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14 Mar 2025

The AI Supercycle™ Report: Venture capital, software emerges, and AI at scale

The AI Supercycle™ Report: Venture capital, software emerges, and AI at scale

Key Takeaways:

  • Venture Capital Concentrates on AI Leaders: AI startup funding is hitting new highs, but investments are flowing into a few dominant firms, making it crucial for investors to identify clear winners.
  • AI Software Takes Center Stage: The AI investment landscape is shifting from infrastructure to monetizable AI applications, favoring companies that successfully integrate AI into their business models.
  • Traditional Industries Embrace AI at Scale: Energy, finance, and open-source AI development are driving innovation, with companies outside Big Tech leveraging AI for efficiency and competitive advantages.

Quote of the Week:

“By next year, AI could be smarter than all humans.”
— Dario Amodei, CEO of Anthropic

Top 5: AI in the Headlines

1. PYMNTS: VC Fundraising Jumps as Investors Bet on ‘Transformative’ AI

  • Why It Matters: Venture capital investment in AI startups has surged to its highest level since 2021. While the overall funding landscape looks strong, capital is increasingly flowing to a small number of dominant AI firms such as OpenAI, Safe Superintelligence, and Anduril. This shift suggests that AI investors should focus on established AI leaders rather than spreading bets across many startups. However, smaller AI firms may still provide selective opportunities.
  • Key Quote: “AI is a transformative force that makes these companies better.”

2. Investor’s Business Daily: Goldman Sachs: How the Next Chapter In AI Stocks Will Unfold

  • Why It Matters: Goldman Sachs analysts note a shift in AI investment from semiconductors and data centers to software companies monetizing AI applications. Companies like Palantir, Cloudflare, and SentinelOne are emerging as key AI-driven players. The first wave of AI investments (chips, cloud infrastructure) is maturing. The next wave will be software-driven, favoring companies that successfully integrate AI into business models.
  • Key Quote: “We continue to believe that the AI trade will broaden and that stocks with AI-enabled revenues offer better risk/reward for new capital than stocks involved in AI infrastructure.”
  • Stock Exposure: VistaShares Artificial Intelligence Supercycle ETF (AIS) holds Nutanix (NTNX), an AI-powered cloud computing firm benefiting from this shift.

3. Reuters: China Says It Will Increase Support for AI, Science, and Tech Innovation

  • Why It Matters: China’s push for AI self-sufficiency underscores its ambition to compete in the global AI race. Increased government backing for AI startups and AI-driven industries could accelerate AI adoption across multiple sectors, while intensifying competition with U.S. firms.
  • Key Quote: “China will strive to create an enabling environment for innovation that encourages exploration and tolerates failure.”

4. The Wall Street Journal: Mistral AI Bets on Open-Source Development to Overtake DeepSeek, CEO Says

  • Why It Matters: French startup Mistral AI is leveraging open-source development to compete with established AI giants like DeepSeek. This approach could democratize AI advancements, enabling startups and enterprises to build custom AI solutions without massive financial outlays.
  • Key Quote: “By building in the open, we can create powerful AI tools without the need for enormous budgets.”

5. Financial Times: Saudi Aramco Chief Says DeepSeek AI Makes ‘Big Difference’ to Operations

  • Why It Matters: Saudi Aramco’s integration of DeepSeek’s AI technology has significantly enhanced operational efficiency and resource optimization. This collaboration exemplifies how AI can revolutionize traditional industries, leading to improved performance and cost savings.
  • Key Quote: “The integration of DeepSeek’s technology has made a significant impact on our resource optimization.”

​Chart of the Week: AI Funding

Closing Insights

AI investment is shifting beyond semiconductors, with software and real-world applications driving the next phase of growth. At the same time, industries like energy and finance are rapidly adopting AI to improve efficiency and decision-making. The concentration of AI venture capital into a few dominant players underscores the
importance of identifying companies with the scale and strategy to execute successfully. As AI continues to evolve, investors will need to look beyond the most obvious names to capture the full value of this transformation.

At VistaShares, we focus on capturing the entire AI supply chain—not just the obvious winners. The VistaShares Artificial Intelligence Supercycle ETF (AIS) is designed to provide exposure to the companies driving AI infrastructure, computing power, and connectivity. As AI investment themes evolve, we remain committed to identifying opportunities beyond the headlines, ensuring that investors are positioned for AI’s long-term supercycle.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (844) 875-2288. Read the prospectus or summary prospectus carefully before investing.  
  
Investing involves risk, including possible loss of principal.  

For the VistaShares Artificial Intelligence Supercycle ETF (AIS) top holdings & fund details, please visit: https://www.vistashares.com/etf/ais/#holding

Artificial Intelligence Risk. Issuers engaged in artificial intelligence typically have high research and capital expenditures and, as a result, their profitability can vary widely, if they are profitable at all. The space in which they are engaged is highly competitive and issuers’ products and services may become obsolete very quickly. These companies
are heavily dependent on intellectual property rights and may be adversely affected by loss or impairment of those rights.

Equity Market Risk. Common stocks are generally exposed to greater risk than other types of securities, such as preferred stock and debt obligations, because common stockholders generally have inferior rights to receive payment from specific issuers.

Technology Sector Risks. The Fund will invest substantially in companies in the technology sector, and therefore the performance of the Fund could be negatively impacted by events affecting this sector. Market or economic factors impacting technology companies and companies that rely heavily on technological advances could have a significant effect on the value of the Fund’s investments.

Foreign Securities Risk. Investments in securities or other instruments of non-U.S. issuers involve certain risks not involved in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies.

Index Strategy Risk. The Fund’s strategy is linked to an Index maintained by the Index Provider that exercises complete control over the Index.

New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have an extensive track record or history on which to base their investment decisions.

Foreside Fund Services, LLC, distributor.