economy

January 17, 2026

Smaller companies are rising quickly to challenge Big Tech as AI 's best trade

Reliable power, nuclear investment, data-center efficiency, and grid capacity are now core drivers of stock returns from the AI theme as demand ramps.

Smaller companies are rising quickly to challenge Big Tech as AI 's best trade

TL;DR

  • AI's growth necessitates investment in physical infrastructure like power, cooling, and data center efficiency.
  • Companies providing solutions for AI's physical requirements, such as Bloom Energy, have seen significant stock appreciation.
  • The demand for constant power for data centers is driving a resurgence in nuclear energy, including investment in existing plants and new modular reactors.
  • Opportunities are emerging in small- and mid-cap companies that specialize in niche areas with limited competition.
  • Actively managed ETFs are gaining traction as a way to identify and invest in these emerging companies earlier.
  • Investors should approach AI-related investments with caution due to the potential volatility of smaller, leveraged companies.
  • Diversification within AI themes and clear risk expectations are crucial for portfolio construction.

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