Forget NVIDIA. This is the New King of AI.

Every investor is looking for that next wave, the next part of AI that's actually going to make investors a lot of money and that is exactly what we are discussing today. Joining us today is Keith Kaplan, the CEO of Trade Smith and he is going to share three AI cash machines for that next wave of AI investment and lots of AI growth. And Keith, I'm so excited about this topic today because we are covering three names that many investors have maybe never heard of or have at least not seen an in-depth discussion on. These are those upand cominging stories and these are exactly the kind of stocks that our viewers love to hear about. So I'm excited for this list today. But let's start out the conversation about where this AI story is. Of course, we just had this massive earnings week with all of the big tech, the mag seven names, and there is so much money pouring into the AI infrastructure story still. But has that wave of AI really already gone past? Have people already made the money they're going to make in this AI infrastructure story? >> The easy money is gone. And so now the money has to turn to really the businesses that are being built on top of this. So the buildout is is just staggering and it's it's still accelerating. Believe it or not, this year alone, Amazon, Microsoft, Google, and Meta together are on pace to spend roughly $725 billion on AI infrastructure. That's up 77% from last year, and it's going to rise again in 2027 and so forth. So a trillion dollars on infrastructure, that's really just a cost until somebody goes ahead and builds a business standalone on top of it. And history is very consistent about who gets rich next. If we go back to May 10th, 1869, a golden spike in the Utah desert for the first time, now goods can ship clear across America by rail. 3 years later, a Chicago salesman named Montgomery Ward sees what the railroad men missed. If a train reaches every single town, a store can be a book. Sears copied them, and their cataloges became two of the biggest retailers in America. But neither one of them laid the infrastructure, the railroad. Someone has to go first and they spend the fortune building the network. Someone else building on top of it, they walk away with a larger prize. That is the pattern and that is the trade here. >> Yeah, that is so interesting because we've talked so long about that AI infrastructure piece and the companies benefiting from that and that is very much still happening right now. you were on uh the show back in May sometime and we were talking about those AI choke points, the places, those bottlenecks, the choke points in the AI infrastructure buildout and we are seeing those companies continue to make money. So before we move on to these AI cash machines, I want to talk a little bit more about where this AI infrastructure story is. Are those choke point stocks still making money right now? Are they still viable investments for our viewers? >> Great question, Bridget. So when I was here in May, I described three waves. Today there's a fourth. So wave one was the chips, wave two was the software giants, wave three was around those choke points, the physical buildout, memory, coing, power, the grid. Wall Street has already rewarded and it's even punished wave three, the fourth wave. This is really that application layer. These are the AI cash machines, AI actually running businesses. >> Yeah. The the businesses that are actually using this infrastructure that's being laid out right now. I want to talk a little bit more about all of the spending that is going on in the AI infrastructure story. You talking about Wall Street punishing some of these businesses that are part of this third wave. Why do you think that is? I think right now many retail investors are concerned because they've invested in these stocks and we're seeing so much volatility over the last few weeks in these names. Why do you think that is? >> It's tough to say what's going to happen next, but Wall Street was really punishing this sort of lever trade that was happening in the markets. Everybody was crowding into the infrastructure trade as they should. Quants were crowding into there, hedge funds, retail traders. The problem was there was sort of these cracks that were happening outside of that. We even saw things like Kimmy K3. I'm not sure if you've heard about this, but this is by Moonshot AI right out of China. And they built a great model that competes with Anthropic and competes with OpenAI and even Grock. They built this great model that can behave on smaller compute and chips outside of Nvidia because they were forced to because we choked Nvidia out of China. So there was a lot of different things happening at once which punished those traders and those investors. But I think that that trade will come back. I believe it will come back. We don't know. But I think it's time to move on from infrastructure. >> Yeah. Clearly there's a ton of money being spent on infrastructure right now. All of this money is pouring into it. But somebody has to use that infrastructure to make all of this investment worthwhile. So let's talk about that next wave, that fourth wave of the AI story and where that next phase of growth is going to be. >> This is the application layer and these are the AI cash machines. This is where AI is actually running businesses. I'm talking about insurance, lending, advertising medicine education even restaurants, anything you can think of. This is the fourth wave. It is also the least crowded wave of the four because these stocks really don't screen as AI plays. They screen as an insurance company or a restaurant company or a language app. The herds aren't looking here yet. It means that you can be at the forefront of investing and the scale it hides in plain sight. Advertisers alone spend more than a trillion dollar a year. A small edge in guessing right is worth a fortune. Every dollar of that $725 billion we were talking about that has to be paid for by businesses that sit on top of it. The 10 companies in this report, they're growing revenue 25%, 50%, even in some cases 70% a year and they're doing so at a fraction of wave three investment multiples. That means it's the next mega trend that is ripe for investors. >> Well, I know that is exactly the kind of companies that we are going to be covering in this video today. You are going to be sharing three of them with us. But you and your team at Tradesmith have just put together a brand new report on 10 of these companies that are all a part of this next growth wave of AI. And you can get that report for free and see all 10 names by getting the special offer just for our viewers today. Scan the QR code or click the link in the description to get that free report with all 10 of this next fourth wave of the AI growth story, these AI cash machines. And Keith, before we get into the first stock that you have for our viewers today, I want to talk a little bit about risk because you talk about historically you think about the dot days of uh when all of these new internet companies came out. Not all of them were winners, right? There were plenty of losers um during that startup phase of new companies using this new piece of infrastructure. Is that risk a potential with some of these next wave of AI growth story uh companies that we're talking about? >> That's a great question. So, I look at it like this. The cash machine layer, that application layer, it still trades like a question mark. Some of these 10 names everyone's going to know and some of them most people will not know. A few of them are small enough that Wall Street has barely even glanced their way. And for an early investor, that's usually where the interesting part begins. Our report is going to map this out by risk and really by size. I have three large cap stocks in there and these are where the cash machine is already running and it's already profitable. That's probably where most investors should start. But I also have six midcap stocks. These are more direct exposure. They will have bigger swings and some of them hinge on one industry or a single decision in Washington. And we have exactly one small cap stock in this report. It's the most speculative name on the list with the most potential to multiply. So size it accordingly. And just know look, all investing has risk and you don't want to invest more than you can really afford to lose. Some sometimes things will go against you. sometimes higher than you ever expected. So, my advice is always invest small. Start with that small amount of money so that you can ride the volatility without freaking out and expect volatility. This is a long-term trend. This report, it is a menu. Don't think of it as like a checklist. Find a couple names that you love and get some exposure to them because every single boom sorts companies into two piles. One that does great and one that busts. >> Yeah. So, that risk is definitely there. I love I love that. look at these names as a menu and pick the ones that you think have the best chance of success in the future. Uh again, I'm really excited to get to the three names that we're going to dive into detail today. These are names that we've never had a deep analysis on or maybe have never even had mentioned on the channel before. So, I'm excited for the names. I want one more history lesson a little bit about looking back and talking about how this has played out in the past. Again, the market has had similar stories. AI might be new, but a new piece of infrastructure in the market is not new. This is something that's happened time and time again throughout history. So I want to talk a little bit more about what we've seen historically in the market during a new time like this. And what examples do we have of success in this wave of a new infrastructure story? >> Yeah, you see this all the time. Amazon is one of the biggest success stories you will ever see. They built on top of infrastructure. They built an entire bookstore at first that was online. They crushed the physical bookstores which are actually making a comeback. We don't know if they'll be profitable, but Amazon is one of the best at this. And then Amazon actually turned from a bookstore to an online website where you could pretty much buy anything and everybody out there uses them. And then it also became an infrastructure play which was kind of crazy to help run their website but then they offered that to everybody else cuz there was extra compute. >> Yeah, we all know Amazon is the the key player and really harnessing the power of the internet when that came out. And now these next three names that we are diving into today are harnessing the power of AI for their companies and really already generating plenty of cash using AI. So let's get to that first name. What is the first company that is one of your AI cash machine stories? >> You got it. So what I did was I took this report, I sorted it by three groups. And so what I did was I was focused on sorting them by the job that the AI does inside of the company. One name per group is what we'll talk about today. So the first group are what we call the deciders. Every business runs on decisions. Do I lend the money? Do I pay the claim? What price do I pay it at? For all of history, that took a trained human being who made a lot of errors, by the way. And more customers eventually meant more people at your company. The deciders, they broke that link. The AI is the underwriter. So our first pick is a company that I just absolutely love. It's been an incredible growth story. It's called Lemonade. LM ND, the AI insurer. And who knew that a company named Lemonade would be AIdriven and be an insurance company? So, this is the company that that can do a 3second claim. Here's what the machine built. Gross profit is up roughly 10fold while headcount has barely moved about a million dollars of premium per employee. This is triple what it was for Lemonade 4 years ago. They've had 11 straight quarters of accelerating growth and Wall Street still prices it like it's just a small insurer. But I actually see Lemonade as a software company that is AIdriven right on top of this infrastructure layer that happens to sell insurance and they even sell insurance for pets. >> Yeah, that's such a growing area of insurance insuring pets because everybody loves their pets, me included. Uh but I think that Lemonade is such an interesting story and again an interesting name that we have not given a lot of attention to but it is doing really well. But this this week especially is an interesting time to be looking at Lemonade because if you look at their chart it's been a volatile week. They just reported earnings. What came out of there that's been moving the stock so much. Keith, >> absolutely. So they reported days ago and what they reported was a revenue beat. They had growth that accelerated for 11 straight quarters. This was the 11th one. They also had 166,000 new customers and its first profitable quarter reaffirmed for the end of this year. Everything is going great for Lemonade. So why did this stock fall 20%. It had run 40% into the report and Wall Street wanted a raise. They didn't want a repeat. There's nothing wrong with the repeat. Nothing is broken about this business. Nothing broke their machine. When a cash machine goes on sale over expectations rather than the actual execution, to me, that's not a warning. That's actually opportunity. I >> I do think that people and investors and Wall Street, they do care about that growth, though. I think the expectations have been a little outsized from all of Wall Street on the tech department because we've seen so much growth. But for you, Keith, when you look at Lemonade, what kind of consistent growth are you expecting? Is this going to be a name that can get that easy money for investors that's going to see a tremendous growth story? Or is this one that's going to be a steady growth story, a cash machine that continues to steadily grow its income and revenue year-over-year, quarter over quarter? What does this growth story look like to you for Lemonade? >> Well, here's the thing with Lemonade. What I love about them is that they've been around for a very long time and they are experts at what they do. They're experts in insurance, but what I mean by they're experts at what they do is they build incredible software that's AIdriven on top of infrastructure that's out there. They're not building any of their infrastructure. They're just buying into it. And these infrastructure companies are selling it to them. So Lemonade is a perfect marriage for wave four here of the AI cash machines. And they're an incredible business that is doing incredible things. They actually recently, and this was a pre-planned thing, they recently announced how their CFO is stepping down and a new one is stepping in. that's already sort of been at the company and will be in that role in the beginning of 2027. I just see this as a great opportunity to buy because this company is going to keep doing what they do best. They're going to outpace everybody else. It is really hard to take an archaic company and move them off of people and into AI for so many different reasons out there. Trust me on that. And so Lemonade's already there. They're already beating everybody and they're going to keep getting customers in and they're going to keep doing what they're doing. I think they're going to feel like a slower growth story with great surprises along the way. >> All right, a good first look at a company that's really leveraging AI and it's already showing up in their revenue obviously for the last few quarters for this company. Let's get on to that second area. I know you talked about you've got kind of three different sections in this report of 10 stocks. What's the second area that we're getting to? >> All right, so the second area is what I call the persuaders. So, think about this. Advertising used to be educated guessing about groups. The persuaders guess about you and then they check their answer the second that you're clicking. There's a company called Apploving. They are an AI media buyer. It's an engine that's run by this engine called Axon. This decides which ad hits your phone billions of times a day. There's no factory behind it though. There's no inventory. There's no guessing. They are one of the most profitable software businesses in public markets. They are really the flagship thesis uh at a $131 billion market cap. And look, I want to give full disclosure here because as much as I love Apploven, this is really important for our audience watching. Apploving is under an SEC investigation right now into how it collects the data that feeds Axon, its engine. I kept it in a report anyway because the numbers, they're just too extraordinary to ignore. And this is a name that I would look at, you know, thinking about that investigation and how to size it modestly. We don't know what's going to happen, but what I believe is going to happen is the same thing that happens after every one of these investigations. If there is a penalty, there will be a penalty. It won't close or crush the business. In my opinion, you should be sizing it accordingly to what your opinion is. What I think will happen is they will just change their models. They'll be able to get the data any way they want, even if they had some wrongdoing there, and they will succeed as a business moving forward. Thanks for bringing that up because I think that in in all of this discussion on AI, I hear plenty of comments from our viewers who say, "Well, I ethically don't like this company or I don't love the even with lemonade, I don't love the idea of eliminating human resources and going towards the the AI model." And all of that makes sense and I think it's important for investors to invest morally and ethically what matters to you. And so keep that in mind with your own investments. But what we're talking about today are the numbers. We are looking at these companies fundamentally and also looking at just what they're doing and how it's showing up as essentially a cash machine on their books and and helping them to generate more revenue. So fundamentally investing. Let's take a look at at App Leven and what those numbers do show you Keith. >> Okay, they have great numbers and so as a 131 billion market cap company last quarter their revenue was up 59% which is just astonishing. Their net income was $1.2 $2 billion in just a single quarter. Many times when you think of AI companies, you just don't think of those companies being profitable. But here is Apploven super profitable. They have a 65% net margin. Margins that actually make chipmakers look labor intensive because there's really no factory here. There's no inventory. There's nothing in between the decision from AI and advertisers payment. I love this company by the numbers. I'm not too worried about the SEC investigation, but you have to size it accordingly. >> Yeah. Also want to point out earnings is coming up in just a few days, too. Do you think that's going to move the stock price at all? We've seen so much volatility in this name over the last few weeks. What do you think earnings could do uh coming up this week? >> Look, it's tough to say. I think this is a great long-term stock. Here's the thing, though. This stock has been down 19% over the past month, and it's a flagship stock that I look at as on sale. You could wait till after earnings to make sure that there's no surprises, especially with that SEC investigation, but I'm thinking the actual earnings that they report will be great. We've seen this multiple times though. You can report great earnings, you can have some weird outlook, you can have some weird thing going on in the background that comes up and that's what everybody fixates on, >> right? that we have absolutely seen uh blowout earnings that you know should theoretically have the market reacting super positively and then something does not go that way and the market reacts completely different. So I think it's a sound advice that you really don't know what the market's going to react to earnings because who knows what comes out in a report that the market decides to fixate on. But it does stand out to me that there's not a lot of institutional ownership. And I know when we started talking about this topic, you said it is something that Wall Street's not catching on to yet, that they are not yet really investing in this next wave of AI. Um, is that a good thing for investors? Is that concerning at all that a company like Apploven that is doing so well fundamentally in its numbers only has about 41% institutional ownership right now? I mean, I think it's a great thing for Apploving because it's a $131 billion company and institutions love that size and they want to see that size grow to 500 billion and even up to a trillion with the types of numbers that we post these days. So, when you think about that alone, I think the institutions are going to start going after this type of business. I think these sort of margins that they're posting as an AI business are incredible and it's going to attract everybody out there. So, that doesn't worry me at all. >> Good to know. And I I think that you have really dug into the fundamentals on these companies and understand them and and why you want to recommend them and what their growth story is moving forward. We have one more name to cover in this video, but I also wanted to remind people if you want to get that full list of all 10 names that Keith is recommending in this next wave of AI investing and AI growth story. Make sure to scan the QR code or click the link in the description to get that free report. It is totally free. You just fill out the form and they will send you that full report of all 10 names of this new wave of the AI cash cows who are really harnessing this infrastructure that's been built. All right, Keith, let's get on to that third name you have for us and it's in a different area of this AI growth story. >> Absolutely. So, this is our sort of third group in a report. We call it the rebuilders. It took me a while to figure out what to call this because it's such an interesting sort of place. So each rebuilder picked one normal, easy to overlook industry and they rebuilt it around AI that does the job the old-timers did by feel. So for everyone all at once without getting tired, by the way, no breaks, no complaints, just keeps going. So one of the stocks in this report is an AI restaurant manager. This company reorders the chicken before the walk-in runs empty and knows to add more servers before Friday night gets slammed. It's a really cool concept. Make sure you check out the report to get that stock. But my pick here today is Hinge Health, HGE. This is an AI physiootherapy practice. And this is a great rebuilder because it's a $6 billion company. So, it's relatively small and it's the cleanest example in the entire report of an old in-person industry that has rebuilt itself from the ground up around AI. A physical therapist that lives in your phone's camera is watching you exercise, correcting your form in real time, and it's aimed at the single biggest category of employer health spending in America. This is actually bigger than diabetes, this whole total available market to us, bigger than heart disease. It's profitable. Its revenue grew 47% last quarter. It's raised its fullear outlook twice in just 5 weeks. And the CFO credits AI efficiency for the margins, not more hiring. It came public 14 months ago, so it's a relatively new stock to the market and most investors haven't even met this stock yet. That is the point of this pick being in the report. >> Yeah, you can see the newness and excitement looking at the stock chart for this one. Uh you can see it's had a lot of excitement and growth and then recently had a pretty sharp pullback kind of with the rest of the market, the AI story that we've seen in the last few days and weeks in the market. Um, this is an interesting name because of that addressable market. I think what you talked about with how much money is already spent on physical therapy, the fact that they're trying to to use AI and automate this area, that's a huge part and that is clearly showing up in the the revenue like you said the earnings beat was so impressive last quarter. I know they have another earnings coming up in in the week ahead. Is it possible for them to continue that kind of growth story that they saw uh the last quarter? >> I believe so. Even going into earnings, they've pulled back a little bit, but they're still up 75% pretty much over the last 3 months. So, this stock going into earnings next week is the kind of stock that maybe you just want to watch and see what they say during earnings because if they have a blowout earnings, even though you could miss that run, you could really see this stock take off over the next quarter, it will keep going. And if they get a big pullback for you, that's another great entry because this company isn't going anywhere. They are going to revolutionize how to get physical therapy. They're building partnerships with companies to use them over what they pay out through health insurance. And that's going to save companies a lot of money. So, they're going to really benefit from companies wanting to get more efficient and tighten up their margins. >> Yeah, I think this applies to this one in particular, but probably applies to all the names that we're talking about. This is a new uh way of using the AI infrastructure. These are companies that are innovating and using this new type of infrastructure we have which is AI and and seeing how that's going to change the way we do commerce which means not every company has figured it out yet. It still takes time to implement and it takes time to to grow. So I want to talk about that with Hinge in particular. It seems like a concept that once more and more companies more healthcare companies um learn about it and see how effective it is that there could be far more implementation down the road. Is that what you see with Hinge? Is that that growth story just continuing because it's still fairly new? >> I I totally see that. And what they've done is they're building this network of customers. And when you have a network of customers, Hinge themselves can start to innovate and break out their AI into other verticals. You can even have a triage AI. You can have an AI talking about different things in your life, mental health AI, and so forth. And so what I think we're going to see is plenty of companies coming online like crazy becoming these AI cash machines just like Hinge Health and the others in this report. But what I think will be interesting is to watch Hinge Health specifically because I think they're going to start breaking out in other verticals. When you nail a vertical and you have a customer base and you're growing your revenue like this, it is impossible for you to not want to get into another vertical right inside of that same space with those same customers that are already part of your addressable market. Oh, that's a great point, Keith, that there is room to grow even more out of the physical therapy and into other areas of health. That could be a huge growth story for Hinge. A really interesting name to look at and a perfect one to illustrate how companies are harnessing AI and really becoming AI cash machines already using it for, you know, growth and revenue and changing the marketplace as we know it. So, a lot of really interesting names today. Keith, thank you for bringing these three. An in-depth look at these three. Again, there are seven other names uh in this AI cash machine story that you can check out for free in that report from Keith and his team at Tradesmith. We've got that link in the description. Go grab it while it's free and you can take a look at those names while they're still early, too. Keith, thanks again for your time today. Let us know what you think about these stocks and this whole AI cash machine concept of companies harnessing the AI story. And if you want to look at those AI choke points, the ones that Keith talked about a couple of months ago, make sure to check out this interview. Those are some really interesting names, too, that still have a ton of growth ahead of them.