Boring Giants, AI Margins
Jasonyeah@jasonyeah0503
+3.9%
since Sep 30
The idea
I believe the real AI winners aren't the companies selling the tools, but the big, profitable incumbents quietly using them to cut costs, insurers, retailers, railroads, banks, and health plans trimming labor and paperwork while the market still prices them as sleepy stalwarts. The basket spans 17 established companies across five industries, weighted toward those with the most to automate, with a small cash reserve since there's no near-term catalyst. This is a slow grind meant to play out over five-plus years, not a trade on any single name.
What it owns
- Railroads, farms, mines and drillers are automating some of the most expensive labor in the economy. · Deere & CoIt sells farmers autonomous and precision equipment to replace expensive field labor with machines farmers can buy off the lot., Union PacificIt runs trains with fewer crew hours using software, improving its operating ratio by moving the same freight for less money., CaterpillarIt sells driverless mining trucks that replace some of the most expensive labor on earth, drivers in remote pits., Waste ManagementIts trucks, routes and sorting lines are all automatable, cutting labor cost per pickup as automated sorting and routing spread., United Parcel ServiceIt runs one of the biggest labor bills in America, and AI routing means fewer miles and fewer hours per package., Exxon MobilIt uses AI to pick where and how to drill, cutting the cost of every barrel so it stays profitable even when oil is cheap.30%
- Insurers and banks run on paperwork and risk decisions, exactly the work AI does cheaply. · JPMorgan ChaseIt spends more on AI than any other bank to cut the people doing paperwork and fraud review, turning processing cost savings into profit growth., ProgressiveIt prices insurance with data instead of gut feel, the boring incumbent way to use AI and win on margins., TravelersIt handles claims with software instead of adjusters and paperwork, turning processing savings into lower costs per policy., Bank of AmericaIts thousands of branches and call centers are expensive labor that AI can shrink, cutting its cost-to-income ratio.24%
- Giant store and restaurant chains turn small AI savings on supply chains and staffing into big profit gains. · WalmartAt its scale, even small logistics cost cuts from AI-powered supply chains become big profit jumps., McDonald'sIt automates ordering and kitchens to improve store margins, the labor-heavy food business cutting costs without losing traffic., Yum BrandsIt pushes one tech stack across tens of thousands of franchised restaurants, so every automation win multiplies across the system.15%
- Fraud checks, payroll and call centers are already being handled by software instead of people. · VisaIt catches fraud with software instead of people, and at its scale every improvement drops straight to profit while payment volume grows., Automatic Data ProcessingIt wins twice, automating its own payroll and HR back office while selling automation to everyone else's, expanding margins., VerizonIt runs enormous call centers and field service teams, costs AI can cut without customers noticing or churn rising.14%
- Health insurance and pharmacy operations drown in claims and admin work that AI can process. · UnitedHealth GroupIt processes a staggering volume of claims by hand, the paperwork AI eats first, shrinking operating costs as a share of premiums., CVS HealthIt is a thin-margin business drowning in pharmacy and insurance admin, so automation on these costs moves the profit needle fast.9%
- Cash8%