AI hyperscalers like Microsoft and Alphabet have seen double-digit revenue growth over the past three years, with top power cooling company Vertiv and connectivity provider Arista Networks experiencing even faster growth. However, the market has recognized this, leading to high valuations for these AI infrastructure plays. Sam Altman’s OpenAI recently assigned itself a valuation of $830 billion, but analysts question its sustainability with competition from rivals like Anthropic and Google. Investors may find better opportunities in pick-and-shovel plays in power cooling and connectivity rather than traditional AI companies. (Word count: 87)

Revenue growth for AI-focused companies like Alphabet and Microsoft has been impressive, but Vertiv and Arista Networks, which specialize in power cooling and networking infrastructure, have seen even greater revenue growth in the last three years. Surprisingly, these pick-and-shovel plays are outperforming traditional AI companies in both revenue and profit growth. While the power cooling and connectivity sector shows promise, their premium valuations reflect the market’s recognition of their growth potential compared to AI giants. Investors should consider these factors when evaluating investment opportunities in the AI industry. (Word count: 87)

The Motley Fool Stock Advisor team has identified 10 best stocks for investors to buy now, with Alphabet not making the cut. By looking at historical recommendations, investors can see the potential for significant returns with the right stock picks. While Alphabet may not be on the list, investors can learn from Stock Advisor’s outperformance compared to the S&P 500 and consider the latest top 10 list for potential investment opportunities. (Word count: 62)

Read more at Nasdaq.: The Real Money in AI Might Be in Power Cooling and Connectivity