F. Scott Fitzgerald wrote the famous line: “There are no second acts in American lives.”

But don’t get him wrong… He didn’t mean Americans never get a second chance. He simply meant that we experience rapid cycles of boom, bust, and reinvention in American culture.

That’s exactly what we’re seeing right now.

There’s a strange thing that happens with every great technological revolution. At first, almost nobody believes it. Then suddenly, everybody believes it. And that’s when things really start to get interesting.

Think back to the internet. In the early 1990s, most Americans had never been online. The internet was something used by scientists, universities, and a handful of computer geeks. Then Netscape went public in 1995, Microsoft (MSFT) launched Internet Explorer, and suddenly Wall Street realized the internet was going to change the world.

Money poured into anything with “.com” attached to its name. But here’s the important part: The internet revolution didn’t end when everyone figured out the internet was real. In many ways, it was just getting started.

That’s exactly where we are with artificial intelligence today.

Setting the Stage

The first stage of the AI boom was relatively easy to understand. ChatGPT exploded onto the scene. Companies raced to build their own large language models. Microsoft, Alphabet (GOOG), Amazon (AMZN), and Meta (META) began spending tens of billions of dollars building AI infrastructure. And Nvidia (NVDA) became the poster child of the entire revolution.

That first wave created enormous wealth. But it also created a dangerous assumption among investors: If you missed Nvidia, you missed AI.

I couldn’t disagree more.

We’re now transitioning into the second act of the AI boom, and this stage could ultimately create a much larger and broader group of winners. The first act was largely about building AI. The second act will increasingly be about using it.

Think about what happened with the internet. Cisco (CSCO) built the networking equipment. Intel (INTC) supplied the processors. AOL connected millions of Americans to the web. Those were some of the obvious early beneficiaries.

But once the infrastructure was in place and adoption accelerated, entirely new businesses were built on top of it. Google transformed advertising. Amazon transformed retail. Netflix (NFLX) transformed entertainment. Salesforce (CRM) transformed corporate software.

Eventually, the internet stopped being an industry of its own and became something that touched virtually every industry.

AI is beginning the same transition.

Still in Rehearsals

One of the biggest mistakes investors can make is confusing a rising stock market with a mature technology. They aren’t the same thing.

AI stocks have already created trillions of dollars in market value, which makes it easy to look at the charts and conclude we’re late. But when I look at what’s actually happening inside businesses and across the economy, I see something very different.

Companies are still figuring out how to deploy AI effectively. Workers are still figuring out how to incorporate it into their jobs. Consumers are still experimenting with what these tools can actually do. And some of the most important applications haven’t even reached us yet.

AI agents could eventually perform entire workflows rather than simply answer questions. Robots will take AI out of the computer and put it into the physical world. AI could dramatically accelerate drug discovery, diagnose diseases earlier, and help doctors personalize treatments.

And thousands of companies that don’t look anything like Nvidia could become major beneficiaries.

That’s why I’ve said repeatedly that today’s AI boom reminds me much more of 1995 than 1999. By 1999, investors weren’t debating whether the internet would change the world. Everybody knew it would. What they didn’t know was where the biggest fortunes would ultimately be created.

All the Economy’s a Stage

This is the part of the cycle I find most exciting. The enormous amount of capital pouring into AI doesn’t simply disappear into Nvidia’s bank account. It moves through the economy and creates opportunities in places most investors aren’t looking yet.

It flows into software companies using AI to make workers more productive. Healthcare companies using it to analyze medical data. Financial companies using it to improve underwriting and detect fraud. Industrial companies using it to automate factories. And robotics companies giving machines the ability to see, think, and move.

Some of those companies will fail. Others will slap “AI” onto their investor presentations and accomplish very little. But a smaller group will use this technology to fundamentally change their businesses, accelerate growth, and potentially create entirely new markets.

Those are the companies I’m hunting for.

Nearly 25 years of investing in megatrends has taught me that the obvious winner at the beginning of a revolution is rarely the only winner. As adoption expands, the opportunity spreads outward. That’s what happened with the internet, smartphones, and cloud computing, and we’re beginning to see it happen with AI right now.

So, when someone tells me the AI trade is over because Nvidia and a handful of mega-cap technology stocks have already soared, I think they’re looking at only a portion of the story.

Act Two is just beginning.

I’ll be getting you prepared for curtains up throughout the week… stay tuned.