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For the past two years, the AI investment story has been dominated by a familiar cast of mega-cap technology companies pouring hundreds of billions of dollars into data centers, chips, and computing infrastructure. But the next phase of the opportunity may look very different.

As those investments begin to work their way through the economy, it appears the benefits may be extending beyond the largest technology companies. Businesses that build, connect, power, and maintain AI infrastructure are seeing increased demand, and many of those companies reside in the small- and mid-cap universe.

Hilton Portfolio Manager Tom Maher recently joined the Charles Schwab Network to discuss this evolving dynamic and why investors may want to broaden their view of the AI opportunity. While the largest technology companies continue to command much of the attention, Tom highlighted a growing opportunity among second- and third-order beneficiaries of AI spending—companies that are building the infrastructure that enables the AI revolution.

Those opportunities span a wide range of industries. Engineering and construction firms helping build data centers, fiber network providers connecting AI infrastructure, electrical equipment companies, and businesses supporting power generation are all seeing increased demand as AI-related capital spending moves through the broader economy. These businesses may offer compelling opportunities because many have yet to attract the same level of investor attention—or valuations—as the most recognizable AI names.

Importantly, this broadening opportunity is also beginning to show up in the fundamentals. As Tom noted during his appearance on the Charles Schwab Network, earnings expectations for small- and mid-cap companies appear to be improving relative to their large-cap peers, supported by both AI-related spending and signs of renewed activity across parts of the industrial economy that have experienced muted demand in recent years.

For investors, the question may no longer simply be, who is building AI. These days it may be more like, who stands to benefit as those investments ripple through the economy. Increasingly, the answer may include high-quality small- and mid-cap companies positioned at critical points throughout the AI infrastructure value chain.

Watch the full interview to hear Tom’s thoughts on the evolving AI investment landscape and the opportunities emerging across the small- and mid-cap universe.

“With higher rates, wider credit spreads and more issuance, it appears that it’s becoming costlier for hyperscalers to fund CapEx—and harder for them to generate a return, which is what the market seems to be  focused on.” 一Timothy Reilly, President

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