To capitalize on the AI boom, here's what to buy instead of hyped-up tech stocks, according to the CEO of an AI-driven analytics firm

• In an interview with Insider, Toggle AI CEO Jan Szilagyi explained how to invest in the infrastructure underpinning AI.
• While some little-known tech stocks have rallied on the AI boom, Szilagyi prefers well-established tech giants.

Artificial intelligence stocks have seen a surge in investor interest since OpenAI's ChatGPT launched in November, with little-known names like C3.ai, SoundHound AI, and others enjoying triple-digit returns.

But the wiser long-term play would be to instead look to the companies building AI infrastructure, according to Jan Szilagyi, the chief executive and co-founder of markets analytics platform Toggle AI.

In other words, don't look for gold during a gold rush, but go invest in the shovels.

"If you want to invest in AI, the best potential is in the infrastructure companies," Szilagyi told Insider. "If you think that there is going to be greater usage of a host of tools and versions of ChatGPT, then these are the companies that will see the biggest spikes, at least in public markets."

Toggle offers what Szilagyi calls an investing "copilot," an AI-driven engine that scans news and data to help users make more informed portfolio decisions. The technology notifies you when a stock may swing based on market data, macroeconomics, or media announcements.

While Toggle has enjoyed a three-fold increase in business this year thanks to the brighter spotlight on the nascent sector, there's a difference between using AI to invest and investing in AI.

"I think we have not yet even seen any meaningful implementation of this latest technology in applications that people would use," Szilagyi said. "The only ones that are currently seeing the benefit of the technology are the owners of the infrastructure."

Microsoft and Google-parent Alphabet stand out, he noted — especially given the former's $10 billion investment in OpenAI — and Amazon could be another candidate that makes a similar move on AI infrastructure.

All three are top providers of cloud computing services. Generative AI tools like ChatGPT require access to an enormous amount of data, and cloud computing is necessary to maintain maximum efficiency and security for that information.

Tech giants, then, are set to benefit most from the new tech trend in Szilagyi's view because of their cloud capabilities. They could potentially earn money every time an AI program is run on their cloud platforms.

For now, it appears that most brands that could integrate an advanced, ChatGPT-like tool remain in the prototype stages, he said, so it makes less sense to lay indiscriminate bets across the sector simply because there may be a connection to AI.

"I do think a lot is going to happen," Szilagyi said. "But right now you're seeing people basically buying into the sector broadly, without understanding the full implications and that not all AI is created equal."