The Three Levels of AI (And Why You’re Only Seeing One)

BY ANDREW GIOVINAZZI

June 17th, 2025

Hey there, Andrew here. 

 

So what I wanna do here is kind of go through what I call the three levels of AI.

 

Right now we basically — and you can agree or disagree with me on this — but I think we’ve created sort of level one, right?

 

Where the market bid up stocks that were gonna benefit and build out AI infrastructure. Kind of like in the 1800s we built railway tracks and railroads and steam engines.

 

Now when they did that, did anybody really see the growth that was gonna happen as towns sprung up along the railway lines? It was kind of like the internet again in the 1990s, right? Social media came a decade later.

 

So right now, I think Microsoft, Amazon, Meta, Google, NVIDIA — these are really the big ones. I’m not putting Apple in here because I don’t think Apple has really had a good AI strategy up till now.

 

But all of these are near all-time highs. And I’m not saying they can’t grow, but they’re pretty big, right? How do they grow from here?

 

It doesn’t mean these aren’t great companies, but what I want for myself and students is: where is the next level of growth coming from?

 

Level Two: Energy Gets Real

 

Now the second part here — and this is a theme — all of these companies have contracted for energy. This is the next leg for AI infrastructure.

 

One ChatGPT query takes like a light bulb’s worth of energy. And it’s very, very energy intensive. That is not gonna go away. It’s only going to get bigger.

 

SMR is a stock Frank and I talk about a lot. Again, some of these are very speculative, okay? 

 

This is a stock to trade. I’m currently out of my shares ’cause I got taken out when the stock went crazy. I wrote calls against it thinking no way it gets there. Stock’s up like a hundred percent in a month.

 

But it’s my belief that the only way to service these data centers is nuclear energy close to where they consume power.

 

Here’s the thing — in the eighties, remember AT&T? One phone company. They split it up into seven little phone companies. Everybody thought they were utilities. What happened? Cell phones, internet, the whole nature of telephones changed forever.

 

Nuclear companies trade like utilities today. But they’re going to have to provide much more energy than before.

 

Level Three: Where Smart Money Goes

 

Three areas that are emerging right now:

 

Anything live — AI can’t replace being there. Football games, basketball games. Live entertainment is only gonna become more valuable.

 

Any network with data becomes incredibly valuable for AI training.

 

And energy production of all types. I think the market is underestimating the need for energy.

The Institutional Tell

 

Want to know something? On December 31st, 2024, SMR had about 1,000 contracts of volume on Jan 2026 options. SMR was trading around 18 bucks.

 

Now SMR is at 44 bucks, and we’ve got four to five times that volume. If institutions didn’t care, they wouldn’t be buying this stuff.

 

We’re halfway through the year. If you’re buying Jan 2026 options as an institution, you are sitting on these for a rally in the second half of the year.

 

That’s the opportunity.

 

What This All Means

 

The first half of the year was nuts. But what are institutions buying for the second half? That’s why Jan 2026 matters — those options will do the best for the second half.

 

This reminds me of the internet in 1995, 1996. How do you figure out which companies are gonna win? Right now with AI, these are already companies bringing in money, with networks, with customers. How is AI gonna improve what they already have?

 

Look, I’m excited about this. Hannah and I are gonna break all this down tonight at 7:00 PM ET. 

 

We’ll show you the specific option fingerprints I’m tracking, which sectors are getting institutional accumulation, and how to position for this second half rally.

 

This is probably one of the better opportunities I’ve seen. Come by tonight, say hi. Event’s free, and we’ll lay out the whole case.

 

Click here to RSVP

 

See you tonight!

 

-Andrew Giovinazzi

Andrew Giovinazzi

30-Year Trading Pro

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Andrew Giovinazzi

Andrew Giovinazzi

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About the Author

Andrew Giovinazzi

Andrew Giovinazzi

Former CBOE floor trader and CIO at Karman Line Capital. Author of ‘The Option Traders Hedge Fund’ with over 30 years of options trading experience.

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