Comebacks in the tech industry are rare, but Intel is in the middle of an all-time turnaround: The chipmaker's stock is up 110% for the year, and it reached a new all-time high Friday, 25 years after hitting the last one.

Why it matters: The AI transition is creating clear winners and losers in the tech industry, and right now, pick-and-shovel hardware companies are slaying, while software and services firms are suffering.

The big picture: Tech is again performing capitalism's fave move: "creative destruction," in which innovation creates new industries and businesses and at the same time destroys, or at least destabilizes, jobs and companies.

• The PC industry did it to mainframe computers. Then the mobile industry did it to PCs.
• Now, AI is putting everyone through their paces.
• The information technology sector is undergoing "creative destruction on speed" — the title of a note out Saturday from Yardeni Research.

Zoom in: The S&P 500's information technology sector is up 8% year to date, Yardeni notes. But inside the sector there's a remarkable divergence between hardware and software.

By the numbers: The companies that build AI stuff are doing great, while the companies that can be replaced by AI are struggling.

Zoom out: We're probably in the middle of this pick-and-shovel era. It started with Nvidia's explosive rise a few years ago — there was an AI training boom, and everyone needed the company's GPU technology to build AI models.

• That broadened out last year to memory chipmakers.
• Power companies and data storage firms also boomed.
• CPU chips, of the sort Intel makes, are entering the chat — where GPUs built the AI models, now the CPUs are needed to do the day-to-day work.

What they're saying: "In recent months, we have seen clear signs that the CPU is reinserting itself as the indispensable foundation of the AI era," Intel CEO Lip-Bu Tan said in the company's investor call Friday.

Reality check: Early winners in tech transformations sometimes wind up losing.

• In the transition to the internet era, telecom companies were the "picks-and-shovels," as Wall Street Journal columnist James Mackintosh wrote yesterday. Hopes were high for these businesses, but their success didn't last.
• "There's no guarantee that today's leaders will ultimately come out on top."

Yes, but: Other companies have successfully made it through these kinds of transitions — Microsoft lost its way for a while after the PC's dominance faded, but found new strength in cloud computing, for example.

• Apple, of course, was a PC company that created the mobile era.

The bottom line: "That's the way creative destruction works," Ed Yardeni tells Axios via email. "You are either creative or you get destroyed."

Nvidia's market cap climbed by $1 trillion in just the last four weeks.

Why it matters: That's particularly astonishing, given that it took the company 24 years to first hit a $1 trillion market cap.

Zoom in: The stock jumped Friday on the back of Intel's gains.

• With Friday's gain, Nvidia is now valued at more than $5 trillion.

Zoom out: Semiconductor stocks are driving a market rally at the moment.

• Investors apparently believe the AI boom outweighs Iran war fallout.

IT budgets are getting blown out as some companies increasingly spend more on AI than on employees' salaries.

Why it matters: Maybe human labor will be more cost efficient after all.

What they're saying: "For my team, the cost of compute is far beyond the costs of the employees," Bryan Catanzaro, vice president of applied deep learning at Nvidia, tells Axios.

• Uber's chief technology officer already blew through his full 2026 AI budget due to token costs, according to The Information.
• Amos Bar-Joseph, CEO of Swan AI, bragged about his Anthropic bill in a viral LinkedIn post, saying, "We're building the first autonomous business - scaling with intelligence, not headcount."

Zoom out: Worldwide IT spending is expected to reach $6.31 trillion in 2026, up 13.5% from 2025, according to Gartner.

• That increase is being driven by "sustained momentum" across AI infrastructure, software and cloud services, which includes everything from the AI buildout to the cost of AI subscriptions.

Yes, but: Even companies with the biggest IT budgets will need to prove returns on AI spending over time, especially if they're answering to shareholders on quarterly earnings calls.

• That could look like proof of productivity gains or metrics that show a clear return for all this AI investment.
• "The tone is shifting a bit more into what is the true value of a worker ... human or digital?" said Brad Owens, vice president of digital labor strategy at Asymbl, which focuses on workforce orchestration.

What we're watching: How rising costs impact enterprise spending at the major AI labs.

The bottom line: When AI labs raise prices, big spending on AI could shift from a flex to a liability.

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