Driven by AI, nvidia has become the highest market cap company in the world, and many investors are starting to look for the next nvidia.
In this era of AI explosion, where is the next breakthrough?
In fact, the four stages of AI can be divided according to different stages of technological development and the depth of market applications. According to Coatue's AI S-curve framework, the four main stages of AI are: AI core infrastructure (Phase 1); Edge AI (Phase 2); AI applications (Phase 3); Physical AI (Phase 4+).

Coincidentally, goldman sachs previously also roughly divided the development of AI into four stages:
Stage 1: The most obvious beneficiaries of AI, represented by nvidia;
Stage 2: Beneficiary stage for companies focusing on AI infrastructure;
Stage 3: Beneficiary stage for companies focused on monetizing AI potential through generating incremental revenue;
Stage 4: Beneficiary stage for companies with the greatest potential for profit enhancement in widespread AI adoption and productivity improvements.
Goldman Sachs believes that over the past two years, market attention has focused on stocks in the "first stage" of AI, such as nvidia, which has an astonishing roi of 187% year-to-date. Meanwhile, the AI "second stage" trades represented by the utilities sector are gradually entering a phase of overvaluation.
The firm anticipates that by 2025, investors will shift from AI infrastructure to the broader promotion and monetization of AI "third stage" applications. In this regard, Goldman Sachs has provided a basket of stocks targeting the third stage of the AI wave, including:
Digital banking solution providers $Q2 Holdings (QTWO.US)$ , enterprise data management application software providers $CommVault Systems (CVLT.US)$ , both of whose stock prices have doubled this year;
cybersecurity giants $Fortinet (FTNT.US)$ The advertising industry giants. $Meta Platforms (META.US)$ The cloud computing giants. $Nutanix (NTNX.US)$ 、 $ServiceNow (NOW.US)$ And others have all risen over 50%;
It also includes online auto platforms $CarGurus (CARG.US)$ , a usa online auction company for used cars $ACV Auctions (ACVA.US)$ ; knowledge engine platform $Yext Inc (YEXT.US)$ , cloud storage company $Box Inc (BOX.US)$ , global software giants $Autodesk (ADSK.US)$ , cloud software giants $Salesforce (CRM.US)$ , marketing companies $HubSpot (HUBS.US)$ , cloud monitoring and analytics software companies $Datadog (DDOG.US)$ , Cloud acceleration service providers $Cloudflare (NET.US)$ According to documents filed with the U.S. Securities and Exchange Commission (SEC), some of the most prominent actions Third Point took in the second quarter, respectively, were to establish positions, shareholding of and more.

In fact, since the beginning of this year, AI applications have accelerated development and reached an explosive inflection point. North American AI application companies represented by AppLovin and Palantir are leading this trend. Data shows that AppLovin's cumulative increase this year has reached 736%, with its latest market cap surpassing 100 billion dollars. Palantir's cumulative increase is 274%, while AI chip giant nvidia has seen an increase of 186% during the same period.
Tianfeng believes that the strong performance of companies like Applovin indicates that AI application companies will gradually enter the phase of realizing AI technology, and it is recommended to continuously pay attention to the commercialization of AI. Xinda Securities stated that AI remains one of the strongest narratives in the technology sector, and in the future, investment opportunities focusing on applications should be emphasized.
Goldman Sachs' research report also indicated that from the third quarter performance, 84% of the third phase stocks exceeded market expectations, while only 53% in the second phase. Moreover, from the third quarter financial reports, more and more signs indicate that third phase stocks are launching AI products and turning them into revenue.

Bank of America similarly believes that the market focus has shifted to the stage of AI benefit trades - software stocks and Agentic AI. As the software 'AI moment' arrives, its monetization is expected to begin in 2025 and become significant in 2026 as enterprise adoption accelerates. Due to its positioning in Agentic AI, Bank of America for $Microsoft (MSFT.US)$ 、 $Salesforce (CRM.US)$ 、 $Adobe (ADBE.US)$ Large companies show preference, and $NICE Ltd (NICE.US)$ 、 $Informatica (INFA.US)$ 、 $Zeta Global (ZETA.US)$ Small and medium-sized companies are also regarded as potential target companies.
However, goldman sachs previously warned that the timing for the development and monetization of ai applications remains unclear, making it difficult to achieve full deployment in the short term.
Editor/Somer