In our recurring The Supercycle’s Second-Order Winners series, we like to highlight non-obvious people, companies, and categories that are benefitting from the AI boom and capex buildout. A few updates on that front:
- Caterpillar, an honoree in Issue #025, reported sales at an all-time-high and a backlog that surged 71% in 2025 to $51B. This is now the power company that just happens to also make yellow bulldozers. And, as this viral X post notes, Caterpillar has not had a year of single-digit returns since 2014!
- Teradyne, a robotics and test equipment company, joins our list as a new inductee – after reporting a significant earnings beat this week, with “AI-related demand” driving 60+% of its Q4 revenue.
- Lumentum, a photonics provider, is up 140%+ over the last year due to strong demand for its laser and optical components. Though we’re not counting this one as a “second-order” winner, given our longstanding photonics thesis.
Then, there’s the American Skilled Trades.
While the terminally online offer their takes and go back and forth on “the capability overhang”, perceived AI benefits by management vs. rank-and-file, and whether ROI on all of this capex will materialize…
…the skilled tradespeople, who aren’t sitting on their hands, and are using them to actually build out all of this infrastructure, are being handsomely rewarded. There are the 2nd-order winners we’ve previously discussed (electricians, welders, plumbers) and clear demand for specialized construction capabilities. But it’s time to add another category to the list: fiber-optic cable installation, which calls for drillers, splicers, linemen, and the like. Per the WSJ:
- The industry needs 58,000 new workers by 2032. In that same period, 120,000 will retire, creating a combined gap of 178,000.
- Since fiber has a less established training pipeline than other vocational trades, it must be built from scratch, with former Marines, rodeo riders, farmers, ex-inmates, and white-collar refugees who got sick of their desk jobs all flooding in.
- Comp trends reflect the human capital scarcity, with median wages for telecom installers hitting $70,500 last year (42% above the national median), entry-level workers pulling in $60k with overtime, and site superintendents clearing six figures.
- The kicker: “AI isn’t going to replace this,” one executive told the WSJ. “It will accelerate and support some of it, but it’s not going to go out and dig the hole.”
While we’re here…
…two additional notes:
- The supercycle isn’t showing any signs of a slowdown. Meta has guided to spend $115-135B on capex in 2026 (vs. $72.2B in 2025), while Tesla estimates it will spend $20B this year (vs. $8.5B).
- If you wanted to create an inverse index to the unofficial one we’ve been building above, you’d probably start with publicly traded software companies. Investor fears over AI/agentic advances from the frontier labs wiped out ~$300B in market value yesterday, across two S&P indexes that track SaaS, financial data, and exchange stocks. Software was the worst-performing S&P subsector this year — before this week.
What do you think? Agree, disagree? Something we missed above? Reply to this email and drop us a line.