to AI as the next chapter of America's infrastructure story, comparing it to canals, railroads, power plants, and highways. A lot of money is flowing into AI, and it looks like this trend will continue for many years.
Physical AI will introduce more opportunities
Most of the AI story has revolved around ChatGPT and the ways companies use software AI to enhance operations. However, a wave of physical AI is emerging. Self-driving cars patrol some of the roads of big cities, and Tesla's humanoid robot rollouts are projected to begin this year for internal use and large industrial clients.
Physical AI introduces a higher demand for AI chips, energy, and other parts of AI infrastructure. The technology has immense potential and has already translated into profits for big companies, which isn't something that can be said of all of the companies in the dot-com bubble.
Physical AI can redefine almost every industry. Uber Technologies is investing in autonomous vehicle technology to ensure it isn't replaced by a competitor that is investing heavily in AI. The high potential of this technology makes it impossible to ignore for long-term investors.
Not all AI stocks are giants quite yet
Nvidia demonstrated what type of generational returns are possible from AI stocks. AI chipmakers still steal the news, but more investors are becoming aware of the different bottlenecks within the AI boom.
Investors can find smaller companies that are growing rapidly if they look at areas like gigawatts, memory storage, raw materials, and other parts of the bottleneck that are overlooked. These opportunities won't exist forever, and some investors are piling their capital into them before more people notice.
When trillion-dollar companies like Nvidia, Meta Platforms, and Microsoft continue to post impressive growth numbers, it's easier to see how smaller companies in the AI bottleneck can produce substantial long-term returns.
