The true structure of AI investment: Why chip stocks have become the focus

Dominic Rizzo, head of the Global Technology Equity Strategy Fund, has a unique analysis of the AI industry structure. According to Rizzo’s theory, to understand investment opportunities in AI, investors need to grasp the layered structure of the entire ecosystem—from foundational technologies to end-user applications.

Basic Layer: The Chip Ecosystem is the Foundation

The AI structure starts from the bottom layer—the chip and semiconductor ecosystem. This is not a minor technical detail but a decisive factor in the success or failure of AI projects. Without powerful chips, nothing can run. Therefore, chip stocks are becoming the brightest spot among global technology stocks.

Intermediate Layer: Infrastructure and Cloud Services

The second layer includes infrastructure and cloud computing service providers. This is where giants like Apple, Microsoft, Amazon, and Alphabet operate massive servers, providing computing power for all AI applications worldwide. The third layer focuses on platform models—the “brains” of AI.

Model Layer: Large Language Platforms

Here, companies develop advanced AI models. Microsoft owns OpenAI, Google develops PaLM2, Meta creates LLaMA, and Amazon builds Titan. These models are core tools upon which other applications are built. They are like an operating system for the entire AI world.

Application Layer: Where Users Actually Interact

The top layer consists of applications that end-users interact with daily—Microsoft’s ChatGPT, Google’s Bard, Amazon’s CodeWhisperer. These consumer products generate direct value and attract public attention.

Why is this structure important for investors?

Understanding this structure helps investors realize that not all AI investments are equal. Companies at the bottom layer—the chip providers—hold real power. They supply the “essence” for the entire system. For this reason, chip stocks are consistently recognized as one of the strongest sectors in the US tech portfolio.