What Unhappy Golfers Reveal About the AI 'Gold Rush'

In 2024, five golfers sued the city of Los Angeles...

The problem had started around 2020. No one could book tee times online at any municipal courses. Reservation sheets filled up in seconds.

It was frustrating – and suspicious.

Investigators soon learned that third-party brokers had created bots to snap up coveted tee times the moment they became available. The brokers then resold the slots at steep rates via obscure messaging systems.

Finally, to sidestep the bots, the city required golfers to pay a deposit to book times. And it banned automated booking tools.

Artificial-intelligence ("AI") tools like these can disrupt business as usual... But early adopters can also harness huge advantages. And while you might not shed a tear for the plight of L.A. golfers, this story gives us a peek at where AI is headed next.

Enter "agentic AI"...

It's the next wave of the AI gold rush. And, as I'll explain, the real investment opportunity lies in its infrastructure – not the flashy apps.

The Rise of Agentic AI

The L.A. golf scandal represents a shift in AI that's ramping up across industries.

The technology has moved beyond pattern recognition (predictive AI) and content creation (generative AI). We're now developing "agentic" AI – autonomous systems that make "decisions" and take actions. These agents can then adjust their actions based on the results to achieve goals.

The implications here go far beyond golf...

Goldman Sachs (GS) estimates that agentic AI could automate tasks equivalent to 300 million full-time jobs.

Meanwhile, Nvidia's (NVDA) CEO Jensen Huang projects there will be 10 billion digital AI agents in the coming years.

Morgan Stanley (MS) goes a step further, predicting that nearly 63 million U.S. workers could be replaced by "humanoids" – human-like robots with AI-powered brains – by 2050.

Some of these promises might sound far-fetched. But even partial success will make big waves – and disrupt industries.

To understand where we are in the agentic AI revolution right now, we need to consider...

The Four Waves of AI Adoption

This breakdown highlights the time frames and milestones. Keep in mind that each wave builds upon the previous one...

1. Wave 1 (2017 to 2023): Foundation Models – Research labs developed large language models.
2. Wave 2 (2022 to 2025): Consumer Applications – Chatbots, image generators, and consumer-facing apps entered the scene.
3. Wave 3 (2024 to 2027): Enterprise Integration – Companies have begun integrating AI into their workflows.
4. Wave 4 (2025 to 2030): Autonomous Agents – Fully agentic AI systems will operate with minimal human supervision.

Most investors are fixated on waves 1 and 2 because they're familiar and visible. They include the eye-catching apps that appeal to everyday people. Wave 3 is in full swing, but less visible to the typical consumer.

But the real wealth creation happens in Wave 4. That's when the AI infrastructure takes shape and drives true transformation.

Here's what that means... and why investors who wait for this wave to pass may miss the biggest gains in the market.

The Critical Infrastructure Layer

The real winners in agentic AI are likely to be the companies that build its infrastructure.

These are the "picks and shovels" companies that will support this technological gold rush. The direct plays in AI will battle for dominance, with a lot of volatility along the way... But whoever wins, we'll see big profits in the businesses that made it all possible.

These supporting companies are working on things like advanced computing (the hardware and cloud services that power AI models) and data infrastructure (the systems that store and process massive datasets).

Agentic AI also requires a strong network infrastructure. That's the "connectivity fabric" that helps AI agents operate in real time. And it demands security infrastructure – the protective layers that secure AI systems.

Developer ecosystems are also a critical part of the equation. These include the platforms and tools needed to build and deploy AI agents.

OpenAI, for example, recently paid $3 billion to buy Windsurf, a developer coding environment.

Meanwhile, Anysphere, maker of another development tool called Cursor, was valued at $9 billion last month. It's experiencing one of the fastest growth rates of any software company ever.

And it's not just private companies that are building the next generation of developer tools. Mega-players like Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) are all focused on empowering developer ecosystems. They all know that when you capture the developers, you capture the future.

If autonomous bots can upend public golf in L.A., imagine the impact they can have on trillion-dollar industries.

That's why the smart money isn't chasing the next flashy AI app. It's betting on the infrastructure that powers them all.

The only question is... will you ride the wave – or let it pass you by?

Good investing,

Josh Baylin