Most people think AI is just ChatGPT, Grok, or Claude.
But the real AI stack is a massive iceberg.
Applications are just the tiny visible tip.
Here is what it actually takes to power the AI wave:
Applications: The chat box we interact with.
Models: The brains (GPT-4, Gemini, Llama).
Data: The fuel (Snowflake, Databricks).
Silicon: The muscles (Nvidia GPUs, AMD, Google TPUs).
Networking: The nervous system (Broadcom, Arista, Cisco).
Infrastructure: The skeleton (Datacenters, Vertiv, Equinix).
All of it must work together.
A large set of data on a model without efficient processing unit is useless . So GPUs comes into picture.
GPUs without bidirectional transfer of bits is bottleneck. Datacenter without power cannot scale. Applications without distribution die quietly.
Trillions in value are being unlocked at every single layer simultaneously.
However, as someone who builds applications and works directly on the networking and datacenter layer, I see a glaring truth:
Applications are currently the easiest layer to replace.
To understand where the money will settle, we have to ask: Where does the bottleneck move next?
The Historical Pattern
History doesn't repeat, but it absolutely rhymes. Every major tech wave follows a strict three-phase evolution:
Phase 1: Infrastructure Wins First
During the late 1990s internet boom, we didn't invest in websites first; we invested in the hardware building the web. Cisco became the most valuable company in the world in 2000 because everyone needed routers (want to bet on the share price?). Today, Nvidia is experiencing that exact unprecedented growth.
Phase 2: Platforms Emerge
Once the pipes are laid, it was all set. Think of how Facebook emerged in 2004, leveraging the newly built broadband infrastructure to defeat early, fragmented networks like Orkut by creating a true identity platform.
Phase 3: Applications & Ecosystems Mature
Apps can only succeed after the infrastructure and platforms are stable.
Let's take an example.
Think about it: why did the Apple Newton MessagePad failed in the late 1990s, but the iPhone - a very similar concept with apps - made Apple the most valuable company in the world just a decade later?
The Newton failed because the mobile networks, touchscreens, and software ecosystems simply weren't ready. The iPhone won because the infrastructure finally caught up to the idea.
The Next Shift
We are currently at the peak of Phase 1 in 2026.
Infrastructure is winning heavily.
Initially, models were scarce. Today, compute and grid power are the primary bottlenecks.
But infrastructure eventually commoditises. Hoping it to by 2027. When the bottleneck moves past the data center, value will shift drastically.
The winners of the next phase won't just be thin wrapper apps. The value will land on proprietary data moats, robust distribution networks, and deep workflow integration.
The infrastructure is being laid right now. Perhaps the AI operating system platforms come next. Only then will the final application layer truly settle.
One thing I keep thinking about:
what does Phase 2 actually look like?
Curious how others here are thinking about it.