Fast Money Blog- 10/10/25
Currently we live in a world in which it seems like everyone is AI crazy. And in many ways that is understandable. Institutions are excited about AI because it feels like a transformative technology with limitless potential, much like the rise of the internet or the smartphone.
However as I’ve always said, as an investor it’s important to understand a company’s story before you invest your money in it. That is why I’d like to give you a few things to think about when it comes to AI companies and their stock.
There are two different sectors when it come to AI: those that build the infrastructure for AI and those that develop or use AI. And right now, the money is being made by only one of them.
Companies building the infrastructure for AI — like NVIDIA (chips), Microsoft (cloud), Amazon Web Services, and data center builders like ORCL — are making money now because they sell the essential tools and hardware needed to run AI systems. Every AI model requires massive computing power, specialized chips, storage, and electricity. These infrastructure providers profit immediately from demand for AI training and deployment, regardless of whether the AI applications themselves make money yet.
In contrast, companies developing or using AI — such as chatbot makers, image generators, or enterprise AI startups — haven’t yet proven clear or scalable business models. Many are still experimenting with how to monetize AI output, whether through subscriptions, productivity tools, or enterprise services. So far, their costs (especially compute costs) often outweigh revenue.
The week on Wall Street was dominated by AMD’s (Advanced Micro Devices, Inc.) surge following news of its significant, multi-year partnership to supply chips to OpenAI. This deal is expected to generate tens of billions of dollars in revenue for AMD, and the stock went from Monday’s open of $165.22 to today’s close of $214.90.
The AI story is very complex. I strongly recommend that you do not overload your cash account or your retirement account with semi-conductor stocks and AI oriented companies.
Make sure you trade and invest with discipline in Dow and S&P components.
Tyrone Jackson, The Wealthy Investor