Don’t chase AI – back the companies using it best

• The best AI bets now aren’t the ones building the tech – they’re the ones using it to cut costs and boost margins
• Workflow improvements make a big noise – and companies reinventing how they operate stand to gain a real edge
• Follow the value chain: mature firms bank efficiency improvements, while younger ones reinvest. So you’ll want to know where the profits land.

​It’s easy to spot the early winners of the AI boom. Stocks like NVIDIA Corp (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD) have soared as companies scramble to load up on chips and infrastructure. And while that ride’s been lucrative, it’s also crowded: everyone’s watching the same tickers and chasing the same trade.

But the biggest long-term gains rarely come from the obvious frontrunners. They flow from the companies that harness new technologies with a bit of swagger – using the latest tools to run faster, leaner, smarter. With AI, that means the workflow rethinkers, not just the chipmakers.

This is second-order investing. And it’s where the most durable returns tend to live.

The real pay-off is in productivity

AI’s biggest economic impact isn’t splashy product launches or ground-shaking new models – it’s productivity. And the real winners aren’t necessarily building the tech. They’re embedding it into their operations to cut costs, boost margins, and do more with less.

In blue-collar sectors, AI is already reshaping how work gets done. Automated warehouses, predictive maintenance, and delivery route optimization – all these reduce downtime and labour intensity. Amazon.com Inc (NASDAQ:AMZN)’s warehouses now run on a hybrid workforce of humans and robots. That’s not about replacing jobs outright, but streamlining them so that the same labour force can do more – faster and cheaper.

White-collar work’s changing, too. Admin tasks in finance, compliance, and customer service are being handed off to machines. JPMorgan Chase & Co (NYSE:JPM) now processes contracts in seconds – work that used to tie up analysts for hours. At scale, these changes don’t just free up time: they shrink payroll costs and fatten profit margins.

For investors, that’s gold: it means a boost in earnings without requiring a boost in revenue. In slow or uncertain markets, that’s often the difference between beating expectations and missing them.

The jobs tell the story

Not all companies stand to gain equally. The key variable is labour structure – who’s doing what and how much can be automated.

Businesses with big pools of variable labour – in logistics, retail, manufacturing, or hospitality – have the most to gain. These industries run on scale, process, and razor-thin margins. That makes them ideal for AI-driven optimization.

The leading AI winners will rethink how work happens altogether.

That means reordering processes, collapsing steps, and turning slow, expensive functions into fast, automated ones. Imagine insurers using AI to approve claims in minutes instead of weeks, or energy firms deploying predictive systems to balance grid loads in real time. These aren’t just cost savings – they’re fully fledged business model upgrades.

When workflows change, cost curves do, too. Fixed expenses become variable ones. Margins widen. Low-return units become profitable. And whole industries start playing a different game.

The sign to watch isn’t lay-offs – it’s the companies that are rebuilding their operations around what AI makes possible. It’s harder to spot, sure, but when you do, you’re looking at real, structural advantages – not just a one-time efficiency gain.

Who wins depends on where they are

Of course, just because a company saves money doesn’t mean those savings will flow to shareholders. How that value is captured depends on where the company sits in its lifecycle.

Younger, fast-growing firms tend to reinvest. That might mean hiring more engineers, scaling faster, or experimenting with new product lines. The pay-off can be sizable – but it’s almost always delayed, and sometimes diluted.

Mature firms, on the other hand, usually don’t need to spend more to keep growing. So cost savings are more likely to go straight to margins, dividends, or buybacks. These firms become compounding machines: modest revenue growth paired with expanding margins creates a powerful flywheel.

Microsoft Corp (NASDAQ:MSFT)’s a textbook case. It’s weaving AI into everything from coding to customer service – not just as a product, but also as a way to improve how it runs. And because the company already throws off enormous cash, much of the resulting efficiency shows up in its earnings – and, ultimately, its share price.

Industry dynamics are key, too. In fragmented, competitive industries, cost savings often get passed to customers via lower prices. In unionized industries or ones facing labour constraints, some of that value might go back to workers in the form of bonuses or higher pay. Investors need to know which side of that trade they’re on.

Here are some of the investable sectors already benefiting from AI

Some of the best investment opportunities won’t look like AI stocks. They’ll be firms methodically using the technology to entrench their advantages.

To find them, focus on sectors where automation boosts productivity and where those savings flow through to profits. Retail and logistics are already a standout: Walmart Inc (NYSE:WMT) is overhauling its distribution network with AI-driven robotics, doubling throughput while halving labour at key facilities. Target Corp (NYSE:TGT)’s cutting stockouts and tightening inventory. Their supplier, Symbotic Inc Ordinary Shares - Class A (NASDAQ:SYM) (now publicly listed), sells automation systems to both.

Healthcare is another rich seam. UnitedHealth Group Inc (NYSE:UNH) uses AI to streamline claims and detect fraud, turning admin gains into shareholder value. In the industrials sector, Siemens AG (XETRA:SIE) is integrating AI into smart infrastructure and energy systems, and profit has been climbing as a result.

Software offers second-order exposure, too. Intuit Inc (NASDAQ:INTU), HubSpot Inc (NYSE:HUBS), and Atlassian Corp Class A (NASDAQ:TEAM) are deploying AI to automate customer support and documentation, reducing overhead at scale. And chip-design software firms like Cadence Design Systems Inc (NASDAQ:CDNS) and Synopsys Inc (NASDAQ:SNPS) have been using AI to sharpen their tools and extend their market lead.

There’s a thread tying these winners together: they’re all using AI to drive down costs, reinvest, and expand margins. That’s where the financial surplus goes – and that’s where the long-term upside lives.

Here’s what it means for you as an investor.

Chasing the first wave of AI winners can deliver nice returns – but only for so long. The real wealth gets built in the second and third waves, as new tools reshape the economics of existing businesses. That requires a different lens: one that focuses less on who’s building the tech, and more on who’s deploying it in ways that compound over time.

That means combing through company filings and earnings calls – not for AI soundbites, but for clues about process improvements, cost allocation, and reinvestment strategies. It means understanding how automation shifts incentives and spreads through different industries.

Smart AI investing is about being precise, not just early. It’s about spotting the firms that aren’t just excited about AI – but are actively using it to turn operational improvements into long-term shareholder value.

Theodora Lee Joseph is an analyst at finimize.

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