The AI Efficiency Rotation: Wave Two Funds Wave One
💸 The AI efficiency rotation is the most interesting call on my feed right now: wave one was the builders, wave two is the companies using AI to cut costs and expand margins. The last easy trade.
Directionally right. Incomplete.
Margin expansion from AI shows up in the income statement before it shows up in the story. You find it in gross margin and headcount, not in press releases. That part is real and underpriced.
What the framing misses: adoption is the demand. A company cutting costs with AI isn't leaving the buildout, it's buying from it. Every efficiency gain is a workload someone has to run, on compute that doesn't exist yet. Wave two funds wave one.
It isn't builders then users. It's the same dollar moving down the stack and back up.
🔎 The screen: rising gross margin, flat or falling headcount, and a cost base big enough that automation moves the needle.
$NOW agentic AI deployed on its own support and engineering
$CRM same playbook, revenue growing while headcount doesn't
$AMZN both waves at once, sells the compute and runs the largest logistics network on earth with it
$GOOGL cutting internal cost while owning the model and the cloud
$META flat headcount, rising margins, and its own silicon
Notice what those five have in common. They all buy compute. The efficiency trade and the buildout trade are the same trade, one floor apart.
