During America’s gold rush in the late 1800s, San Francisco boasted more millionaires than New York and Boston combined. However, while gold prospectors would make up to three dollars on a good day, Levi Strauss amassed the equivalent of $200 million today by avoiding the fray, and simply supplying goods such as picks, shovels, and dynamite to the miners.
The current AI frenzy is vastly different from the gold rush, but in some ways it feels the same: seeking fast-growth, the reality that many AI startups will fail, and, increasingly, profitable roles with far less risk. Growing numbers of smart investors are looking towards other sectors growing exponentially, and placing their investments into supporting infrastructures that may not be as shiny, but just as valuable.
The Search For Reliable Returns
AI’s bull run is perhaps the biggest long-term story in the global economy, with projections suggesting the sector will grow from $376 billion today to an eye-watering $2.48 trillion by 2034.
Yet it’s difficult to predict which AI companies will succeed, which are overvalued, and whether any company – AI-native or not – can carve out a lucrative space while forming a meaningful moat. Looking towards sectors that quietly support the boom without being in the center of the bubble seems to be the answer to reliable returns. For example energy: U.S. infrastructure alone will require a 33T supercycle.
Meanwhile, other industries, perhaps not strictly adjacent to AI but certainly connected, remain undervalued and overlooked. The cross-border payments category serves as perhaps the ultimate example of a smart “connected” infrastructure investment in the AI era.
Fueled by AI, fueling AI growth
Cross-border payment infrastructure is well positioned to benefit from AI-fuelled growth. These have long been discovered by established sectors such as retail, streaming services, and even AI businesses, which they support commercially. But also, due to their own nature, they also happen to be shielded from the boom and bust cycles.
According to Stripe, 22.9% of companies earn most of their revenue outside their home country, double the number from five years ago. The top 100 AI startups sell to a median of 55 markets within their first year. As AI companies expand globally, they need platforms that can localise payments and capture business across high-growth emerging markets, driving new demand for cross-border services.
While companies such as Anthropic have largely captured an enterprise audience, around 60% of OpenAI’s revenue is generated by global consumers who must find a way to pay for premium subscriptions. Payments support AI companies commercially as enablers from a customer/commercial point of view, while, as a recipient, they get augmented.
But the opportunity goes further: unlike many industries, cross-border payment infrastructure has so far been largely immune to AI disruption. Clients of cross-border payments organizations are the biggest brands in the world for a reason: they require compliant payment infrastructure, local expertise, complex licensing processes, and technologies across a large number of territories, if they are to fulfill their growth ambitions.
It’s no wonder AI has its eyes set on worldwide expansion. And the Global South is not an exception. Emerging markets are growing exponentially, with a population doubling to over 670 million households by 2035, while in four years, Gen Z is expected to be the first generation in which the epicenter of consumer spending is no longer in the Global West.
But this is precisely where complexity becomes acute. There are a multitude of diverse payment methods across these regions, and most are not available in mature markets. It takes an incredible amount of expertise to work with regulators and maneuver stringent local regulatory laws, licensing requirements, and AML rules that vary by region and by country. Capitalizing on the opportunity requires navigating and orchestrating varying payment rails that look nothing like what global merchants are used to in their traditional markets. That just can’t be replaced or disrupted by AI.
Levi Strauss didn’t need to know which one of his prospects would strike gold that day; he just needed to understand their processes enough to know what they would need to pursue their endeavors. While Anthropic, OpenAI, Meta, and Google battle it out in the AI race, many investors are patiently watching and focusing on the infrastructure needed to run it – and to profit from it.
Cross-country transfers during the gold rush were highly in demand in the 1800s, but one that was largely ignored. Wells Fargo got its start amidst the frey, providing quick transportation and delivery, as well as working as a bank to purchase gold dust, sell paper bank drafts and provide loans. Currently, it is the third-largest bank in the U.S. Today’s global economy is no different, with businesses of all types seeking to provide goods and send money to all corners of the world.
While AI is on everyone’s minds and creating a frenzy, many investors are looking at assets that are pivotal for global growth, including the payments layer holding the infrastructure of AI pay-ins and payouts together. While the loud ones ask for attention, the quiet ones move steadily ahead.
