{"id":25861,"date":"2026-02-22T02:01:13","date_gmt":"2026-02-22T02:01:13","guid":{"rendered":"https:\/\/finderica.com\/?p=25861"},"modified":"2026-02-22T02:01:13","modified_gmt":"2026-02-22T02:01:13","slug":"the-overlooked-way-to-pick-the-best-ai-stocks","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=25861","title":{"rendered":"The Overlooked Way to Pick the Best AI Stocks"},"content":{"rendered":"
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Editor\u2019s Note:<\/strong> The \u201cpick-and-shovel\u201d strategy has quietly built some of the greatest fortunes in market history.<\/p>\n

Instead of betting on the headline maker, smart investors back the critical suppliers behind it.<\/p>\n

Below, Research Director Kristin Orman explains how this approach created extraordinary wealth during past technological revolutions.<\/p>\n

\u2013 James Ogletree, Senior Managing Editor<\/p>\n

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You\u2019ve probably heard of pick-and-shovel investing<\/em>. The idea comes from the California Gold Rush of the mid-1800s.<\/p>\n

Back then, the people who made the most money weren\u2019t always the gold miners. Instead, it was those who were selling picks, shovels, and other tools to the miners. These businesses didn\u2019t have to dig for gold or take big risks \u2013 they just supplied what everyone needed. One famous example is Levi Strauss, who built a fortune selling durable denim to miners.<\/p>\n

In investing, the pick-and-shovel approach means backing the companies that supply tools and services to fast-growing industries \u2013 rather than investing directly in the companies leading the charge.<\/p>\n

For example, instead of trying to pick the next breakout AI startup, a pick-and-shovel investor might look at companies that build data centers, manufacture semiconductors, or provide cloud services. These companies support the whole industry, so they often grow right alongside it \u2013 without the same level of risk.<\/p>\n

They\u2019re also in a great spot. As these industries grow, so does the need for their services. Sometimes, big players in the industry even buy them out, offering investors a chance for big returns.<\/p>\n

Take Mellanox Technologies, for example.<\/p>\n

This company might not be a household name, but it played a big role in the AI revolution. Founded in Israel in 1999, Mellanox made high-speed networking hardware \u2013 like Ethernet switches and other tools that help data move quickly between servers, graphics processing units (GPUs), and storage systems. That kind of technology is essential in modern data centers.<\/p>\n

As Nvidia<\/strong> (Nasdaq: NVDA) became a leader in AI with its powerful GPUs, it ran into a challenge: Moving data between GPUs was slowing things down.<\/p>\n

Mellanox had the solution.<\/p>\n

Its networking tools helped GPUs communicate much faster \u2013 something that\u2019s crucial for training large AI models. Nvidia saw how valuable this was and, in 2019, won a bidding war with Intel<\/strong> (Nasdaq: INTC) to buy Mellanox for $6.9 billion. The deal closed in April 2020, just as demand for AI and cloud services began to explode.<\/p>\n

Mellanox is a classic example of a pick-and-shovel investment. Consider\u2026<\/p>\n