Invest in AI, Avoid the Bubble - Ep. 2/4
AI-Powered Products & Services
The content of this analysis is for entertainment and informational purposes only and should not be considered financial or investment advice. Please conduct your own thorough research and due diligence before making any investment decisions and consult with a professional if needed.
In this second episode of the series Invest in AI, Avoid the Bubble, I’m exploring what I believe is the most interesting category: AI-Powered Products & Services. The reason? These businesses benefit from AI progress and investment, but face no backlash when AI CapEx slows down. Unless the scenario is catastrophic—like a sudden investment cutoff that drags down the entire economy—they could even benefit from a rebalance of supply and demand, as inference compute costs drop.
These are the everyday tools that use AI to handle jobs humans used to do. Think getting insurance quotes in seconds (like Lemonade’s app that skips the long calls) or designing, manufacturing, and selling superior products that are more science- and data-based and increasingly tailored to individual consumers.
The secret sauce for creating such a business is having a unique, significant dataset at your disposal and/or (better yet, both) an AI-first organization. This means that once you reach a minimum headcount level, you can scale revenue without adding human resources.
In 2026, these organizations are extremely rare, but I expect more will emerge from now on.
Below is a list of companies I’ve identified, researched deeply, and own for the long term. I believe all of these will be multibaggers from here (some already are for me).
My picks in the category
Lemonade ($LMND)
Reinventing the insurance sector. Lemonade is redefining insurance by operating as an autonomous organization. Unlike incumbents that rely on brokers and agents, Lemonade uses a direct-to-consumer model. While this limits distribution in the short term, it allows them to collect orders of magnitude more data than the standard playbook. Since insurance is a statistical game—where you optimize top and bottom lines based on available data—Lemonade is poised to achieve superior results for years to come. Hardly anyone will catch up soon. To complete the data moat, Lemonade’s visionary leaders have built an autonomous organization where AI agents handle the work (onboarding new customers, paying claims, etc.), meaning they’re scaling revenue while headcount remains flat.
I expect these two characteristics will make Lemonade compound for the foreseeable future. Lemonade is already a multibagger for me (about 5x).
Check https://www.lorenzo2cents.com/p/lemonade-articles to know more and subscribe to Lorenzo2cents (L2C) Premium to access the details of the allocation, my strategies, and much more.
Oddity Tech ($ODD)
Revolutionizing the beauty industry. Oddity Tech designs and sells beauty products, such as foundations, directly to consumers. Unlike incumbents that rely on the classic brick-and-mortar model, Oddity operates a direct-to-consumer model. While this limits distribution in the short term, it allows them to collect orders of magnitude more data than the standard playbook. Thanks to this data moat and its AI engine, Oddity recommends the best product for each individual—like the perfect foundation for your skin tone—and develops new molecules to better address individual needs.
I expect these characteristics will make Oddity compound for the foreseeable future.
Check https://www.lorenzo2cents.com/p/oddity-tech-articles to know more and subscribe to Lorenzo2cents (L2C) Premium to access the details of my allocation, strategies and much more.
Duolingo ($DUOL)
Transforming education by making learning both fun and effective. Duolingo owns and operates a platform primarily for teaching languages through its app, and is slowly expanding to teach other topics—aiming to become the go-to place to learn anything. Duolingo is already the undisputed leader in this industry, and given its top-class leadership and data moat—millions of people using the app daily—I believe this gap will only widen. On top of that, Generative AI has increased by orders of magnitude the speed at which they can create new content for courses, making their data moat even stronger. Duolingo, like Lemonade, has a big advantage in this race: it doesn’t need to move atoms to deliver its services, meaning they will likely become an autonomous organization where the top line grows while headcount remains stable.
I expect these characteristics will make Duolingo compound for the foreseeable future. Check https://www.lorenzo2cents.com/p/duolingo-articles to know more and subscribe to Lorenzo2cents (L2C) Premium to access the details of my allocation, strategies, and much more.
Hims and Hers ($HIMS)
Redefining healthcare by making it accessible and affordable. Hims owns and operates one of the largest telehealth platforms and aims to transform it into a longevity service delivering the highest value per dollar for individuals. Unlike big pharma—where collecting consumer feedback and tailoring medicines to individuals is an afterthought—Hims’s philosophy centers on personalization. With 2.5 million subscribers, Hims has built a clear data moat. They’re now developing an AI engine to leverage this data, positioning them to become the undisputed leader in healthcare. As a bonus, they’re investing heavily in verticalizing their business, allowing them to compound their own products, achieve cost leadership, and conduct research for better healthcare.
I expect these characteristics will make Hims compound for the foreseeable future. Check https://www.lorenzo2cents.com/p/hims-and-hers-articles to know more and subscribe to Lorenzo2cents (L2C) Premium to access the details of my allocation, strategies, and much more.
Tesla ($TSLA)
The ultimate leader in transportation autonomy, sustainable energy, and humanoid robotics. There’s not much to say here—either you see it or you don’t. Tesla enables moving atoms with no people involved. Whether you’re thinking about autonomous cars or humanoid robots, Tesla provides the technology for paradigms that will completely change the world in a few years. But it doesn’t end there. Beyond providing technologies to make the world autonomous, Tesla is poised to become an autonomous organization itself—specifically, the first autonomous manufacturing organization. This stems from two drivers: first, Tesla will be the first to implement Optimus in its factories; second, Elon’s mastery of optimization (his early days at Twitter and DOGE tell you anything?). Tesla will scale cars, batteries, solar panels, and robots without increasing headcount beyond a certain point. And by the way, that will mark the beginning of the age of abundance. A new world.
I expect these characteristics will make Tesla compound for the foreseeable future. To know more and subscribe to Lorenzo2cents (L2C) Premium to access the details of my allocation, strategies, and much more.
META ($META)
Unlocking AI’s future with an unparalleled dataset. Meta is the world’s largest social network by users, giving it the biggest people dataset on the planet. Meta also leads in large language models and has one of the largest AI compute infrastructures available. Combined with founder-led leadership—CEO Mark Zuckerberg has proven himself among the best at keeping his company competitive—I believe Meta will be one of AI’s greatest beneficiaries. I’m not sure exactly how yet, but they’ll either provide the best AI companion to billions of people or create the next consumer ecosystem by overtaking Apple with their smart glasses. Either way, I believe they’ll make it happen.
I expect these characteristics will make META compound for the foreseeable future. To know more and subscribe to Lorenzo2cents (L2C) Premium to access the details of my allocation, strategies, and much more.
What to expect
This is the revenue trend I expect from this category of businesses, alongside the AI Capital Expenditure trend.
Like the graphs and my analysis? Check out my “Tools I Trust & Use” page to see what I use—and grab ‘em via my links to support my work!
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Next Episode
In the next Episode of the series “Invest in AI, Avoid the Bubble”, I’ll be digging into the “AI infrastructure” category, the one from which I will likely get most of the boost in the short term. Stay Tuned (It will be out in about a week).
Lorenzo2cents Portfolio strategy for 2026
The current L2C Portfolio allocation to this category aligns well with the optimal allocation indicated by the “Allocation_Optimizer” Tool, even though not exactly the same.
If you’re unfamiliar with this, please review https://www.lorenzo2cents.com/p/l2c-lesson-2-mastering-portfolio.
