The semiconductor sector is rallying Wednesday, following Advanced Micro Devices' (AMD) second quarter earnings beat driven by the success of its AI-related sales. TCW senior portfolio manager Eli Horton joins Wealth! to discuss where he believes investors should look to capitalize on the AI trend.

Horton emphasizes that "the literal foundation" of AI is the power and electric grid. He notes that companies are investing billions in their AI initiatives because "this is mission-critical to their businesses." This investment, he explains, flows into chips, servers and networking, and data centers — all of which require substantial power consumption. Horton describes this as "an indirect way to invest in this theme."

However, he cautions that many investors may not be exposed to the true "winners" of the AI trade. "The winners of these themes are old economy industrial-type businesses," Horton tells Yahoo Finance, highlighting companies within electrical equipment and power generation sectors.

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This post was written by Angel Smith