There is an old story that gets told whenever a new craze grips the market. It concerns the California gold rush of 1849 — a frenzied, speculative scramble for buried wealth that drew tens of thousands of prospectors from across America and beyond.
According to Corlytics, the conditions were brutal, sickness spread quickly, and the easy pickings in the riverbeds ran dry fast. Yet some people did make fortunes. Just not the ones most people picture. It was not the man with the shovel who prospered. It was the man who sold it to him.
Corlytics recently discussed the topic of the AI rush, and who were the shovel sellers in this modern gold rush.
The merchants who shifted picks, pans, dry goods, and hard-wearing trousers — most famously Levi Strauss — built lasting businesses. Banks such as Wells Fargo and American Express grew wealthy providing financial services to prospectors who may or may not have struck gold. The infrastructure profited whether or not the miners ever found a single nugget.
The modern equivalent
AI is the new rush. And, as it happens, its epicentre is once again California. The headlines are intoxicating, encouraging investors and entrepreneurs alike to dream on a grand scale. But the most striking valuations in today’s market belong not to companies that have cracked what AI can do for end users — they belong to the shovel sellers.
Take Nvidia. At its peak, its market capitalisation surpassed that of any company in recorded history. Yet Nvidia does not produce an AI product in any consumer sense. It manufactures graphics processing units — the specialised chips that AI models require to train and run. In the most literal sense, it is a shovel company. Its customers are the forty-niners.
The hyperscale cloud providers tell a similar story. Amazon, Google and Microsoft have committed vast sums to data centre infrastructure, which they then rent to AI firms to power their work. They are the railways, supply depots and warehouses of this new rush — indispensable to the endeavour, and paid regardless of whether any gold is found.
Then there is power. AI models consume extraordinary quantities of electricity, and energy providers have found themselves central to the whole enterprise without building a single AI product themselves.
The economics of the rush
In mineral exploration, enormous capital is spent speculatively, staked on promising geology or an early encouraging find. Vast sums flow before a drop of oil or an ounce of gold has been commercially extracted. The same logic applies to AI: companies are burning through capital at a breathtaking pace, almost entirely on the basis of potential. Not revenue. Not profit. Potential.
This dynamic helps explain growing investor interest in so-called HALO stocks — Heavy Assets, Low Obsolescence — companies with significant physical infrastructure that are considered relatively immune to AI disruption and may, in fact, become more profitable because of it. The chip, the cloud cable and the current powering the data centres are all needed whether or not any individual AI venture succeeds.
History offers a salutary reminder. Many of the original forty-niners returned home with less money than they had set out with, or did not return at all. The gold rush created real wealth, but it was concentrated in those who provided the tools, the transport and the services — not predominantly in those swinging the pickaxes.
Navigating the rush with intelligence
Just as prospectors fared better armed with geological surveys and expert guidance, today’s AI sector increasingly requires a sophisticated understanding of the regulatory landscape. Companies such as Corlytics provide what might be termed regulatory intelligence — analysing regulatory behaviour and helping firms navigate evolving compliance requirements. As regulation catches up with AI, including frameworks such as the EU AI Act and ISO/IEC 42001, this kind of intelligence functions as a modern geological survey: helping firms understand the terrain before they commit capital.
In the AI boom, infrastructure powers the search. Intelligence guides it.
The lesson repeated
The Californian gold rush helped shape California into what it is today — great cities, major infrastructure and a culture that has never quite lost its taste for speculation. The wealth was real, but it derived not from gold itself so much as from everything required to find it.
The AI rush may well prove similarly transformative. If history is any guide, those who focus on what is needed to pursue the dream — rather than only on the dream itself — stand a reasonable chance of being the ones left standing when the dust settles.
None of this constitutes investment advice. But the shovel story is one that each generation seems to rediscover and then just as quickly forget. Perhaps this time it will stick.
Read the full Corlytics post here.
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