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3 Stocks That Prove the AI Trade Isn't Over, It Moved

Authored by Bridget Bennett. Article Posted: 8/5/2026.

Everyone has already made money on the AI buildout. The next money will be made by whoever is actually using it.

For the past two years, the easiest trades in the market were tied directly to AI infrastructure: chips, data centers and power contracts. Much of that money has already been made. The stocks that ran hardest on the story have been rewarded—and, in some cases, punished—as investors ask a harder question: Who is actually turning all this spending into profit? That tension runs through this year's AI story, which is why the next round of winners may look nothing like the last one.

The Buildout Is Over, the Payoff Begins

Elon moved first. I bought 10,000 shares. (Ad)

Tesla just signed a six-year supply agreement with a small nickel producer trading around $5 a share. The company controls what may be the most important domestic nickel operation in the U.S., backed by government support and a legendary mining billionaire.

One of the world's largest mining companies is already working alongside it, yet Wall Street has barely noticed. Dr. Mark Skousen says he's already put his own money into 10,000 shares.

See the overlooked nickel stock behind Tesla's supply deal

Alphabet Inc. (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corporation (NASDAQ: MSFT) and Meta Platforms, Inc. (NASDAQ: META) are on track to spend a combined $725 billion on AI infrastructure in 2026, up 77% from last year's $410 billion. That's a staggering number, and it's only a cost until someone builds a real business on top of it.

History keeps repeating this pattern. The railroads laid track across America in the 1800s, but Montgomery Ward and Sears—not the railroad men—got rich shipping catalog goods to every town the tracks reached. Amazon did the same thing with the internet: It built a bookstore on top of someone else's infrastructure and became the country's biggest retailer.

The application layer is where that is happening now, according to Keith Kaplan, CEO of TradeSmith. These are companies running real businesses on AI in industries such as insurance, advertising and healthcare, and most of them do not even screen as AI stocks. That's exactly why they remain relatively cheap compared with the infrastructure names.

Lemonade Turns a Sell-Off Into an Entry Point

Lemonade, Inc. (NYSE: LMND) uses AI to underwrite insurance in seconds instead of weeks. Its second-quarter revenue rose 79% to $294.4 million, while in-force premium climbed 32.5% to $1.43 billion, marking the 11th straight quarter of accelerating growth. Gross profit has grown roughly tenfold over the past several years while headcount has barely moved—a sign of how much work AI has absorbed. The stock still fell roughly 20% following the report.

Why the drop? Wall Street wanted a guidance increase, not another quarter of solid execution. Adjusted EBITDA losses narrowed to $19 million from $41 million a year earlier, and the company still expects to reach positive adjusted EBITDA by the fourth quarter of 2026. A newly announced CFO transition added some uncertainty, but nothing about the underwriting engine itself changed. When a cash machine is discounted because expectations were too high—not because execution deteriorated—that is typically an entry point rather than a red flag.

AppLovin's Margins Make Chipmakers Look Inefficient

AppLovin runs a different kind of machine. AppLovin Corporation (NASDAQ: APP) built Axon AI, an AI engine that decides which ad reaches your phone billions of times a day, without a factory or inventory. Its most recent quarterly revenue rose 59% year over year to $1.84 billion, while net income reached roughly $1.2 billion. The company carries a market cap near $131 billion. Institutional ownership sits at roughly 41%, leaving meaningful room for growth if larger funds decide those margins are too attractive to ignore.

The catch is an ongoing SEC investigation into AppLovin and how Axon AI collects the data that makes it work. That's a real risk that warrants a modest position size. Still, the numbers are hard to ignore: This is one of the most profitable software businesses in the public markets, and its next earnings report lands Aug. 5 after the market close. The report could clarify how much the probe is weighing on growth.

Hinge Health Rebuilds Physical Therapy Around AI

Hinge Health, Inc. (NYSE: HNGE) is the smallest and newest name here. The nearly $6 billion company has put a physical therapist's judgment into a phone camera. Its technology watches patients exercise, corrects their form and targets one of the largest categories of employer health spending in the country.

Revenue grew 53% year over year in the latest quarter to $213 million, and Hinge Health again raised its full-year guidance, now calling for 2026 revenue of $856 million to $860 million. The Aug. 4 report gave investors a stronger read on the company's post-IPO momentum, with free cash flow of $100 million. A new agreement to acquire Cylinder Health adds another layer to the growth story.

Because Hinge Health only went public in 2025, many institutional investors may still be forming a view of the stock. The latest quarter, however, gives them more to work with than a simple early-stage growth narrative.

How to Size the Risk

Not every name in this group carries the same risk, and Kaplan's approach is to size positions accordingly. The safest starting point is the large-cap names with proven, profitable business models. Mid-cap names can experience bigger swings and may hinge on a single industry trend or regulatory decision. The smallest and newest names offer the most speculative upside, along with the most volatility.

Lemonade, AppLovin and Hinge Health are three names from a broader list that Kaplan and his team at TradeSmith have grouped using this same risk framework. The list sorts names by whether AI is making decisions, buying ads or rebuilding an entire industry from scratch. The practical takeaway is to treat a list like this as a menu, not a checklist: Pick the handful of names that fit your risk tolerance rather than trying to own all of them equally. Keep position sizes small enough to ride out the swings without panic-selling into weakness.

Where the Risk and the Upside Actually Sit

The upside across all three names is similar: They did not build the infrastructure; they bought into it. That means they can achieve faster payback with a fraction of the capital commitment required by the hyperscalers. The risk is just as consistent: Every one of these stocks can swing sharply on a single earnings report, regulatory headline or guidance number that falls short of inflated expectations.

None of that changes the underlying setup. The infrastructure money has already moved. Stay focused on who is actually running a business on top of it, because that is what moves these stocks next.