The AI revolution marks a historic shift driven by the sheer amount of money being spent. Over the next four to five years, $4-5 trillion will go into AI. For every dollar spent on capital expenditure (capex), there is a $5-6 multiplier across the rest of tech. We are only hitting the second, third, and fourth derivatives of AI now. Investors keep underestimating the scale and scope of what this means for earnings and for the buildout over the next 12 to 18 months.
Supply Can't Meet Demand
Demand far outstrips supply - the ratio is 13 to 1 for chips. If a company green-lights an AI plan today, it won't implement it until late next year, around summer or December, because of the backlog. This helps NVIDIA (NVDA), AMD (AMD), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Palantir (PLTR), and cybersecurity names. For the first time in 30 years, the US is ahead of China in tech.
The Top Five Picks Into 2027
From 49 names under coverage and the "Ives 30," five stand out: NVIDIA (NVDA), Microsoft (MSFT), Palantir (PLTR), Apple (AAPL), and CrowdStrike (CRWD).
NVIDIA (NVDA) - Investors are underestimating earnings by up to 20%. The price target is $300, and the case can be made for much higher, because physical AI and the true next part of the cycle has not even hit yet.
Microsoft (MSFT) - The enterprise buildout is its home turf. Azure checks have been very strong. The stock could have a six or even a seven in front of it, reflecting chips and hyperscaler strength.
Palantir (PLTR) - The favorite overall software play. It could double over the next two to three years and reach a trillion-dollar market cap. The free cash flow story is ramping as more enterprises move to AI. Its AIP platform, used in areas like oncology, and the way Karp and the team see around the corner, give it technology that cannot be matched. The "SaaS apocalypse" fear - that Anthropic would eat Palantir's lunch - was a fictional narrative. Any CIO will say Palantir's AI technology cannot be matched, across enterprise and government.
CrowdStrike (CRWD) - As surface area and agents expand, cybersecurity benefits. CrowdStrike sits front and center as the main beneficiary.
Apple (AAPL) - A toll collector on the AI highway. This is worth $75 per share of extra value not yet priced in.
Apple's Next Phase
Many reports over the past four or five years predicted iPhone supply cuts that never panned out. The iPhone 18 will beat expectations, which goes against some supply chain signals. Under new leadership from John Ternus, Apple's legacy will be defined by this AI chapter of AI-enabled devices. About 20% of the world will access AI through an Apple device. Apple finally has an AI strategy and solution, with Gemini as a key piece. The real value is the install base: 1.5 billion iPhones and 2.5 billion iOS devices to monetize, plus the app store and new phone functions. Apple stumbled for a few years, but with an install base that size, being late is survivable. This is a sleeping giant for the next phase of the technology cycle.
SpaceX
SpaceX is building itself into the next hyperscaler. Its Nvidia chip strategy and multi-year buildout make it more of a data play than a space play. Apollo and other banks are helping SpaceX pay for Nvidia chips - a convergence across the industry. There is over an 80% chance that by the end of next year SpaceX and Tesla (TSLA) merge, because of the data and AI technology under one roof. The current price is $161, with a target of $215. Given the IPO and lock-up, expect some tense, "white knuckle" periods. Over the coming years the stock could be multiples higher as it becomes a hyperscaler. Musk's goal is to build an end-to-end "Swiss Army knife" for AI, brick by brick.
This is an arms race. It is like building the Vegas strip in 1955 - there are only minimal spots. Decide to build five years late, and you end up in Reno instead. Now, in the third inning of the AI revolution, is the time to build.
Other Names and Portfolio Advice
The full list includes older names like IBM (IBM) and Dell (DELL), newer ones like SK Hynix and Nebius (NBIS), plus Snowflake (SNOW), and Mag 7 names Apple (AAPL), Meta (META), and Alphabet (GOOGL).
For a 30-year-old with a diversified portfolio facing a pullback of 5 to 10%, the advice: you are in year three of a 10 to 12 year buildout of a true fourth industrial revolution. There will be white knuckle moments, fears about SaaS and circular finance, like the recent OpenAI report. This is a multi-year tech bull market. The bears have called 10 of the last two downturns; they don't see AI in their spreadsheets. When opportunities come for the winners, you own them.
Why This Is Not 1999
Back in 1999, tech stocks traded at about 30 times revenue. Today it is 23 times earnings. Back then companies were venture-funded with business models on a PowerPoint. Now it is big tech with a trillion dollars on the balance sheet spending $300-400 billion a year to build out the AI revolution. The use cases are real and will change consumer and enterprise society. More jobs will be created by AI than taken away. The bears have missed every transformational tech stock over the last 25 years by always calling the end.
Why did Elon Musk say he won't have any apps on his phone in five years? Musk is anti the Apple ecosystem. Every tech company is going at AI a different way - Musk his way, Nadella his, one "Godfather" generation to the next. It is a true arms race, which is why these companies will spend like a Ferrari in the left lane going 100 miles an hour, not 45 in the right lane.
