Chinese tariffs are a go.

This morning, a 10% levy on Chinese goods took effect.

China is already hitting back. A 15% tariff on U.S. coal and liquefied natural gas will begin on February 10. Meanwhile, a 10% levy will be put on American crude oil, farm equipment, and select autos.

These moves appear to be mostly symbolic and strategic.

For example, part of China’s response included news of an investigation into Alphabet over alleged antitrust rules. However, Alphabet pulled Google’s search engine services to China back in 2010. So, this isn’t exactly an economic A-bomb. The moves appear more intended to give China some poker chips for leverage at the negotiation table.

That doesn’t mean the situation won’t devolve into something far worse, but for now, this is a relatively tame reaction.

We’ll keep you updated.

It’s a key variable on Trump’s economic chessboard. The President wants and needs lower energy prices, but that’s going to be a hard sell to the groups on the other end of the negotiating table.

President Trump campaigned on the slogan “drill, baby, drill.” More U.S. oil at lower prices is critical for Trump’s vision for a few reasons:

One, more U.S.-sourced energy will have a downward effect on prices at the pump. History shows that this is a big issue for voters, improving sentiment toward the economy.

Two, lower energy prices would ease price pressures on all sorts of goods. As we’ve detailed in previous Digests, fossil fuels are a key ingredient in countless consumer items that most people don’t realize (cameras, coffee makers, golf balls, lipstick, and sunglasses, to name a few). This makes more production inherently deflationary, helping stave off the inflation that so many economists predict will result from Trump’s policies.

Three, related to deflation, lower energy prices would support additional interest rate cuts from the Fed. Trump wants to juice the economy – lower rates play a big role in how he hopes to achieve that.

Bottom line: More U.S. drilling to increase supply and lower prices plays a huge role in Trump’s economic vision.

The U.S. energy complex isn’t in the same place it was years ago when advancements in shale technology spurred an explosion of drilling.

Here’s The Wall Street Journal:

Wildcatters are mostly gone, replaced by more disciplined oil giants.

Wall Street has helped instill that discipline, pushing oil companies to focus more on producing cash for investors.

Meanwhile, production in most U.S. crude regions is set to decline as fields mature and sweet spots dwindle.

What this means: The oil patch is unlikely to see the kind of breakneck growth it saw in Trump’s first term, when daily crude production shot up from about nine million barrels to roughly 13 million.

“We’re not going to have the explosive growth that we’ve seen,” Richard Dealy, who oversees Exxon Mobil’s Permian operations, said.

At least in the short term, a glut of new supply is going to be tough to come by.

Now, longer-term, Trump’s plans to scrap environmental regulations should promote new capital flowing into the sector; and that should increase output, putting downward pressure on prices. But energy executives will be cautious about cannonballing into new, expensive projects this time around. And so, to alleviate prices in the short-term, where can Trump look?

The Middle East.

From the WSJ:

[Trump’s advisers] say his best lever to bring down prices might be to persuade the Organization of the Petroleum Exporting Countries and Saudi Arabia, the group’s de facto leader, to add more barrels to the market.

But Saudi Arabia has told former U.S. officials that it also is unwilling to augment global oil supplies, say people familiar with the matter. Some of those former officials have shared the message with Trump’s team.

Oil trades at $73 per barrel as I write, not $94 a barrel like a few years ago. This has already eaten away at Saudi Arabia’s profit margins. Why would they support lower prices other than trying to gain more market share?

Of course, Trump doesn’t want them gaining greater share. He wants that going to the U.S. energy complex. So, the incentive structure doesn’t lend itself to complete Saudi cooperation.

Put all this together and it’s unlikely that “drill, baby, drill,” or Trump’s OPEC lobbying will result in significantly lower oil prices anytime soon.

Stocks in the energy sector have significantly lower valuations than most other corners of the market. Many of the top-tier companies pay healthy dividends. And yet, eventually, we believe that Trump will succeed in enticing Big Oil to ramp up output, which will be necessary to support AI growth (in previous Digests, we’ve covered how DeepSeek’s lower-cost AI technology is likely to result in more demand for energy, not less, thanks to Jevons Paradox).

I’ll add that legendary investor Louis Navellier just recommended a blue-chip oilfield services company to his Growth Investor subscribers.

Oilfield services providers are in a good position today. They don’t need higher energy price to boost their bottom lines; rather, they just need more companies operating in the oil patch, requiring the goods/services provided by these oilfield services leaders.

As always, Louis isn’t investing based on what he hopes will happen (in this case, Trump’s policies resulting in a wave of new drilling). He’s looking to fundamental strength to drive his recommendation. And that’s what this new recommendation has.

From Louis:

Total fourth-quarter revenue rose 8% year-over-year to $7.36 billion.

Fourth-quarter adjusted earnings jumped 37% year-over-year to $0.70 per share, up from $0.51 per share in the same quarter a year ago. Analysts expected adjusted earnings of $0.63 per share…

And over the past five years, [this company] has increased its dividend by more than 16%.

You can learn more as a Growth Investor subscriber by clicking here.

Bottom line: Keep your eye on the oil patch. It plays a big role in Trump’s overall plan.

One of the most unexpected stories of the last two years has been the resilience of the U.S. consumer.

Despite many metrics pointing toward a sharp decline in the economic health of the average American, a much-predicted consumer-based recession never materialized. Instead, shoppers continued opening their wallets.

Now, this doesn’t mean that consumers have been unaffected. We’ve seen a shift in how they’re spending. Here’s ÃÛÌÒ´«Ã½Watch on that note:

Surveys continue to show that middle-income Americans are not feeling the benefits of a growing economy as they struggle with high prices for basic necessities like housing, transportation, healthcare, and child care…

With consumer prices up 2.9% year on year in December — and new tariffs from the Trump administration widely to expected increase prices in the near future — middle-income households are feeling financially stressed and negative about their financial outlook, and many are cutting spending for 2025…

Remember, the U.S. consumer is the primary workhorse of our economy, accounting for nearly 70% of our GDP. So, tracking what they’re spending money on – and how they’re spending money – can inform our investing decisions.

This begs a question…

Where do many “financially stressed” Americans prefer to shop?

Congrats if you guessed Walmart.

Given this preference, it shouldn’t surprise you that the retail giant just notched a new 52-week high yesterday as the broad market sold off in the wake of tariff fears. And as I write Tuesday, it’s on pace for a fresh all-time high.

(Full disclosure: I own Walmart in my personal account.)

But not every company that targets financially strained Americans is a buy right now.

Take Dollar General (DG). Its chart is going the opposite way as Walmart’s.

Why?

Like Walmart, Dollar General serves budget-conscious consumers, but there are some key differences in their strategies. And one of the biggest is Walmart’s successful implementation of AI.

Let’s rewind to this past summer.

On Walmart’s post-earnings call, CEO Doug McMillon said that the company was finding “tangible ways” to leverage generative AI to improve customer, member, and employee experiences.

From McMillon:

Without the use of generative AI, this work would have required nearly 100 times the current head count to complete in the same amount of time and for associates picking online orders, showing them high-quality images of product packages helps them quickly find what they’re looking for.

While Dollar General has made efforts to implement AI, the company is miles behind Walmart when it comes to applying AI to supply chain and logistics, checkout automation, personalized shopping ads, employee management, and drone and delivery robotics to name a few.

Bottom line: The effective use of AI is helping drive an enormous difference in fundamental performance between these two companies. And this underscores a point that our technology expert, Luke Lango is stressing today…

In the first phase of AI – the “buildout” phase – companies spent billions upon billions of dollars to create new AI datacenters, buy new AI chips, build new AI fabrication plants (fabs), and more.

The AI Builder stocks – or the companies building those data centers, selling those chips, running those fabs, etc. – were the big winners. This is still happening to some degree.

But phase two is the application phase – or the AI Applier Boom. This is when companies spend billions upon billions of dollars to develop new AI applications on top of the new AI infrastructure. In this phase, where we are today, AI Applier stocks are the big winners. Walmart is an example.

Luke is urging his readers to buy top-tier AI Appliers, as this where he predicts the biggest winners of the AI Boom will emerge – even more so after the DeepSeek breakthrough last week.

From Luke:

The biggest takeaway [from DeepSeek’s emergence] is an accelerated shift from AI Builder stocks toward AI Applier stocks.

That’s because the breakthrough simultaneously (somewhat) commoditizes AI hardware and democratizes AI software.

By partially commoditizing AI hardware, the DeepSeek breakthrough may lead to some premium AI hardware providers – like Nvidia – losing some pricing and margin power, though demand will remain robust, leading to good (but not great) AI Builder stock performance. Meanwhile, by democratizing AI software, the DeepSeek breakthrough will lead to more AI software creation and deployment, leading to very strong AI Applier stock performance.

Therefore, we remain fully bullish on the AI trade in 2025 but would like to continue to emphasize a shift in focus toward AI Applier stocks over AI Builder stocks.

For more on the AI Applier stocks that Luke is recommending to his Innovation Investor subscribers, click here to learn more about joining him.

And if you missed it, last week, in the wake of the DeepSeek news, our experts Louis Navellier, Eric Fry, and Luke Lango just sat down with our Editor-in-Chief and fellow Digest writer, Luis Hernandez, for a roundtable discussion.

Part of what they discussed was this handoff of AI leadership from AI Builders to AI appliers. It was a fantastic discussion which will help you understand the forces driving today’s investment markets.

Click here to watch their discussion and hear the action steps they’re recommending today.

By the way, in December, Louis, Eric, and Luke created their AI Revolution Portfolio.

This is a “best of the best” collection of AI stocks based on our experts’ respective approaches to picking market winners. The portfolio represents what Louis, Eric, and Luke believe are the best ways to profit from the AI revolution over the next 12-26 months.

They discuss this in the video referenced above, but if you’d like more information, click here.

• So far, China’s tariff counterpunch isn’t awful.
• What’s happening in the oil patch today is complex, but we’re still long top-tier fossil fuel plays, as is Louis Navellier.
• The U.S. consumer is still alive, but his/her spending patterns are changing. Make sure you’re investing accordingly.
• Walmart – a beneficiary of changing spending patterns – is outperforming also because of its use of AI.
• This type of “AI Applier” is going to outperform the “AI Builders” looking forward.

We’ll keep you updated on all this and more here in the Digest.

Have a good evening,

Jeff Remsburg

The post What Will China’s Tariff Retaliation Mean? appeared first on InvestorPlace.

If you’re feeling overwhelmed, you’re not alone. Amidst the chaos, there is one asset that can thrive during uncertain times: crypto. While I don’t trade crypto myself, I can understand why it’s something investors lean on in chaotic times. My colleague, Luke Lango, is hosting The Great American Crypto Project event, where he will talk about how you can trade crypto the right way during market chaos. Click here to automatically reserve your spot.

In this article, Luke shares three times in the past two decades when crypto went up as market chaos ensued. Take it away, Luke…

**

With markets teetering on a knife-edge—rattled by trade wars, AI shocks, and geopolitical turmoil—only one asset has a history of turning chaos into massive gains.

In fact, the past week has demonstrated just how chaotic the markets can be… (and just how important that singular asset is).

On Monday, Trump slapped sweeping tariffs on our three largest trading partners – Canada, Mexico, and China – prompting a global trade war, quelled only by a deal at the 11th hour.

Before that, a highly efficient AI model emerged from China, rivaling those from Big Tech and undercutting them by a huge margin. The market reacted to DeepSeek-R1 with a cascade of selling that will now go down as the worst day for artificial intelligence stocks since the AI boom began.

While the market has mostly recovered from both crashes, we all know this could get worse before it gets fully better.

And we haven’t even mentioned the fragile peace in the Middle East, which could break at any moment and add volatility to oil and gas… or the recent shift in European Union energy policy in which Western Europe is trying to reduce dependency on Russian gas by accelerating renewable energy.

Absolutely… the world feels out of sorts these days… and many investors are starting to hide out in gold. 

But that’s not the best-performing asset in chaotic times. 

Believe it or not, when the world feels out of sorts like it does today, the one asset that tends to reign supreme is cryptos.

But you have to trade them correctly… because cryptos are also among the most dangerous assets during chaos.

In this issue, we’ll talk about why that is.

To help prove my point, I’ll lay out three times in the past two decades when crypto gains and world chaos have gone hand in hand.

Finally, I’ll point you where to learn more about the strategy we use to trade cryptos in times just like these.

Let’s get started by thinking back to 2020-’21…

The Past Crypto ÃÛÌÒ´«Ã½s in Chaos

The world certainly felt out of sorts back then, too.

Remember…

• The pandemic was sweeping the globe, forcing the shutdown of businesses, schools, and just about everything else.
• Joe Biden and Donald Trump faced off in one of the most intense American presidential elections ever.
• There were riots and protests on the streets of major cities seemingly every week. 

And yet, Bitcoin (BTC/USD) soared through that chaos.

In 2021, Bitcoin popped 40%. That same year, about 70 “altcoins”  – that is, cryptos other than Bitcoin – soared more than 1,000%!

It was a blockbuster year for the crypto markets. 

How about 2016?

The world felt precarious back then, too.

• Trump burst onto the political scene out of nowhere… and won the White House.
• Brazil and South Korea impeached their presidents.
• Turkish troops tried to overthrow President Recep Tayyip Erdoğan – and failed.
• North Korea tested nuclear weapons.
• And the United Kingdom voted to leave the European Union. 

Yet through all that mess, Bitcoin soared.

In 2017, BTC rose almost 1,000%!

It was a blockbuster year for the crypto markets. 

Let’s even think back to 2012. 

Back then – just like today – tensions in the Middle East were flaring. The U.S. Consulate in Libya was attacked, as well as a CIA office nearby. Israel assassinated the military leader of Hamas. A veteran American war photographer was killed in Syria.

Yet, despite those Middle East tensions, Bitcoin soared 4,500% in the following year. 

You get the point. 

Despite their rep as a “risky asset,” cryptos tend to soar in times of geopolitical chaos. 

Now, let’s talk about what we can do with that info…

The Opportunity… and Danger… Is Clear

What do we find ourselves in right now?

Geopolitical chaos.

Tensions (while paused) remain a risk in the Middle East, much like in 2012. Political tensions are flaring in America, much like in 2016. Inflation fears and the risk of an all-out trade war are running rampant, much like in 2020.

What we have today is a mix of the exact same situations that, in the past two decades, have led to massive crypto rallies. 

We don’t think this time will be different. 

If history repeats… then fortunes could be made in cryptos over the next year. 

But I’m here to warn you: Do not just buy Bitcoin and other small altcoins…

Because cryptocurrencies can fall just as hard and fast as they rise during market chaos.

That’s because, as “risk-on” assets, they move farther and faster —  up and down – as more staid stocks. So while they absolutely soar as chaos winds down, they can rise and fall multiple times rapidly during that chaos, which can shake out less certain investors.

For example, in the runup to this past weekend’s tariffs, Bitcoin dropped below $100,000 on Feb. 2, for the first time since mid-January, while big altcoins dropped 20% or more.

In other words, the market moves you see in mainstream stocks are nothing compared to what’s available in crypto.

That’s why, after nearly a year of working behind the scenes, I’m holding an event I’m calling The Great American Crypto Project (sign up automatically here) — where I’ll talk much more about my team’s quant-based trading algorithm designed to identify a predictable pattern before cryptos tend to soar tenfold, fiftyfold, even a hundredfold in 90 days or less.

And I’m planning to present three such trades this Thursday, February 6, that could soar in Trump’s first 100 days in office.

Plus, I’ll brief you on three specific new White House crypto policies that could ignite the biggest crypto super-cycle we’ve ever seen in 2025.

And for those who were trading with me in the last bout of market chaos, that’s saying a lot. In 2021, we delivered one-month gains of 276% on CELO and two-month gains of 605.3% on MANA in our Ultimate Crypto portfolio, to name just two highlights.

Just click here to automatically RSVP for my Great American Crypto Project event on Thursday at 10:00 a.m. Eastern.

I hope to see you there.

Regards,

Luke Lango

Senior Analyst, InvestorPlace

The post The ÃÛÌÒ´«Ã½s Are in Chaos Right Now… and Chaos Is a Catalyst for Cryptos appeared first on InvestorPlace.

In a dramatic turn of events that seemed pulled straight from a financial thriller, U.S. President Donald Trump unleashed a storm on Saturday night, imposing sweeping tariffs on America’s three largest trading partners: Canada, Mexico, and China. The markets were caught in the eye of this economic tempest, which sent risk assets spiraling in one of the most significant crashes in the past decade.

The specter of a full-blown trade war loomed large, threatening to unravel years of economic progress.

But just when the world braced for impact, we found ourselves in the middle of a bona fide plot twist…

On Monday, in a nail-biting, last-second maneuver, both Canada and Mexico clinched crucial eleventh-hour deals with the U.S. to delay these tariffs. A global trade war has been averted – for now, at least – and financial markets across the globe rebounded with fury.

To some, this rollercoaster of events signals a new era of volatility… but to us, it signals the opening of a potential golden window for investors.

Allow me to explain.

It’s Beginning to Look a Lot Like Altcoin Season

With traditional markets showing such volatility, there is one market that is often seen as a refuge in times of economic uncertainty: the crypto market. With its unique detachment from traditional economic levers, cryptos could be the next frontier for savvy investors looking to capitalize on this unexpected turn of events.

Yes, we like stocks on this rebound now that a global trade war has been averted, but we think cryptos can and will do better over the next few weeks and months.

That’s because it is starting to look a lot like “altcoin season.”

More on that in a moment. First, let’s talk about the trade war that almost was. On Saturday night, Trump issued 25% tariffs on a wide array of goods from Mexico and Canada, as well as an additional 10% tariff on a variety of Chinese goods coming into the U.S. In total, the tariffs would have impacted about $1.3 trillion in total trade—or about 5% of U.S. GDP. According to Bloomberg research, they would have taken the average U.S. tariff rate from 3% to 11%, the highest it has been since before 1950.

The market reacted strongly to those tariffs because, if they became effective and normalized, they would have significantly slowed the U.S. economy and reignited inflation.

According to research from the Federal Reserve, every percentage point increase in the average U.S. tariff rate would coincide with a 0.15% decrease in GDP growth and a 0.1% increase in the core PCE inflation rate. Therefore, if the average U.S. tariff rate increased eight percentage points in response to Trump’s announced tariffs, then U.S. GDP would theoretically slow by 1.2%, and core PCE would theoretically rise by 0.8%. At those rates, we would be looking at a U.S. economy with approximately 1% growth and more than 3% core inflation.

Those are bad numbers.

Unsurprisingly, stocks don’t perform well in those conditions. Going back to 1947, the stock market has tended to rally in about two out of every three quarters, with an average quarterly return of over 2%. That’s “normal” for the market. But when GDP growth is low (right around 1%) and core inflation is high (over 3%), the stock market only rises 44% of the time, with an average quarterly decline of over 2%. This graphic tells the tale:

So, the market was fearful that, if Trump’s tariffs went into effect, the economy would slow, and inflation would rise in a manner historically negative for stocks. Which is why they sold risk assets in response.

But thanks to a pair of eleventh-hour deals, none of those tariffs went into effect; and we think the world will avoid big tariffs for the foreseeable future.

Trade War: A Means to an End

The reality is that, in our view, Trump doesn’t really want tariffs. He’s using them, or the threat of them, to an end. He is simply using tariffs to achieve other goals, like border security, and once he achieves those other goals, he pulls back the tariffs.

See: Mexico and Canada yesterday. Trump threatened each of them with big tariffs. Each of them came to the negotiating table. Each of them worked out a deal with the U.S. America delayed the tariffs.

We think it could be a “lather, rinse, and repeat” situation for most other countries.

Trump threatens tariffs. Stocks and cryptos crash. The other country caves. Trump delays the tariffs. Stocks and cryptos rebound.

The risk to that thesis, of course, is that the other countries don’t cave. But we think most of them will. The U.S. is the envy of the world right now. Economically, America is far stronger than any other country out there, and by a wide margin. No one has the economic might to fight the U.S. (except maybe China, but that’s been a fight that has been dragging on for years).

Assuming most other countries do cave, we see a “lather, rinse, and repeat” situation on tariffs for the foreseeable future. Most countries will follow in the footsteps of Canada and Mexico and strike eleventh-hour deals to avoid a trade war.

And that means a global trade war will likely continue to be averted for at least the balance of 2025.

We think that means it is time to buy cryptos.

What This Means for You

Yes, it also means it is time to buy stocks. The stock market should rally this year thanks to AI growth, deregulation, strengthening consumer and business sentiment, and more.

But cryptos should do better.

Now that we’re on the brink of a new crypto era, we could see three specific crypto policies put in place that could ignite the biggest crypto super-cycle we’ve ever seen in 2025.

Though I’m here to warn you: Do not simply buy Bitcoin and call it a day…

Instead, after nearly a year of working behind the scenes, I’m ready to share what I’m calling the Great American Crypto Project—a quant-based trading algorithm designed to identify a predictable pattern where cryptos could soar tenfold, fiftyfold, even a hundredfold in 90 days or less.

To help explain why, I am hosting an emergency crypto market webinar this Thursday, Feb. 6, at 10 a.m. ET.

In that webinar, I am going to discuss my outlook for the crypto markets in 2025 and outline why I think this could be the year of huge altcoin gains, much like 2021, when dozens of altcoins rallied more than 5,000% in a single year.

I’ll also talk about my proprietary crypto trading algorithm, which I used to identify three coins that could soar in 2025.

Click here to reserve your seat now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Trump’s Trade War Means It’s Time to Go All-In on This Asset appeared first on InvestorPlace.

Just minutes into trading Monday morning, all three major stock indexes were deep in the red as the world reacted to President Trump’s tariffs that go into effect tomorrow morning.

The new levies included 25% tariff on imports from Canada and Mexico, with a lower 10% charge on Canadian oil, natural gas, electricity and other energy products. Chinese products also face a 10% tariff.

Stocks were selling off for three primary reasons…

First – uncertainty. Wall Street hates not knowing what’s on the way. The duration, scope, and global reaction to these tariffs are a big unknown.

Second – fears of reduced earnings. Tariffs increase the risk of kneecapping corporate bottom lines as sticker-shock causes price-conscious consumers to fold up their wallets. Today’s stock valuations require strong earnings growth. Without them, prices will appear far too overextended.

Third – inflation. The consumers that do buy at elevated prices are fueling an inflationary cycle, potentially triggering even higher prices to come.

By mid-morning, it appeared the day’s losses would snowball into something rather nasty.

Around 10:30 AM Eastern, news broke that Mexican President Claudia Sheinbaum has ordered a troop deployment to the U.S./Mexico border. In response, U.S. tariffs on Mexican goods are now paused for one month.

From President Trump:

I just spoke with President Claudia Sheinbaum of Mexico.

It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country.

We further agreed to immediately pause the anticipated tariffs for a one-month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico.

I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a ‘deal’ between our two Countries.”

The reaction on Wall Street was immediate, with stocks reversing and paring their losses.

The news is fueling hopes that tariffs are simply a bludgeoning tool that Trump will use briefly and sparingly to prompt action from foreign governments. If that is the case, the risk of reinflation or stunted earnings diminishes.

As I write at lunch, we haven’t seen a similar reaction from Canada. Instead, on Saturday, Prime Minister Justin Trudeau announced Canada will retaliate with its own 25% tariffs on an array of U.S. imports.

Bottom line: An enormous game of financial “chicken” just began, and while Mexico swerved, the U.S. and Canada are still barreling toward each other.

Despite experiencing volatility through mid-month, the S&P rallied to end January 2.7% higher, and history tells us that’s great news for the rest of 2025.

Here’s Ryan Detrick, chief market strategist at Carson Research:

An effect widely known as the January Barometer looks at how January does and what it may mean for the next 11 months. It is known by the saying, ‘So goes January, goes the year’ in the media…

Historically speaking, when the first month was positive for stocks, the rest of the year was up 12.3% on average and higher 86.7% of the time.

And when that first month was lower?

It was up about 2.1% on average and higher only 60% of the time.

Below is a chart from Detrick beginning in 1950. The outperformance stemming from a positive January is enormous.

Clearly, signs look positive for more growth in 2025.

As you know, the S&P notched a fresh all-time two weeks ago. And based on this indicator, we’ll be toasting a new all-time high in 11 months.

First, the good news…

It’s not just stocks that have been surging to record highs. Look at the list of recent winners:

• S&P 500: all-time high last month
• Bitcoin: all-time high last month
• Gold: all-time high as I write (more on this shortly)
• Cocoa: all-time high last year
• Silver: 12-year high last October
• Residential homes: all-time high last summer

Great news, right?

Well, let’s take a closer look.

When we think about price, we think about the value of an object – say, real estate – represented in dollars.

The unspoken implication is that what’s changing is the inherent value of the real estate. The dollar is the sturdy, fixed point in this comparison. The North Star.

So, when a home price rises, the default assumption is that the movement reflects the value of the home itself, since the trusty dollar is our stable point of reference.

But what if it isn’t the value of the real estate changing, but the dollar itself?

Said another way, what if the value of the real estate is largely the same, but the dollar itself is weakening?

In that case, it makes sense that all these assets would be hitting all-time highs. Why wouldn’t they? Their unit of measurement is collapsing, so “up” has a natural bias in the asset’s value.

As you know, that’s exactly what’s been happening for decades as our government has printed trillions of dollars, eroding the value of our currency.

So, let’s look at these all-time highs a different way, using a different point of reference.

Which one?

Well, how about, gold, which is notching a new all-time high as I write.

Here’s CNBC:

Gold prices hit an all-time high on Monday, bolstered by safe-haven inflows after U.S. President Donald Trump’s tariffs on Canada, China and Mexico added to concerns of inflation that would dent economic growth.

If gold is our constant – not the U.S. dollar – a different story emerges…

We’re about to look at charts showing the ratio of an asset’s price relative to the price of gold over the last 20 years.

If the beginning value is roughly the same as the ending value, that means the value of that asset remained relatively constant with the value of gold.

If the line slopes up, that means the value of the asset has appreciated relative to gold.

And if the line slopes down, that means the asset’s value has fallen relative to gold…which would suggest that any all-time high that the asset notched during this period would be nominally accurate, yet a wealth illusion.

With that in mind, here’s the average stock’s value (the S&P 500 Equal Weight Index) measured in gold over the last 20 years.

And homes?

And even though corporate bonds haven’t been hitting all-time highs, let’s throw them into the mix since they’re an enormous asset class.

Let me throw in one more that you might not expect…

You’ve either been in tech funds or you’ve lagged the market.

Given this, let’s look at the Technology Select Sector SPDR ETF (XLK), which is a proxy for “tech.” Though its holdings have changed over the years, the current largest weightings include Apple, Microsoft, Nvidia, Broadcom, Oracle, Salesforce, and Oracle. Clearly, this is a blue-chip tech fund.

Below, we look at the ratio of XLK to gold over the last 25 years, beginning in 2000. To be fair, that was the height of the Dot Com Bubble.

Nevertheless, here’s the reality…

This is why your net worth is probably at or near all-time highs today, yet your monthly budget feels more strained than it has in years.

It’s also a good reminder why gold is a critical part of any portfolio – especially as Trump’s new tariffs risk fueling inflation.

Now, for added perspective, here’s XLK to gold over the last 20 years (not 25). Clearly, tech is where you want to be as far as stocks go.

This chart is a critical reminder that if you want to achieve major wealth, you need the extra horsepower of top-tier stocks. Regular stocks won’t do it.

Given how quickly our dollar is collapsing, the inflation-adjusted return of the average stock isn’t going to create the escape velocity needed to achieve financial independence. Broadly speaking, tech is your best bet.

As I write Monday, the Nasdaq is still down more than 1% on tariff fears. Perhaps not a bad time to go looking for opportunities.

We’ll keep you updated here in the Digest.

Have a good evening,

Jeff Remsburg

The post The World/Financial ÃÛÌÒ´«Ã½s React to Trump Tariffs appeared first on InvestorPlace.

This week, Jason Bodner joins us again to talk about what happened when DeepSeek entered the AI scene, what we anticipate from President Trump’s tariffs and preview earnings from several companies that are set to announce soon, including Ford Motor Company (F), Eli Lilly and Company (LLY) and Amazon.com, Inc. (AMZN).

I should add that this video was recorded before Trump announced this morning that he would delay the 25% tariffs on Mexico by one month after the President of Mexico, Claudia Sheinbaum, agreed to deploy troops to the border and enter negotiations. But the 25% tariff on Canada, along with the 10% tariff on China, are set to take place tomorrow, February 4.

But as I explained to my Growth Investor subscribers in a Special ÃÛÌÒ´«Ã½ Podcast this morning, all of these fears about tariffs are overblown.

In the meantime, for my and Jason’s thoughts on DeepSeek, tariffs and earnings, you can click the play button below!

I hope you liked this week’s video! If you did, please consider subscribing to my channel and “liking” the video. You can do that here.

Welcome to the “shock and awe” of Trump 2.0, folks.

I will stay on top of events as they develop – and will keep you updated with my latest analysis.

Things are moving fast – in addition to tariffs, we’ve already seen Trump sign a series of executive orders related to energy, manufacturing and artificial intelligence that could have profound effect on certain stocks.

I should add my system gave a “buy” rating to all of the top 30 performing stocks of President Trump’s first term. And I’ve identified a handful of picks that I expect to prosper during Trump 2.0…

Go here now to learn more.

(Already a Growth Investor subscriber? Click here to log in to the members-only website.)

Sincerely,

Louis Navellier

P.S. I’ve been a fan of Jason Bodner and his Quantum Edge system for a long time. He designed his data retrieval and algorithms to identify the best stocks in the market with the highest probability of making money, and it works.

Jason’s system beat the S&P 500 7-to-1 over the last 30 years in independent testing and back testing. He also focuses on fundamentals and technicals, and he adds his proprietary model for tracking Big Money inflows across the market and into individual stocks.

Click here to learn more about his strategy.

You’ll also receive full access to his handpicked Quantum Edge Pro stock recommendations as well as his ratings – his proprietary Quantum Score – on roughly 6,000 stocks. Find out more here.

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Eli Lilly and Company (LLY)

The post Trump’s Tariffs, DeepSeek Rocks the AI Race and Upcoming Earnings appeared first on InvestorPlace.

Editor’s Note: This weekend, President Trump imposed 25% tariffs on Mexico and Canada and 10% tariffs on China. And Wall Street was not happy this morning. The S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite all opened down significantly today.

However, tariffs on Mexico have since been put on hold for one month following Trump’s conversation with Mexican President Claudia Sheinbaum earlier today.

As we write this, the markets are on the rebound from their major downturns… but we all got a reminder this morning that a volatile market is scary.

That is why I’m running an essay from InvestorPlace CEO Brian Hunt with some relevant advice about what you should do and, more importantly, what you should not do during market selloffs.

Hello, Reader.

When the stock market goes through a big drop and your portfolio’s value is going lower and lower, it can be difficult to know what to do.

It’s an emotional time, and mistakes are common when we are feeling pressure.

• What about my retirement…?
• My kid’s college education…?
• My dreams of financial independence…?

Well, when the market takes a nosedive there are some things you should do, and also some things you absolutely, positively should not do.

And we can learn a lot by looking at one of the biggest business stories of the past 100 years: Amazon.com Inc. (AMZN).

If you were asked to name some of the biggest stock market winners of the past century, there’s a good chance Amazon would come to mind.

After all, Amazon has gone from a small online bookseller to one of the world’s largest, most powerful companies. In 2020, the company’s market value reached a massive $1 trillion. Today, it’s at $2.5 trillion.

Amazon sells virtually everything… and its founder, Jeff Bezos, is one of the world’s richest men.

Amazon’s market value has increased more than 120,000% since its IPO in 1997. That kind of gain turns every $10,000 invested into a stunning $12 million.

You probably also know why Amazon achieved such huge success. Its Prime membership program was a big hit. Its mastery of logistics lowered the price of almost everything. Its cloud computing business generated billions of dollars in annual revenue.

What you probably don’t know is what the Dow Jones Industrial Average did on March 4, 2015… or what the Dow did on Oct. 18, 2013… or what the Dow did on any specific day of Amazon’s incredible rise. You also probably don’t know what mortgage rates were on Dec. 12, 2003… or where the Federal Reserve had short-term interest rates set at on July 27, 2011.

That’s because what the stock market and interest rates were doing on those days didn’t amount to a hill of beans compared to what Amazon’s business was doing.

Recessions, bear markets, and stock market corrections made a lot of headlines but proved to be tiny speedbumps on Amazon’s path to success.

What the market did or what made headline news on any specific day is meaningless compared to the power of Amazon’s business model, the massive online shopping trend it rode to success, and the moves its management made.

What really mattered to Amazon shareholders wasn’t the broad market, interest rates, or presidential elections. What really mattered was that Amazon constantly innovated, delivered value to its customers, and outperformed its competition.

The same goes for every innovative, successful company you can think of: Apple Inc. (AAPL). The Walt Disney Co. (DIS). Starbucks Corp. (SBUX). Alphabet Inc. (GOOGL).

What interest rates or the stock market did during the ascent of these companies didn’t matter at all. Even recessions, bear markets, and stock crashes didn’t matter. Who was president didn’t matter.

What mattered was innovation, massive industry trends, delivering value to customers, and smart business models.

Here’s why this is so important to you as an investor…

If you invest in stocks for the long-term, you are guaranteed to live through bear markets, recessions, and corrections.

These declines – even if they are in the modest 15% range – will scare you.

They will make you question the idea of owning stocks.

If you invest in stocks for the long term, you’re sure to come across tons of “bearish” news and predictions.

There’s a whole industry of journalists and financial analysts who constantly predict the fall of America, runaway inflation, the next Great Depression, and a host of other calamities.

These folks are born pessimists. No amount of positive things can shake them from thinking things are about to go to hell in a handbasket soon.

And you know what?

We listen to them!

Humans are hardwired to pay close attention to potential dangers.

A hundred thousand years ago, it’s how we survived. Constantly worrying that a tiger or bear could be around the corner was a valuable instinct.

These days, we don’t have much to fear from bears or tigers.

However, our instincts make us pay close attention to potential dangers… both real and imagined. So, our subconscious minds compel us to click on bearish headlines, fixate on disasters, worry about elections, buy magazines with gloomy forecasts on their covers, and fret over 15% stock market corrections.

Or as media insiders like to say: “Fear sells”… and “If it bleeds, it leads.”

I encourage you to let common sense and the facts shape your actions instead of leaving it up to caveman thinking.

You’ll be far more successful investor if you do.

Why do I say that? And what are the facts?

Well, just consider that the stock market has averaged a positive annual return of 10% for the past 100 years. This is because the trend of increasing prosperity that is powered by free markets and free enterprise is one of the strongest trends in human history.

And here’s another important fact…

During the 20th century, stocks appreciated in value by 1,500,000%.

A 1,500,000% return turns every $100 invested into $1.5 million.

But wait…

Wasn’t the 20th century filled with wars and recessions and other awful things?

Yes.

There were two huge world wars, which killed tens of millions of people and devastated large portions of the world.

You also had the Great Depression… the Korean War… the Cuban Missile Crisis… the Watergate scandal … the inflation of the 1970s… the Arab oil embargo… the Vietnam War… and the savings and loan crisis of the 1990s.

You also had more than a dozen recessions and five horrible bear markets.

Despite all these things, U.S. stocks appreciated in value by 1,500,000% during the 20th century.

Despite something bad happening every decade, incredible wealth was created by innovative businesses like The Coca-Cola Co. (KO), Ford Motor Co. (F), Hershey Co. (HSY), Intel Corp. (INTC), General Electric Co. (GE), McDonald’s Corp. (MCD), The Procter & Gamble Co. (PG), Tootsie Roll Industries Inc. (TR), Pfizer Inc. (PFE), Walmart Inc. (WMT), Starbucks, and thousands of others.

We all know there are problems in America… like debt, poverty, and inequality.

These topics are covered daily in the news. They are the subjects of best-selling books. They have many people paralyzed by fear.

But if you know your history and know how powerful American innovation is, you know this is no cause to sell your stocks and crawl into a hole.

— Brian Hunt, CEO of InvestorPlace

That’s a great message to print out and have at hand all the time to go back to on days like today. So, thanks to Brian.

Meanwhile, as we wait to see what rest of the week ahead has in store, let’s review what we covered here at Smart Money this past week…

Smart Money Roundup

DeepSeek Just Fast-Tracked AI Job Disruption – Here’s How Investors Can Prepare

When you have a hungry, hungry AI architecture, it can take a long time to feed. That was until Americans got their hands on DeepSeek R1, a Chinese-developed large language model. This will have major implications for our investments… and our livelihoods. So, Thomas Yeung shares how you can best prepare for the incredible technological changes to come.

Why China’s New AI Could Unlock the Next Big AI Investment Opportunity

The Chinese AI model DeepSeek R1 made its global debut late last week – and on Monday morning we awoke to a bloodbath. So, earlier this week, I sat down with InvestorPlace Editor in Chief Luis Hernandez and my AI Revolution Portfolio partners – Louis Navellier and Luke Lango – to answer questions… and to consider what we all should be doing with our AI investments now.

The Best Way to Protect Against Future ÃÛÌÒ´«Ã½ Volatility

Nobody really knows why a stock goes up or down over the short term. That’s why I’ve found that your odds of correctly predicting stock price movements are higher over the long term than the short. That’s why I’ve found that your odds of correctly predicting stock price movements are higher over the long term than the short. To take advantage of the security that long-term trades offer, I use a specific trading strategy that I’d like to share with you.

Looking Ahead

My team and I will cover Trump’s tariffs in tomorrow’s Fry’s Investment Report weekly update (to make sure you’re on the list for that update, learn how to become a member here), and we will continue to monitor it here in Smart Money.

If any immediate action needs to be taken in any of our services, I will let you know.

Regards,

Eric Fry

Editor, Smart Money

Frequently Asked Questions (FAQs)

1. How do tariffs shake up the stock market?

Tariffs hit businesses where it hurts—raising costs, cutting into profits, and stirring up uncertainty. That’s why markets often react with sharp drops, just like we saw when new tariffs were slapped on Mexico, Canada, and China.

2. Should I dump my stocks when the market tanks because of tariffs?

Absolutely not. Panic selling is one of the biggest mistakes investors make during downturns. History shows that sticking with innovative companies—think Amazon—pays off in the long run, no matter how rocky things get in the short term.

3. What’s the smartest way to protect my portfolio from tariff-driven volatility?

Keep your eye on the long game. Invest in businesses with solid fundamentals and a history of innovation. Don’t get spooked by headlines—focus on companies that consistently deliver value and outperform the competition.

4. Do market drops and scary headlines really matter for long-term investors?

Not in the way you’d think. The day-to-day noise—whether it’s market dips, interest rate hikes, or political drama—barely registers over time. What really matters is backing companies that innovate and ride major industry trends to success.

5. Has the stock market ever thrived despite economic crises?

You bet. Despite wars, recessions, and financial crises, the U.S. stock market soared by 1,500,000% in the 20th century. Companies like Amazon, Apple, and Starbucks didn’t just survive—they thrived by focusing on innovation and delivering real value.

The post Here’s What NOT to Do the Next Time Tariffs Hit appeared first on InvestorPlace.

This Week’s Ratings Changes:

Upgraded: Buy to Strong Buy

Downgraded: Strong Buy to Buy

Upgraded: Hold to Buy

Downgraded: Buy to Hold

Upgraded: Sell to Hold

Downgraded: Hold to Sell

Upgraded: Strong Sell to Sell

Downgraded: Sell to Strong Sell

To stay on top of my latest stock ratings, plug your holdings into Stock Grader, my proprietary stock screening tool. But, you must be a subscriber to one of my premium services. Or, if you are a member of one of my premium services, you can go here to get started.

Sincerely,

Louis Navellier

The post Weekly Stock Grader Analysis: Upgrades & Downgrades on Top Blue-Chip Stocks appeared first on InvestorPlace.

In late January, Chinese AI startup DeepSeek released its powerful R1 model, an open-source ChatGPT rival on-par with incumbent chatbots. And reportedly, it cost 95% less to create. 

This breakthrough challenged the assumption that AI model development is absurdly expensive, as incumbent firms like OpenAI and Google have demonstrated, inciting panic across Wall Street. Suddenly, it seemed that the AI Boom faced a massive existential crisis.

But as it turns out, this DeepSeek drama didn’t signal the end of a bullish era. It merely marked the beginning of a ‘phase shift’ in the ongoing AI Boom. 

And this next phase may be far more profitable for investors who know what AI stocks to buy. 

Follow me here. 

Many industry experts note the striking similarities between today’s AI Boom and the Dot Com Boom of the 1990s. And that comparison feels spot-on to us.

The internet was a revolutionary technology that proliferated throughout the global economy and changed everything about how we work, play, travel, communicate… It changed everything about everything. 

And when it comes to AI, just lather, rinse, and repeat. 

AI is another revolutionary technology proliferating throughout the global economy – and changing everything about everything. 

As revolutionary technologies go, AI and the internet have very strong parallels. 

And the AI and Dot Com Booms also have very strong parallels on Wall Street. 

AI and the Internet: Striking Parallels

In 2023 – the first year of this AI Boom – the S&P 500 rose more than 20%. And it rose more than 20% once again in 2024, meaning the market has soared 20%-plus two years in a row. 

The last time it did that? In 1995 and ‘96 – during the first two years of the Dot Com Boom. 

Take a look at the S&P’s price action over the past two years as well as in 1995 and ‘96. As you can see in the graph below, those lines match up almost perfectly.

In today’s AI Boom, stocks are following the exact footsteps they made in the Dot Com Boom. 

And of course, the 1990s’ market boom played out in two phases: first it was all about the ‘Builders,’ then the ‘Appliers’ took the baton. 

That is, when the internet first emerged, telecom companies rushed to build the infrastructure needed to support the internet’s buildout. This was the Builder phase – Phase 1. 

And it’s why, in the 1990s, the Dot Com Boom’s biggest winners were internet ‘Builders’ – the companies establishing the net’s infrastructure. 

Indeed, from 1995 to ‘99, Qualcomm (QCOM) rose almost 6,000%. AppliedMaterials (AMAT) popped about 1,000% over that same stretch. Semtech (SMTC) rocketed almost 7,000% and VeriSign (VRSN) soared about 3,000%.

These were internet Builder stocks – and they stole the show during Phase 1 of the Dot Com Boom. 

But they aren’t the winners that we think of today when it comes to the Internet Revolution. 

Instead, Amazon (AMZN), Netflix (NFLX), Meta, Alphabet (GOOGL),and Microsoft are top-of-mind. These are some of the largest and most powerful companies in the world. And yet, none were internet-builders. 

They are the ‘Appliers.’

The Boom’s ‘Phase 2’

Once the internet’s infrastructure was built, we pushed into the ‘Applier’ phase. That’s when today’s tech titans actually applied the internet to various industries, creating entirely new business models that have since become internet empires. 

For example, Amazon applied the internet to the commerce industry, creating an e-commerce empire.

Netflix applied the internet to the entertainment industry, and it now dominates in the streaming arena.

Meta applied the internet to the communication industry; Alphabet to the information services industry.

As a result, these firms have become the world’s largest companies… the stock market’s biggest success stories. 

And they were all internet appliers. 

Now, considering how similar the AI and Dot Com Boom have already proven to be, the AI Boom’s ‘Applier’ phase could also solidify the next generation of market champions. 

And we believe DeepSeek just accelerated the shift into this boom’s Applier phase.

AI Appliers Are Pulling Ahead

For the past two years, we’ve been in the AI Builder phase.

Companies have poured billions of dollars toward creating the infrastructure necessary to facilitate the AI Revolution. They’ve been building new data centers, constructing new chip fabs, developing next-gen AI chips, so on and so forth. 

Indeed, this era has been dominated by those building out the groundwork necessary for AI to thrive on a global scale. And as a result, such AI Builder stocks have been on fire. 

We view semiconductor stocks as a good proxy for AI Builders as they comprise the firms that build the chips, equipment, etc. that power AI technologies. And from early 2023 to summer 2024, semiconductor stocks led the AI Boom, soaring about 130% higher. 

Meanwhile, Applier stocks – the software firms looking to develop and apply new AI models – rose just 70% over that same time frame.

But that has changed over the past few months. 

Since mid-July 2024, AI Applier stocks have been crushing incumbent Builders. Software stocks are up 20%, while semiconductor stocks are down 20%. 

We have “phase-shifted,” if you will.

And this is where we predict the biggest winners of the AI Boom will emerge. 

The Final Word on the AI Boom’s Next Phase

Remember: As great as internet builders were, appliers were better. 

Qualcomm, the quintessential internet Builder stock, has soared about 10,000% since 1995 – an excellent return.  

But Apple, an internet Applier, is up about 67,000% in that time. Netflix is up about 84,000% since its IPO. Similarly, Amazon has surged an astounding 264,000% since it went public. 

Clearly, the internet application boom produced huge returns. 

The AI Application Boom could do the same. 

So, how does DeepSeek fit into all of this? 

The firm’s breakthrough made clear that, with software innovation, programmers can create robust AI models with relatively little advanced hardware. That somewhat commoditizes hardware and shifts the innovation to the software stack. 

In other words, the software race has become the one to win – which means we have shifted from the ‘Builder’ to the ‘Applier’ Boom. 

We’ve entered ‘Phase 2.’ 

Yet… to fully capitalize on this shift… you need to be focused on the right AI Appliers. 

To help us do that, let’s turn to Elon Musk – the world’s richest man – and his startup, xAI. 

We’re confident that firm has the opportunity to become a major winner in this next phase of the AI Boom.

And while it’s not yet publicly traded, we’ve found a promising ‘backdoor’ way to invest in the company. 

Learn more about xAI and its portfolio-boosting potential now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Why the Most Astonishing AI Gains May Still Be Ahead appeared first on InvestorPlace.

Luke’s powerful Auspex stock screener is built to help find the strongest stocks at the beginning of every month by scanning 8,000 stocks for 15 different fundamental, technical, and sentiment factors.

His strategy could help you beat the markets every month in 2025 and make you as much as 100% faster than you imagine.

Recent success stories include…

• 38% in a month with AnaptysBio
• 115% in under 60 days from Aveanna Healthcare
• 60% surge in November on Exagen

And tomorrow, Luke will unveil the next batch of potential market-beating picks, which you can learn more about here.

He is joining us today to share more about his Auspex tool… and how you can use it to find the “strongest” stocks in the market at any given time.

Take it away, Luke…

We don’t have long to go now. Tomorrow, Feb. 3, we’ll be announcing our list of the most promising stocks to buy for quick-and-easy February gains. 

So, if you’re not already familiar with Auspex – the cutting-edge stock-picking system uncovering those trades – it’s time to get acquainted.

That is, for several months, my team and I worked to create what we hope is the ultimate stock-picking tool: one that can help us spot the best stocks to buy at the most opportune time.

I’m talking about stocks with strong fundamental, technical, and sentimental support – nearly airtight trades that are strong in every way.

We use this model to find what we believe are the stocks most likely to rise over the next 30 days.

On the first day of each new month, we have Auspex conduct a market scan, analyzing thousands of different stocks. It typically finds only a small handful that meet its strict criteria.

And those stocks become our “Auspex picks” for that month.

Then at month’s end, we sell those trades and run another market scan. And those new stocks became our portfolio picks for the next 30 days. Lather, rinse, repeat.

That is how, with Auspex at our side, we aim to regularly profit from the strongest stocks in the market, no matter the broader backdrop.

And so far, it is working really well.

Auspex’s Robust Track Record

This strategy has consistently beaten the market since we began back-testing it last year. In fact, according to one 10-year back-test in particular, Auspex would have outperformed the Street by about 10X!

But this extends beyond hypotheticals. Over the past few months, we’ve used Auspex internally in real-time – with great success.

For example, back in July, Auspex helped us score a nearly 40% gain in AnaptysBio (ANAB) and ~30% gains in ZetaGlobal (ZETA) in just about 30 days.

In August, we locked in a ~25% paper profit on Cellebrite (CLBT) in the same timeframe.

Similarly, in September, we were able to nab ~25% returns on SiTime (SITM).

In October, Auspex helped us put together a portfolio of five stocks – and four went on to rise that month, even though the broader market dropped.

This screener also guided us to Exagen (XGN) before it popped about 60% in November.

And just this past month, our Auspex portfolio has risen more than 10% as of this writing. 

Meanwhile, the rest of the market has been largely stuck in neutral.

Soon we’ll be launching Auspex’s latest portfolio picks for February gains.

Don’t miss the chance to get your hands on this new batch of strong stocks. They may be the best way to respond to the ongoing market volatility.

Learn more now before those picks go live.

Regards,

Luke Lango

Editor, Hypergrowth Investing

The post Revealed Tomorrow: The Stocks Poised for Big Gains in February appeared first on InvestorPlace.

Euphoria in Silicon Valley turned to panic this week after a Chinese-based startup called DeepSeek released a new large language model (LLM). 

It’s very good. 

And it’s very cheap. 

Not only did DeepSeek’s “R1” model beat all but the top models from OpenAI and Google in quality rankings. But it did so by spending just $6 million in model training – an amount that Andrej Karpathy, the former head of AI at Tesla Inc. (TSLA), called “a joke of a budget.” 

Cost savings extend to its day-to-day use as well. Initial third-party tests suggest R1 costs a tenth of what it costs OpenAI to run its “o1” model. 

That triggered a massive rout on Wall Street. Companies from AI chipmaker Nvidia Corp. (NVDA) to AI data center power producer Constellation Energy Corp. (CEG) saw their share prices tumble 20% or more, wiping out more than a trillion dollars in market capitalization. 

Because if DeepSeek’s claims hold true, AI might not require as much power – and perhaps not as many cutting-edge GPUs from Nvidia – to train and run. 

For retail investors, these headlines might feel like whiplash. One moment, we’re being told we need massive “hyperscaler” data centers and high-end chips to power next-generation AI. The next, a barely known startup rattles the very foundation of the recent bull market. 

Still, there’s more to this story.  

The Truth Behind DeepSeek’s Breakthrough: What Investors Need to Know

Since the release of R1, our team has examined how the system gets such fantastic results. We wanted to find out what makes this system so special… and if that look under the hood fundamentally changes our outlook. 

Our conclusion is straightforward.  

As senior analysts Louis Navellier, Eric Fry, and Luke Lango outlined in a video conversation on Thursday, we believe R1 is a real breakthrough that confirms our predictions.  

To us, DeepSeek is further proof that superintelligent AI is on the way. 

That leaves us precious little time to prepare. 

Because once AI becomes smarter than the average person, there’s no turning back. 

A superintelligent AI will produce even better versions of itself, which would then make even better versions, and so on. 

Millions of jobs could get lost to AI in the blink of an eye. 

In fact, the release of R1 only makes us more confident this will all happen in the next 1,000 days. And it’s something Eric details in his latest presentation. 

So, this week, let’s explore five competitor-proof companies to invest in to get financially ahead before the storm. 

From Mafiaboy to AI: A New Age of Cybersecurity  

In February 2000, a hacker known as “Mafiaboy” took down several major websites, including CNN, eBay, and Yahoo. Mafiaboy, who was later identified as a 15-year-old high school student, did so by using several compromised university servers to overload websites with junk requests. 

Since then, these “distributed denial-of-service” (DDoS) attacks have become more sophisticated. In 2016, sites from Netflix to Amazon went down after malware named Mirai hijacked Internet of Things (IoT) devices like cameras, smart TVs, and baby monitors to create a massive “botnet” to attack its targets. Today, AI is routinely used to coordinate attacks. 

Why Cloudflare (NET) Is a Cybersecurity Powerhouse

And that’s where Cloudflare Inc. (NET) comes in. 

Cloudflare is the world’s largest DDoS prevention company, with an 82% market share. We previously recommended the stock in June 2023 (it’s risen +115% since then), and again earlier this month (+23% since). 

The rise of ultracheap AI suggests even more demand to come. Cloudflare is an expert on bot attacks, which include credential stuffing, inventory hoarding, as well as the traditional DDoS variety of mischief – all which will increase with cheaper AI. In fact,  

the average analyst revision has already increased NET’s earnings per share forecasts by 5.4% over the past 30 days. Cloudflare also continues to score a “B” on Louis Navellier’s Stock Grader system (subscription required), suggesting greater gains to come from a quantitative perspective. 

That said, investors may need to be patient for Cloudflare’s story to play out. The stock has risen sharply since I originally recommended it in 2023, and earnings must grow for the firm to fill in its premium valuations.  

The Rise of AI Appliers: Software Firms Seizing the Moment

At InvestorPlace, we’ve been distinguishing between “AI builders” and “AI appliers” for a while now: 

• AI Builders. These firms create the physical chips, data centers, and other infrastructure needed for AI to run. These are much like the telecom companies of the dot-com boom. 
• AI Appliers. These companies use this infrastructure to provide software services on top. This would be much like Netflix Inc. (NFLX), which relied on fast internet connections to provide streaming services. 

In a tech or industrial revolution, “builders” are generally the first firms to succeed. A new technology like the internet (or AI) must have data centers, broadband networks, switches, and so on.  

We’re now seeing the initial signs of moving onto the “Appliers” stage. 

The AI Appliers Picks: HubSpot & Shopify

Last week, several of Louis’s A- and B-rated software stocks began rising even as chipmakers and power producers plummeted. Among these winners, two appliers with wide moats stand out. 

• HubSpot Inc. (HUBS). This Boston-based software firm specializes in helping small and medium-sized businesses with inbound marketing and customer management. Its AI tools generate leads, automate marketing, manage customer service, and more. That makes the rise of better, cheaper AI (like DeepSeek) a net positive, because it will lower costs and increase the number of potential software products. Analysts also expect HubSpot’s reported earnings per share to flip from negative to positive this year, which is a typical signal of large gains ahead as loss-averse investors begin to buy shares. 
• Shopify Inc. (SHOP). The e-commerce website builder has similarly embraced AI in its “Shopify Magic” product. Small businesses can use the system to write product descriptions… generate customer emails… even answer customer chats. The Canadian company has also incorporated other AI bots to help with dynamic pricing, logistics, and more. 

Both HubSpot and Shopify have risen 9% since DeepSeek’s launch and score Bs in Stock Grader.  

Alibaba (BABA): The Chinese Dark Horse in AI 

Earlier on, I noted how Google took just three months to add OpenAI’s o1 “thinking” model into its Gemini product. 

Alibaba Group Holding Ltd. (BABA) did it in two. 

In fairness, the Chinese tech giant has long been a tough stock to stomach.  

Though it controls 42% of the Chinese e-commerce market, Alibaba has also been subject to intense government scrutiny. In 2020, Jack Ma, the founder and CEO of the firm, “disappeared” after criticizing the Chinese government. A planned IPO of its subsidiary, Ant Group, was shelved soon after. By mid-2024, Time magazine warned that “big tech may never recover in China,” citing a sweeping regulatory crackdown on Chinese tech giants.  

While BABA shares remain 66% below their pre-crackdown peaks, that could quickly change with the success of DeepSeek. 

How Alibaba’s AI Models Are Closing the Gap

On the technical front, Alibaba’s flagship LLM model, called Qwen, looks much like DeepSeek R1. It uses an MoE architecture, and has surpassed many of its Western counterparts in both quality and cost efficiency. The resounding success of DeepSeek’s version suggests Alibaba is even closer to catching up than previously thought. 

The Potential for Deregulation and Growth

Then there’s the potential for deregulation. In 2017, the Chinese government vowed to become the world leader in AI by 2030 and poured enormous sums of money into government-sanctioned projects. DeepSeek succeeded without government help, sending a strong signal that tech companies often do best when left to their own devices. 

I don’t expect the Chinese government to let Alibaba suddenly run wild. But even a little less scrutiny would be an incredible boon to B-rated Alibaba, which currently trade at a rock-bottom 11X forward earnings.  

Moderna (MRNA): The Healthcare Pick 

Finally, drug development firms will benefit from DeepSeek’s innovation.  

The biopharmaceutical industry currently spends almost $2 billion to bring a new drug to market. Better AI will decimate this figure by helping drug companies discover better therapies, predicting side effects, and allowing researchers to virtually test drug candidates before human trials begin. 

Why Moderna Is Poised for Exponential Growth

One of the biggest winners will be Moderna Inc. (MRNA), one of my nine top picks for 2025. The company is a lead developer of “cancer vaccines,” and improved AI will allow its products to be tailored to individuals at a lower cost. I 

That makes Moderna even better exposed to the upsides of superintelligent AI. Its mRNA-4157 cancer vaccine has been in development since at least 2022 and could be approved for use as early as this year. Bespoke versions of the therapy are likely next. 

Though Moderna scores a D in Stock Grader, this figure is understated because of the biotech’s start-up nature (negative profits) and significant off-balance-sheet assets (intellectual property). If its AI-powered cancer drugs are a success, shares could rise as much as 10-fold over the next several years. 

The AI Revolution Is Here… and AGI Is Coming 

DeepSeek’s emergence should remind investors of one crucial truth in tech: 

Disruption is inevitable. 

There will always be a new technology, startup, or approach that flips the conventional wisdom on its head. Former giants from Kodak to AOL are toppled as newer rivals rush in. And this time around, change is happening faster than ever. 

Many companies will fail in the AI Revolution. And millions of workers will suddenly find themselves replaced by AI that never needs to sleep or eat. 

Fortunately, there’s still time to get ahead. In his most recent presentation, InvestorPlace senior analyst Eric Fry talks about his 1,000-day countdown to AGI. 

The launch of DeepSeek signals that AGI remains on track to reach Eric’s 1,000-day target. Here’s why this is so important… 

By now, you’ve heard us warn that AI is coming for people’s careers. Accounting, legal research, medicine, even high-powered decision-makers near the C-suite could eventually be outsourced to superintelligent AIs. 

In the workplace, AGI is like the equivalent of having a human you could hire, or compete against, as a coworker. Once AI hits this tipping point, there’s no reason a model couldn’t develop even better versions of itself to replace humans in almost any role. 

That’s going to be disruptive, to say the least. 

Many experts initially thought we had time to prepare. DeepSeek changes that. 

Investors only have a tiny window to prepare during this “pre-AGI” moment before it’s too late. 

Luckily, Eric has identified several companies that are strategically positioned to capitalize on AGI’s imminent arrival, and he wants to share them with you. 

You can learn more about these companies in his free 1,000 Days to AGI special broadcast.

Click here to access the special presentation. 

Until next week, 

Tom Yeung 

ÃÛÌÒ´«Ã½s Analyst, InvestorPlace 

Frequently Asked Questions (FAQs)

1. What is DeepSeek, and why is it shaking up the AI industry?

DeepSeek, a Chinese startup, launched its large language model “R1,” rivaling OpenAI and Google in performance but developed at just $6 million—a fraction of typical costs. Its operational efficiency, costing one-tenth of OpenAI’s models, triggered a sharp market reaction, causing stocks like Nvidia to tumble over 20%.

2. How will DeepSeek’s breakthrough impact AI-related stocks?

While infrastructure-heavy companies like Nvidia face pressure from reduced demand for high-end chips, “AI appliers” like HubSpot, Shopify, and cybersecurity leader Cloudflare are thriving. These firms are leveraging cheaper AI to expand their offerings, turning disruption into opportunity.

3. What does DeepSeek’s breakthrough mean for the broader market?

DeepSeek’s rise highlights how fast AI is evolving, accelerating the path toward superintelligent AI. While this could disrupt industries and displace jobs, it also opens up new investment opportunities in companies ready to harness these advancements. Now is the time for investors to act before AI’s full impact is realized.

4. Which companies could benefit most from DeepSeek’s AI advancements?

Companies integrating AI into practical applications are well-positioned. Cloudflare stands out in cybersecurity, HubSpot in marketing automation, Shopify in e-commerce, Alibaba in tech innovation, and Moderna in AI-driven drug development.

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.

The post 5 AI Stocks Surging on DeepSeek’s Shocking Week  appeared first on InvestorPlace.

AI powerhouse Nvidia (NVDA) dropped more than 15%. A variety of other AI stocks—such as Nebius, Credo, Vistra (VST), Constellation Energy (CEG), Astera Labs (ALAB), Lumentum (LITE), Fabrinet (FN), and Ciena (CIEN)—plunged between 20% and 40% in a single day.

It felt like the AI bubble was bursting.

But it wasn’t. Instead, the DeepSeek drama earlier this week simply created a generational buying opportunity in top-tier AI stocks.

To understand why, we first have to break down what happened.

The Impact of DeepSeek’s Cost-Effective Model on AI Stocks

Tech stocks—and in particular, AI stocks—crashed after DeepSeek, a Chinese AI startup, released a new AI model that could represent a disruptive paradigm shift in foundational AI models.

The DeepSeek model functions similarly to ChatGPT. It is a chatbot with complex reasoning capabilities—and it is very good. The app has quickly become the most downloaded in the United States, and early users broadly believe it is as good as (if not slightly better than) ChatGPT.

But here’s the real kicker: DeepSeek is significantly cheaper than ChatGPT.

Training ChatGPT-4 reportedly cost about $80 million. Google’s (GOOGL) Gemini Ultra reportedly cost nearly $200 million. Broadly, incumbent foundational AI models in the U.S. have required $100 million or more to train.

DeepSeek, however, claims it trained its AI model for less than $6 million—despite being nearly as good as (or potentially better than) those other $100-million-plus AI models. That’s 95% cheaper.

The market panicked over this reported cost breakthrough, fearing that companies may not need to spend as much on AI model development in the coming years. That could mean less money flowing into AI infrastructure, lower spending by companies supporting that buildout, and, ultimately, lower stock prices for those firms.

Those fears are misplaced. In reality, the opposite will likely happen. Lower AI training costs will mean more AI spending.

That’s because AI is not your average commodity.

If you reduce the price of your average commodity — like eggs — you’ll reduce the total amount of money people spend on that commodity. If egg prices drop from $10 to two dollars, we’ll all spend less on eggs. Sure, some of us will buy more eggs. But the demand for eggs is pretty consistent. It won’t change dramatically with price. If egg prices go down, the total amount of money we spend on eggs every week will go down, too.

AI is not eggs.

AI is a high-demand and high-value commodity. When you have a high-demand and high-value commodity like AI, cost reductions tend to be met with quantity increases, and overall consumption goes up.

Jevons Paradox and the AI Spending Surge

This is not a novel idea. It’s an economic principle called “Jevons Paradox.”

Penned by 19th-century British economist William Stanley Jevons, Jevons Paradox states that improvements in the efficiency of resource use tend to increase — rather than decrease — the overall consumption of that resource because greater efficiency lowers the cost of using the resource, which can lead to increased demand for it.

This happened with coal usage in steam engines. Improvements in steam engine efficiency reduced coal consumption per unit of output. However, these improvements also made coal-powered technology more economically attractive, leading to broader adoption and ultimately increased overall coal consumption.

It happened with the internet. As computers got smaller and cheaper — and access to the internet became essentially free — pretty much everyone bought a computer and plugged into the internet 24/7.

And we believe it’s happening with AI right now. As AI model training and inference costs get slashed, more companies and people will build AI models, paving the path for AI to become a global ubiquity.

That means more — not less — AI spending.

More AI models mean more AI chips. More AI chips mean more AI compute. More AI compute means more AI energy. All that means more AI spending.

We aren’t alone in thinking this way about the DeepSeek developments.

Giant semiconductor equipment supplier ASML (ASML) reported earnings on Tuesday. In its quarterly conference call with analysts, ASML management said the cost efficiencies unlocked by DeepSeek would just open the door for more AI models to be created, which will lead to more AI chips, and more demand for the semiconductor equipment needed to make those chips.

They see the DeepSeek breakthrough only boosting the AI spending boom.

Microsoft (MSFT) and Meta (META) seem to agree.

They both reported earnings on Wednesday. In their quarterly conference calls, both Microsoft and Meta execs said the DeepSeek breakthrough wouldn’t change their AI spending plans. Both companies doubled down on their plans to spend tens of billions of dollars in 2025 on creating new AI infrastructure.

Semiconductor firm KLA Corp. (KLAC) said much the same in its quarterly earnings call this week. It believes the increased compute efficiency unlocked by DeepSeek will enable more adoption of AI due to “clearly elastic” demand for AI. Another important player in the AI infrastructure world — Celestica (CLS) — echoed similar thoughts. More efficient compute means more apps, which means more demand for the stuff that builds those apps.

The Final Word

The tech world has spoken. DeepSeek’s compute efficiency breakthroughs will be a net positive for the AI industry.

That, of course, means the huge drop we saw in AI stocks this week is nothing more than a golden buying opportunity.

We should be taking advantage of this opportunity right away.

To help us find maybe some of the best AI stocks to buy on this dip, we’re looking towards the world’s richest man – Elon Musk – and his big AI venture, xAI.

Click here to learn more about xAI now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post How DeepSeek Created the Buying Opportunity of a Lifetime in AI Stocks appeared first on InvestorPlace.

On Friday afternoon, the White House doubled down on its pledge to ramp up, starting today, 25% tariffs on Mexico and Canada, and a 10% duty on China… in retaliation for “the illegal fentanyl that they have sourced and allowed to distribute into our country.”

While those tariffs hadn’t officially been implemented yet yesterday, the press secretary’s comments still added plenty more drama to this week’s already chaotic markets.

If this recent bit of extreme turbulence has taught us anything, it’s that you never know when a stock is going to move. And that goes for better or worse. (Although, of course, we prefer “for better.”)

President Trump’s promised tariffs follow China’s DeepSeek R1 large language model shocking – and rocking – the markets earlier in the week.

KLA Corp. (KLAC), for instance, fell over 6% following the news. As a major supplier to the electronics industry, the company is, therefore, a major AI Revolution supplier as well.

However, KLA has since clawed back those losses after reporting earnings on Thursday that beat analysts’ expectations. In fact, KLAC is now inching back toward highs it hasn’t seen since October… proving that we can never truly anticipate a stock’s move.

The same goes for the tech-heavy Nasdaq Composite, which dipped more than 3% on Monday – but has since mostly recovered after tech giants like Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Meta Platforms Inc. (META) all beat Wall Street earnings estimates.

So, while we don’t yet know what will happen in the market short term, we do know that something will.

Now, I’ve been a professional investor for over 40 years, and I’ve yet to find anyone who can predict short-term moves with accuracy. 

Nobody really knows why a stock goes up or down over the short term. It’s almost entirely based on mob psychology.

However, in the long run, stocks trade higher or lower based on things you can analyze and forecast, like fundamentals, growth, earnings, and big-picture trends. 

That’s why I’ve found that your odds of correctly predicting stock price movements are higher over the long term than the short.

To take advantage of the security that long-term trades offer, I use a specific trading strategy that I’d like to share with you today.

And it starts by using a powerful tool that could magnify your gains: leverage.

Let me explain…

A Simple but Powerful Tool

Longtime readers have likely heard me use the term leverage before.

The word comes from a simple machine – the lever.

A lever creates a mechanical advantage that can be used to move something very heavy using only a small amount of effort. As the image below shows, the wooden lever is used to move the large boulder.

It’s a simple tool, but a very powerful one. 

Now, it’s a short step from this example of mechanical leverage to financial leverage. 

You’re still moving something big with a small amount of effort. Only instead of lifting a boulder, you’re controlling a valuable financial asset with only a small upfront stake. 

An example of financial leverage that most of you are no doubt familiar with is putting up a small down payment to buy a house. The home mortgage is actually a great way to illustrate the power of leverage. 

Say you want to buy a $500,000 house. You may have to put down $50,000 as a down payment. Now you control a valuable asset for a fraction of its overall value… and the power of leverage is revealed when the value of the home goes up. 

Let’s assume for the sake of argument that the day after you buy that house, it rises in value to $600,000. Now, if that happened, you’d be happy if you paid the full price in cash… but you’d be thrilled if you used leverage to purchase that house. 

You see, if you bought the house for $500,000 cash and then sell it for $600,000, you make $100,000. That’s a nice 20% profit on your investment. 

But if you used a mortgage, you only paid a $50,000 down payment and borrowed the rest of the money from a bank. That means if you sell the house the day after you bought it, you’d pocket the same $100,000 gain as the guy who paid cash… but you don’t make a 20% gain…

You make a 200% profit – or 10 times more! 

Because you only invested $50,000 to get that $100,000 gain, you put up just enough money to control the asset. In other words, you used leverage. 

Here’s where my long-term investing strategy comes in play…

Taking a Leap With LEAPS

One way to use leverage in a wise way is with long-term options, called LEAPS. That stands for Long-Term Equity Anticipation Securities. 

Now, if you are unfamiliar with options, be sure to first check out my free, special broadcast where I detail everything you need to know about this financial instrument.

But simply put, options are legal contracts that allow investors the right (but not the obligation) to buy or sell a specific security at an agreed-upon price within a set period of time.

Every option is identified with a specific stock. So, whenever you place an options trade, the movement of the underlying stock will affect the success or failure of your investment. Essentially, they are side bets on a stock’s price that allow investors to make enormous payoffs if they get things right.

And LEAPS are long-dated options whose expiration dates are one to three years away.  I use them to find my paid subscribers gains of 100%, 200%, 1,000%, and more.

For instance, back in 2019, I recommended using a leveraged play on Wheaton Precious Metals Corp. (WPM). And when that mining stock popped 114% in less than a year, my LEAPS recommendation soared as much as 525%!

On a $5,000 investment, you could have realized an incredible $20,415 in profit. And it’s all because of the leverage power you get with long-term stock options.   

And in late 2023, I recommended a LEAPS trade on GE HealthCare Technologies Inc. (GEHC). In two months, that stock rose 24%, but the gain on the LEAPS was 157%. 

Bottom line: Time is the critical factor with stock options. You can pick the right stock and the right direction… but if you don’t have the time frame right, you lose most or all of your investment.

It’s my belief that long-term options give you a greater chance to be right because they give you more time for the stock to move in the direction you want it to.

That is why I exclusively use this investment strategy in my Leverage service. When used selectively and judiciously, like we do at Leverage, options can impart powerful benefits to an investment portfolio.

To use this powerful investment strategy yourself, learn how to join me at Leverage today.

Regards,

Eric Fry

Editor, Smart Money

The post The Best Way to Protect Against Future ÃÛÌÒ´«Ã½ Volatility appeared first on InvestorPlace.

“Control of space means control of the world.”

That was how then-Senator Lyndon Johnson reacted to the Soviet Union’s launch of Sputnik, a moment that jolted America into action.

Now, the debut of China’s DeepSeek AI has drawn parallels to that Cold War shock. Tech pioneer Mark Andreessen went as far as calling it “AI’s Sputnik moment.”

The Soviet Sputnik satellite that kick started the space race. (Source: iStock)

Americans were suddenly reminded that technological dominance is not guaranteed. 

In hindsight, Johnson’s words may have seemed exaggerated—but today, they ring truer than ever. Simply replace “space” with “artificial intelligence.”

A wake-up call is a good thing, but people can react without thinking.

That’s what the market did Monday.

And smart investors were ready to take advantage.

Stay Calm During ÃÛÌÒ´«Ã½ Volatility

In case you missed it, the market reacted with shock to the debut of DeepSeek. The tech-heavy Nasdaq lost 3% of its value in a single day!

Legendary quant investor Louis Navellier has witnessed every type of market reaction over his 40-plus-year career, and he knows a knee-jerk response when he sees one. Here is what he told his Growth Investor subscribers on Monday.

This is a good time to remind all investors that the stock market is really just a “manic crowd.”  The truth of the matter is crowds “react” and do not “think.” 

In fact, the bigger the crowd, the lower the IQ. 

So, during Monday’s sell off, the stock market’s violent reaction was especially stupid, since investors were just reacting and not thinking.

Louis’ superior stock returns come from data-driven analysis and rational thinking, which is why he has the market-beating track record that many envy – and why he recommended Nvidia (NVDA) long before anyone heard of ChatGPT or OpenAI – when the AI trend really took off.

As I write, Louis is sitting on open gains of 2,700% in NVDA.

But now Louis is focused on second wave of AI … and how Trump 2.0 is going to spark bigger and faster gains than before.

The Energy Demands of AI and the Trump Factor

It’s no secret that AI uses a ton of energy. Researchers at Goldman Sachs believe one ChatGPT search uses 10 times as much energy as a Google search.

As AI adoption grows, energy needs will only increase.

And that’s an opportunity for smart investors. Here is Louis with the key information needed to convince you.

Elon Musk believes we could run out of power for AI data centers as soon as 2025. And without enough electricity, data center building will screech to a halt and the growth of the AI industry could be severely stunted.

However, there is one person who can fix this problem. I’m talking about none other than Donald Trump.

Louis has a set of recommended AI-related investments in his Growth Investor service that were chosen to take advantage of the massive changes taking place during the first 100 days of the new Trump administration.

And, yes, he does still recommend buying Nvidia.

You can check out a special presentation about these recommendations by clicking here.

How to Profit Beyond Buy-and-Hold

The Federal Reserve has signaled at least two potential interest rate cuts in 2025 that could ignite the market, but this week, they held rates steady.

A more accommodative Fed, however, combined with Trump’s pro-business policies and the AI Megatrend are likely to make this a great year for stocks – but also a volatile one.

As we saw with the market’s reaction to DeepSeek, investing stories – especially when it involves AI stocks – can pivot on a dime. But our tech investing expert Luke Lango believes the DeepSeek news is net positive for AI companies and investors.

The truth, in our view, is that the DeepSeek breakthrough will meaningfully accelerate AI model advancement and meaningfully boost the odds that Big Tech companies achieve AGI much sooner than previously thought.

Does that mean you should be buying the dip in AI stocks after this week’s gut-wrenching selloff?

Absolutely.

But we should be clear … the market will remain volatile.

Investors who rely solely on a buy-and-hold strategy can get whipsawed by rapid market shifts.

While long-term investing can be highly profitable (as Louis’ gains above show) there are other ways to invest that aren’t quite so stomach-churning.

To try to manage the emotional wear-and-tear of heightened volatility,, Luke developed the Auspex Trader service – a portfolio strategy where stocks are held for only one month.

At the beginning of every month, all the stocks are sold, and a new set is purchased. This approach reduces the whiplash associated with long-term buy-and-hold strategies while still delivering consistent gains.

Luke launched the system to his Inner Circle subscribers on July 1, and since then it has beaten the S&P every month but one. (Note: Luke ran the system twice in December, when it debuted more widely.)

The system uses three factors to identify the best stocks at the beginning of every month.

As I write Friday morning, Auspex is beating the market again in January … by a wide margin!

Luke provides all the details about the system in a special presentation you can access here. And a new slate of picks will debut Monday morning.

Doubtless the market is going to continue to experience new shocks as the AI megatrend unfolds.

Maintaining a rational, thoughtful approach to the markets is going to be crucial.

Enjoy your weekend,

Luis Hernandez

Editor in Chief, InvestorPlace

The post The AI Race Heats Up: Smart Strategies for Volatile ÃÛÌÒ´«Ã½s appeared first on InvestorPlace.

As I wrote about on Tuesday, news broke over the weekend that a little-known Chinese startup called DeepSeek had a new large language AI model that could outperform the likes of OpenAI’s ChatGPT – and with far fewer resources.

As a result, all hell broke loose in the market on Monday, with many AI-related stocks tumbling by 20% or more. NVIDIA Corporation (NVDA), for its part, lost 17% before recovering some of those losses later in the week.

Clearly, this is not how things were supposed to go.

The playbook seemed clear… Earnings season was supposed to hog the limelight this week as the fourth-quarter earnings announcements kicked into high gear. Four out of the seven of the Magnificent Seven Big Tech names were slated to report: Meta Platforms (META), Microsoft Corporation (MSFT) and Tesla, Inc. (TSLA) on Wednesday, while Apple Inc. (AAPL) reported yesterday after close.

We will get a look at Alphabet and Amazon’s latest numbers next week. And then, as usual, NVIDIA will round things out towards the end of the earnings season.

So, in today’s ÃÛÌÒ´«Ã½ 360, I want to bring these reports back into the spotlight. We will review the results from Meta, Microsoft and Apple, including what they had to say about the DeepSeek news. We’ll also talk more in depth about the ramifications of Trump 2.0 and how you can set yourself up to profit.

Let’s dig in…

Meta Platforms Inc.

Meta Platforms announced its fourth-quarter revenue increased 20.6% year-over-year to $48.38 billion and also beat Wall Street consensus estimates for revenue of $46.99 billion.

Meanwhile, earnings per share surged 50.5% year-over-year to $8.02 per share, up from earnings of $5.33 per share in the same quarter of last year. Analysts were calling for earnings of $6.74 per share.

Now, Meta’s Reality Labs sales rose slightly to $1.1 billion in the fourth quarter, but the virtual reality unit recorded nearly $5 billion in losses. Founder and CEO Mark Zuckerberg noted that “this is also going to be a pivotal year for the Metaverse” before adding that this would be the year when a number of the long-term investments for their Metaverse efforts will really start to pay off.

Then, during its earnings call, Zuckerberg addressed the DeepSeek news:

I think there’s a number of novel things that they did that I think we’re still digesting. And there are a number of things that they have advances that we will hope to implement in our systems.

He added:

…it’s probably too early to really have a strong opinion on what this means for the trajectory around infrastructure and capex and things like that.

This comes less than a week after Meta said it plans to spend between $60 billion and $65 billion on AI infrastructure this year. So, given the fact that there were no apparent alarm bells over the DeepSeek news in the earnings call, Wall Street cheered the positive results and shares of META rallied more than 4% on Thursday.

Looking ahead, Meta Platforms anticipates revenue between $39.5 billion and $41.8 billion in the first quarter of 2024. Analysts were calling for revenue of $41.6 billion.

Microsoft Corporation

Microsoft reported second-quarter earnings of $3.23 per share, up 10.2% year-over-year from earnings of $2.93 per share and beating analysts’ estimates of $3.12 per share. Revenue of $69.6 billion was up 12.3% from $62.0 billion a year ago as bested analysts’ estimates of $68.81 billion.

I should note, though, that this is the slowest growth since mid-2023.

But what really displeased Wall Street was Microsoft’s Cloud segment. There, revenue rose 21% to $40 billion but missed expectations for $41.1 billion. Digging a little deeper, the company’s artificial intelligence spending seems to have weighed on margins, as the cloud unit margins decreased to 70%.

Wall Street wasn’t happy with those results, and the stock fell by roughly 6% on Thursday.

Similar to Meta, Microsoft took some time to address DeepSeek. CEO Satya Nadella said regarding DeepSeek’s reported AI advancements:

That type of optimization means AI will be much more ubiquitous. And so, therefore, for a hyperscaler like us, a PC platform provider like us, this is all good news as far as I’m concerned.

In fact, Microsoft began offering DeepSeek’s R1 model on Azure on Wednesday and noted that it will soon be available to run on Copilot+ PCs as well as the GPUs available on Windows.

Apple Inc.

Apple’s earnings results for its first quarter in fiscal year 2025 came in at $2.40 per share, which was 2.13% above analysts’ estimates for earnings of $2.35 per share. Quarterly revenue of $124.3 billion was up 4% year-over-year and just above analysts’ expectations of $124.1 billion.

Now, iPhone sales declined about 1% to $69.1 billion and missed Wall Street’s estimates of $71 billion. This news came after the stock was hit with a couple of high-profile downgrades by Wall Street analysts in recent days.

I should also note that China sales continue to be a struggle for the company. However, revenue for Apple’s Services business continues to soar, rising 14% year-over-year to $26.3 billion – in line with analysts’ expectations.

This report was a bit of a mixed-bag for Apple, so it isn’t surprising that the stock finished close to flat on Friday in the wake of this news.

Now, CEO Tim Cook did address the elephant in the room (DeepSeek) by saying he believes “innovation that drives efficiency is a good thing,” before proceeding to say that Apple’s integration of silicon and software will continue to serve the company well.

What Stock Grader Says…

Now, money always flows to companies best positioned to profit and thrive in the current environment. And investors who stay focused on fundamentals – like accelerating earnings and sales growth – and don’t get distracted or react to every headline, will prosper.

That much is clear during earnings season.

When it comes to fundamentals, I’ve relied on my tool that I have perfected over the past four years: Stock Grader (subscription required). It has helped me identify market-beating picks for the last 47 years of my career.

So, with that said, let’s take a quick look at the Stock Grades for each of these companies:

As you can see, of the three, the only stock with a “buy” rating is Meta, with a “B” Total Grade. Apple earns a “C,” which is a “hold” – while Microsoft earns a “sell” due to its “D” Total Grade.

In other words, Stock Grader is telling us that Meta is worth considering, while investors should be cautious about Apple – and to stay away from Microsoft right now.

Positioning to Prosper

Meanwhile, I should add that the last time Trump was President, my system gave a buy rating to all of the top 30 performing stocks of Trump’s first term. And I’ve identified a handful of picks that I expect to prosper during this 100-Day Melt-Up…

The fact is, we’ve already seen Trump sign a series of executive orders related to energy, manufacturing and artificial intelligence that could have profound effect on certain stocks. And things are just getting started…

Go here for all the details on how to profit from The 100-Day Trump Melt-Up now.

Sincerely,

Louis Navellier

Editor, ÃÛÌÒ´«Ã½ 360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA)

The post What We Learned From 3 Big Tech Earnings Reports This Week… appeared first on InvestorPlace.

By the end of the week, investors had seemingly forgotten all about the “DeepSeek scare.” A wave of strong tech earnings put those fears to rest.

And rightfully so.

Forget DeepSeek: The strong tech earnings reports released this week prove that AI stocks will keep charging higher for the foreseeable future.

DeepSeek’s Impact: A Catalyst for AI Growth

The big fear at the start of the week was that DeepSeek—a Chinese AI model that rivals top U.S. AI models but supposedly costs about 95% less to make—would kill the AI spending boom by showing the world there’s a cheaper way to build AI.

But the world’s biggest and most important AI companies don’t see it that way.

Giant semiconductor equipment supplier ASML (ASML) reported earnings on Tuesday. In their quarterly conference call with analysts, ASML management said the cost efficiencies unlocked by DeepSeek would just open the door for more AI models to be created, which will lead to more AI chips, and more demand for the semiconductor equipment needed to make those chips.

They see the DeepSeek breakthrough only boosting the AI spending boom.

Microsoft (MSFT) and Meta (META) seem to agree.

They both reported earnings on Wednesday. In their quarterly conference calls, both Microsoft and Meta executives said the DeepSeek breakthrough would not change their AI spending plans. Both companies doubled down on their plans to spend tens of billions of dollars in 2025 on creating new AI infrastructure.

CEO Satya Nadella even invoked Jevons Paradox—an economic principle which states that if you decrease the cost of a high-demand resource (in this case, AI), you actually increase the demand for it. By that logic, Nadella seems to think the same thing that ASML’s executives think—the DeepSeek breakthrough will only boost the AI spending boom.

Semiconductor firm KLA Corporation (KLAC) said much of the same in their quarterly earnings call this week. They believe that the increased compute efficiency unlocked by DeepSeek will enable more adoption of AI due to “clearly elastic” demand for AI. Another important player in the AI infrastructure world, Celestica (CLS), echoed similar thoughts. More efficient compute means more apps, which means more demand for the stuff that builds those apps.

The tech world has spoken. DeepSeek’s compute efficiency breakthroughs will be a net positive for the AI industry.

That means Wall Street got it wrong earlier this week. When Nvidia (NVDA) collapsed almost 20% in a day on Monday, that was an overreaction.

That was a buying opportunity.

But it wasn’t the only buying opportunity in the market. The DeepSeek drama this week created a plethora of compelling buying opportunities on Wall Street. This is the time to look for those opportunities.

The Final Word

To help us find a few, we’re turning our attention to the world’s richest man, Elon Musk, and his AI startup, xAI. We think that startup has a lot of potential over the next few years, but it isn’t a public company. So how do you claim your share?

Click here to learn more now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Strong Tech Earnings Prove the Bull Thesis on AI Stocks appeared first on InvestorPlace.

It appears that new Trump-tariffs are a go.

From the BBC:

US President Donald Trump has said he will follow through with his threat to hit imports from Canada and Mexico with 25% border taxes, known as tariffs, on 1 February.

Trump has told reporters that the decision is intended to force Canada and Mexico to stem the flow of undocumented migrants and fentanyl coming across U.S. borders.

Meanwhile, China is expected to be hit with a 10% tariff tomorrow, with potentially more and higher levies on the way.

The wildcard issue is whether Trump will include oil on his tariff list for Mexico and Canada. Doing so could jeopardize the President’s campaign promise to bring down the cost of energy. Roughly 40% of the crude that flows through U.S. refineries is imported (mostly from Canada).

(Why the world’s largest oil producer imports 40% of our crude oil is a question for another Digest.)

But if oil makes the tariff list, it will have serious ramifications.

Higher oil prices won’t just impact Americans at the pump, or when they buy airline tickets (the airline companies pass through the cost of fuel to fliers as often as they can). Oil/gas is used in countless sectors and in all sorts of consumer goods. A few examples include cameras, coffee makers, golf balls, lipstick, sunglasses… it’s an enormous list.

So, tariffs on oil substantially increases the risk of reinflation. We’ll keep you updated.

In December, the Personal Consumption Expenditures (PCE) price index climbed 2.6% on a year-over-year basis. Core PCE, which strips out volatile food and energy prices, rose 2.8%. Both readings were in line with expectations.

On a monthly basis, headline PCE climbed 0.3%, while core PCE was up 0.2%. Again, these numbers matched forecasts.

While the results are good news, keep in mind that the Fed’s favorite inflation gauge – core PCE – remains 40% higher than the Fed’s target rate of 2.0%.

This underscores the following comment from Fed Governor Michelle Bowman this morning:

There is still more work to be done to bring inflation closer to our 2 percent goal. I would like to see progress in lowering inflation resume before we make further adjustments to the target range.

I’m still scratching my head as to why the Fed has slashed rates 100 basis point.

One line item in this morning’s report to watch closely…

Energy prices jumped 2.7%. Any tariffs on oil could be a substantial upward influence on future PCE readings. And that could influence Fed policy as we move toward the summer.

That’s the quick takeaway from master trader Jeff Clark, editor of ÃÛÌÒ´«Ã½ Minute.

For newer Digest readers, Jeff is a market veteran with more than four decades of experience, who profitably trades the markets regardless of direction – up, down, or sideways. He uses a suite of momentum indicators and moving averages to provide clues about where stocks are going next.

And per Jeff’s analysis from Wednesday, those clues are giving the edge to a bearish Bitcoin trade.

But before we get there, let’s begin with some perspective.

After surging in the wake of President Trump’s win in November, Bitcoin topped out at just over $108,000 on December 17.

Since then, it’s pulled back and traded sideways, bouncing between roughly $92,000 and $106,000.

As I write Friday, it trades as roughly $105,700.

Bitcoin surged more than 50% after the Trump win. That enormous buying pressure resulted in overbought conditions on two technical indicators that Jeff uses: the Relative Strength Indicator (RSI) and the Moving Average Convergence Divergence (MACD) Indicator.

The RSI is a momentum indicator that measures the extent to which an asset is overbought or oversold. A reading over 70 suggests an asset is “overbought” (and likely poised to pull back as mean reversion kicks in) while a reading below 30 means it’s “oversold” (and poised to climb, also thanks to mean reversion).

Meanwhile, the MACD indicator reflects changes in a price trend’s strength, direction, momentum and duration. Traders use this tool by analyzing the location of the MACD line relative to its signal line.

Here’s Jeff with what’s happened to these overbought indicators, and what their current readings suggest now:

This consolidation phase has relieved the overbought conditions.

It has allowed the moving averages to coil together, building energy to fuel the next move. And, since the height of the consolidation pattern is $14,000, the next move is going to be BIG.

If Bitcoin breaks out to the upside, then it could rally to $120,000.

On the other hand, a breakdown below $92,000 could target $76,000 – which would wipe out all of the gains since Election Day.

Jeff begins by outlining the bullish case. In short, he argues that we’ve seen high-level consolidation since mid-December, and since the various short-term moving averages have morphed into a bullish formation, we’re more likely to see an upside breakout.

But Jeff is leaning toward the bearish case due to the negative divergence he’s seeing between Bitcoin’s indicators and its price.

To illustrate, below, note below how Bitcoin’s price has remained rangebound, yet its MACD and RSI readings have been dropping since last November.

Back to Jeff:

For my money, I’m leaning more bearish than bullish at this point – simply because Bitcoin is near the top of its consolidation range. That creates a good short trade from a risk/reward perspective.

Bitcoin has edged back to the top of its recent trading range, so we’re watching closely. We’ll circle back after the granddaddy crypto makes its move.

At 10 AM Eastern, our digital currency expert Luke Lango will launch “The Great American Crypto Project.”

We’ll bring you more details in the coming days, but in short, Luke will highlight three steps that he believes President Trump will make that will ignite the biggest crypto super-cycle we’ve ever seen.

He’ll then walk through a quant-based approach that tackles the greatest challenge facing crypto traders: how do you pick the winners?

With meme cryptos like “Fartcoin” surging hundreds of percent in just a few days, it’s obvious that fundamentals aren’t driving returns. Instead, momentum and price action are preeminent. And that’s where having a quantitative approach engineered to find surging momentum is an enormous advantage.

Luke will cover this and far more next Thursday, explaining why he believes returns of 10X, 50X, and even 100X are on the table – in 90 days or less.

Stay tuned. More information is coming…

Regular Digest readers know that I’ve been highlighting nosebleed valuations in U.S. stocks for months. Despite this, we’ve remained in the market because bullish momentum trumps lofty valuations.

However, eventually, valuations matter.

Numerous studies have illustrated how starting valuations are enormously predictive of ensuing 10-year returns. The higher the starting valuation, the lower the typical 10-year return and vice versa.

So, as a foil to the U.S. market – now trading at the highest valuation on record by some metrics – is there another market offering far more attractive valuations?

Yes, according to Eric: Japan.

After detailing Japan’s market bubble in the 1980s that culminated in the 1992 meltdown (and ensuing “lost decades”), Eric writes:

But from that low-water mark, the Japanese stock market started a long road back to respectability and relevance. Finally, last February, the Nikkei surpassed its ancient all-time high of 38,957…

Japanese stocks are beginning to reflect positive [economic] trends, but their valuations remain subdued, relative to both their own history and to U.S. stocks.

At 15 times earnings, the MSCI Japan Index is trading nearly 20% below its 30-year median level… and 43% below the current valuation of the S&P 500.

But these depressed valuations may not persist for long.

As to why, Eric points toward three tailwinds driving Japanese stocks:

• Japanese companies are more devoted to returning capital to shareholders
• The Japanese government is incentivizing individual investors to buy stocks in their retirement accounts
• Mergers and acquisitions activity is accelerating, with a growing number of Japanese companies, flush with cash, acquiring other companies

To play the opportunity, Eric just recommended a Japan-focused ETF in his flagship newsletter, Investment Report.

Back to Eric:

Importantly, this trade offers a compelling way to diversify from U.S. stocks.

Assuming the Japanese economy continues its current growth trajectory, this play could produce solid double-digit gains for several years – even if the U.S. stock market falters somewhat.

To learn more about joining Eric in Investment Report, click here.

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg

The post Tariffs Appear on the Way This Weekend appeared first on InvestorPlace.

As I wrote about on Tuesday, the Chinese company sent shockwaves throughout Wall Street, igniting sharp pullbacks in AI chip makers and server providers. But the hardest hit stocks were the companies aiding in the buildout of the electrical grid and the construction of data centers.

The ensuing irrational panic ended up overshadowing two other key events.

First, the Federal Reserve was slated to issue its latest policy decision on Wednesday. The other focus was expected to be on earnings season. The fact is we entered the heart of the fourth-quarter earnings season this week, with four of the seven Magnificent Seven companies reporting. (I’ll review them in tomorrow’s ÃÛÌÒ´«Ã½ 360, so stay tuned!)

But all of the sudden, concerns about the U.S. artificial intelligence industry’s future stole the show from discussions of the Fed and quarterly results. (Our experts weighed in on the DeepSeek news in a roundtable discussion, which you can view here.)

All of this to say that the Fed meeting sort of took a back seat to all the action this week. After all, no big changes to key interest rates were expected. And when there is panic in the air, the attention span of the markets tends to be like that of a toddler (short and temperamental).

Now, I want my readers to deal in the world of rationality. And the reality is that there are some key takeaways we can glean from the latest Fed meeting. So, in today’s ÃÛÌÒ´«Ã½ 360, we’ll consider the Fed’s unanimous decision to stand pat and discuss what it plans to watch closely in the upcoming months – including moves from the Trump administration.

Fed Stays the Course on Rates – No Surprises Here

On Wednesday, the Federal Reserve voted to keep its key interest rate range at 4.25%-4.5%. No one was shocked – after all, the CME FedWatch tool showed a 99.5% chance of no change.

If you dig into the Federal Open ÃÛÌÒ´«Ã½ Committee (FOMC) statement, there were a couple of interesting tweaks, though. First, the central bank removed language about inflation having “made progress” toward the Fed’s 2% goal. Now, it simply says “inflation remains somewhat elevated.”

Second, officials revised their characterization of the labor market. Previously, the Fed said unemployment had “eased.” Now, it says the jobless rate has “stabilized at a low level,” and that overall conditions remain “solid.”

Translated from Fedspeak, the Fed wants to remain data-dependent. And right now, the data isn’t there to justify a rate cut, in their view.

In Fed Chair Jerome Powell’s post-meeting press conference, he hinted there was “no hurry” to adjust policy further. He said he believes rates are “significantly less restrictive” than they were before the Fed kicked off last fall’s rate cuts.

I should add that President Trump responded to the Fed news by accusing the Fed and Powell of mishandling the economy, saying they “failed to stop the problem they created with Inflation”.

Either way, it seems clear to me that whether we like it or not, the bar for further cuts is now set higher. Powell & Co. want to see more compelling evidence that inflation is on its way toward their 2% target.

On that note, this morning we learned that the Fed’s favorite inflation indicator, the Personal Consumption Expenditures (PCE) index, showed relatively flat prices in recent months. Core PCE, which excludes food and energy, rose 0.2% in December and was up 2.8% in the past 12 months. Both were in line with expectations.

Now, we’ll gain more clarity on the path of key interest rate cuts in the March FOMC meeting, as the Fed will release its next “dot plot” survey. But it is widely anticipated that the Fed will cut key interest rates at least two more times this year, especially if inflation continues to moderate. Many Fed officials have been vocal about expecting inflation to cool throughout 2025.

More Cuts Are on the Way…

In fact, the CME FedWatch tool suggests traders are already placing bets on at least one – maybe two – quarter-point cuts by June. That could have something to do with the fact that, after a furious run-up, the 10-Year Treasury yield has declined from a peak of nearly 4.8% to about 4.5%, as of this writing.

That’s quite the decline for the bond world, folks. And I expect market rates to decline further as global central banks cut their rates, which should, in turn, spur global bond investors to buy U.S. Treasuries. And as I always like to say, the Fed doesn’t like fighting market rates.

So, the bottom line is rate cuts are on the way. It may be later in the year, but I think it is entirely possible that we could see up to four quarter-point cuts this year.

The Trump 2.0 Factor

The reality is the Fed is being extra cautious because right now because it wants to see which policies the Trump administration will enact, focusing specifically on how tariffs, taxes and immigration could impact the U.S. economy.

Powell even stated during his press conference, “We need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be.”

President Trump, for his part, has been “demanding” that the Fed lower interest rates. But when asked about these comments, Powell demurred, as the Fed generally likes to stay out of the political fray.

Meanwhile, all eyes are on the tariff front today, as President Trump has threatened to implement a 25% tariff on all imports from Mexico and Canada tomorrow, February 1. (Earlier this week there were reports that he had pushed back the tariff deadline to March 1, but the Trump administration denied that this afternoon.) In addition, he’s threatened tariffs against China.

The reason, according to Trump, is he wants action to be taken to stop the flow of undocumented migrants and fentanyl into the U.S.

But you should know that President Trump likes to use tariffs to make allies uncomfortable, so he can negotiate from strength. And although both Canada and Mexico have said they will retaliate against any tariffs, the reality is that it would devastate their economies much more than it would ours.

So, I believe he wants a deal at the end of the day. We’ll know more tomorrow if Trump’s tariffs are imposed on Canada and Mexico.

But this is the backdrop the Fed is operating against right now. I think they will realize, in time, that these tariff threats are simply negotiation tactics. And, what’s more, any tariffs that go into place will likely not be inflationary, since the U.S. dollar is incredibly strong right now.

Keep Your Eye on the Ball

Now, we’ll keep an eye on these developments as needed. But I want to emphasize that you should remain focused on what really matters right now.

I’m talking about earnings, of course.

The fact is earnings are accelerating and expected to be strong every quarter of 2025. FactSet currently projects 11.3%, 11.6%, 15.3% and 16.6% average earnings growth in each of the four quarters of 2025, respectively. And calendar year 2025 earnings are expected to average 14.8%.

What’s more, my Growth Investor stocks should soundly beat the S&P 500 this year. My Buy List is characterized by 509% average annual earnings growth and 23.8% average annual sales growth – and my Growth Investor stocks have benefited from positive analyst revisions over the past three months.

In other words, I anticipate wave-after-wave of positive earnings surprises to dropkick and drive my Growth Investor stocks higher throughout the year!

To further position my Growth Investor Buy List for the stunning earnings season, I decided to add two new buys in today’s Growth Investor February Monthly Issue. One is on the verge of posting another big earnings surprise, as analysts have more than doubled estimates in the past three months. The other is a company that reported fourth-quarter adjusted earnings that were 37% higher – and is expected to greatly benefit from Trump’s “drill, baby, drill” policy.

Go here now to view my latest research and learn how to get the latest issue of Growth Investor.

Sincerely,

Louis Navellier

Editor, ÃÛÌÒ´«Ã½ 360

The post The Fed Pauses Rate Cuts (For Now) as Trump 2.0 Tariff Deadline Approaches appeared first on InvestorPlace.

A Special Video From Our InvestorPlace Analysts: As InvestorPlace Editor In Chief Luis Hernandez explains in the above video, Eric Fry, Louis Navellier, and I built our AI Revolution Portfolio to represent the best-in-class stocks for the AI Boom.  

Our focus is on finding the AI stocks that could go on to disrupt entire industries and, as a result, go up more than any stock over the next 12 to 36 months. Our AI Revolution Portfolio returned more than 21% last year… and continues to outperform the market this year. 

While this week’s market volatility is no fun, at the end of the day, our AI Revolution Portfolio companies are pumping out more profits than anyone else…. and that’s why we believe this week’s selloff is so overblown. 

To learn more about our AI Revolution Portfolio, click here.

The action on Wall Street this week has been dominated by the DeepSeek breakthrough out of China, which sent AI stocks like Nvidia (NVDA) on a roller-coaster ride all week long. But while AI stocks were whipsawing up and down, the rest of the market quietly powered higher because of one thing: the Federal Reserve.

We think this Fed-powered rally has legs.

It is funny to think that the Fed took a backseat this week. After all, it has arguably been the biggest driver of stocks in the past two years…

Whenever Fed Board Chair Jerome Powell sounds hawkish and acts like he wants to hike rates, stocks struggle. When Powell sounds dovish, signaling that rate cuts are coming, stocks soar.

Which is why it’s so unusual for the Fed to take a backseat, and yet that is what happened…

How the Fed’s Latest Moves Position Stocks for a Strong Year

The Fed held its January Federal Open ÃÛÌÒ´«Ã½ Committee (FOMC) meeting on Tuesday and Wednesday, followed by a new interest-rate decision, policy statement, and press conference from Powell. Usually, those meetings take center stage on Wall Street. This week, it was a sideshow, because of the DeepSeek drama.

That doesn’t change the fact that the Fed is still arguably the most important factor on Wall Street.

The Federal Reserve controls the money flow, decides if rates are going higher or lower, and decides if the economy strengthens or slows…

It is still the most important power on Wall Street.

And this week—while everyone was distracted by DeepSeek—the Fed gave the green light for stocks to rally.

Sure, it didn’t cut interest rates. Rather, the Fed paused its rate-hiking campaign in a move that was widely expected…

The market didn’t care much about that decision. Rather, the market focused on what Powell would say about the path of interest rates going forward.

And he told the market exactly what it wanted to hear on Wednesday afternoon:

• He said inflation is still trending lower and that the Fed remains confident that it can get inflation back to 2%.
• He said that the recent inflation report was very comforting.
• He said that the economy is pretty healthy.
• And, most importantly, he said that if current trends persist, the Fed will feel comfortable resuming its rate-cutting cycle soon.

In response, the market started pricing in more rate cuts, and stocks rallied.

Looking beyond the drama in the AI industry right now, the simple economic reality is that if the Fed keeps cutting interest rates this year, those cuts will couple with deregulation and a rebound in economic sentiment to power a very strong economic growth surge over the next few quarters.

Alongside that economic growth surge, stocks will push higher.

The Final Word

So, at the end of the day, it still all comes down to the Fed. While the market was distracted by DeepSeek drama this week, the Fed quietly gave stocks the green light to rally.

So, let’s let them rally.

This could be another very good year for stocks so sitting on the sidelines is not an option. Instead, let’s look for top stocks to buy for 2025.

To help us find a few, we’re turning our attention to the world’s richest man, Elon Musk, and his AI startup, xAI. We think that startup has a lot of potential over the next few years, but it isn’t a public company. So how do you claim your share?

Click here to learn more now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post The Fed Gave the Green Light for Stocks to Rally This Week appeared first on InvestorPlace.

The DeepSeek story continues to evolve as new information comes to light.

Let’s begin with Reuters:

Chinese AI startup DeepSeek’s chatbot achieved only 17% accuracy in delivering news and information in a NewsGuard audit that ranked it tenth out of eleven in a comparison with its Western competitors including OpenAI’s ChatGPT and Google Gemini.

The chatbot repeated false claims 30% of the time and gave vague or not useful answers 53% of the time in response to news-related prompts, resulting in an 83% fail rate, according to a report published by trustworthiness rating service NewsGuard on Wednesday.

Meanwhile, as to how it caught up with the U.S. incumbent AI platforms so quickly, the answer might be “stealing.”

Here’s The New York Post:

OpenAI, the company behind ChatGPT, says it has proof that the Chinese start-up DeepSeek used its technology to create a competing artificial intelligence model — fueling concerns about intellectual property theft in the fast-growing industry.

OpenAI believes DeepSeek, which was founded by math whiz Liang Wenfeng, used a process called “distillation,” which helps make smaller AI models perform better by learning from larger ones.

While this is common in AI development, OpenAI says DeepSeek may have broken its rules by using the technique to create its own AI system…

Security researchers at Microsoft, which has poured billions into OpenAI, discovered last fall that individuals with possible links to DeepSeek were harvesting vast troves of data through OpenAI’s application programming interface, or API, sources told Bloomberg.

Despite this, Microsoft has been gracious and supportive of DeepSeek.

From Bloomberg:

“DeepSeek has had some real innovations,” [said Microsoft Corp. Chief Executive Officer Satya Nadella] during an investor call after Microsoft reported quarterly results on Wednesday.

“Obviously now that all gets commoditized and it’s going to get broadly used.”

Stepping back, let’s not rush to conclusions about what DeepSeek’s technology means for U.S. AI sector. New information and perspectives are emerging fast, and the story will continue evolving.

So, for now, let’s look at what’s most likely accurate about DeepSeek, and analyze how it could influence your portfolio.

By the way, our experts Louis Navellier, Eric Fry, and Luke Lango just sat down with our Editor-in-Chief and fellow Digest writer, Luis Hernandez to film a roundtable discussion on the topic. It’s your best way to get our experts’ unfiltered thoughts about DeepSeek, its impact on the AI sector, and what to do about it in your portfolio.

More on that shortly…

However, its arrival does mean that the AI leaderboard is shifting slightly. There are some corners of the AI sector that could face headwinds, even if DeepSeek doesn’t live up to all its claims.

To begin our analysis, it’s critical to understand how DeepSeek competes with incumbent U.S. AI models – despite operating at vastly lower cost using greatly reduced energy.

The answer has to do with something called Mixture-of-Experts (MoE) architecture, which our technology expert Luke Lango detailed in yesterday’s issue of Hypergrowth Investing:

Ever since the AI Boom began, the U.S. has consistently enforced export bans on AI chips to China, thereby limiting the number of chips Chinese firms can buy. As a result, Chinese developers were forced to embrace a “do more with less” mentality.

At the heart of DeepSeek’s breakthrough is something called a Mixture-of-Experts (MoE) architecture. It is a model composed of multiple topic-specific sub-models.

Therefore, when you ask DeepSeek a question, the only part of the model that “wakes up” is the expert sub-model relevant to your question.

Thanks to this modular approach, DeepSeek can save an immense amount of computing power on each query because only part of the model is roused per query. This drastic reduction in activated parameters is partially what has allowed the firm to create an AI as good as leading models for ~95% lower costs.

Now, lower costs would seem to be an enormous benefit for AI companies. So, why did so many AI stocks implode earlier this week after DeepSeek emerged?

The selloff earlier this week reduces to a core concern…

AI at lower cost/reduced energy consumption means that the AI Big Dogs (think the Mag 7) won’t need to spend billions on their AI development.

And that would mean the chipmakers, datacenter operators, and component suppliers that were anticipating billions in tech development revenue will need to rethink their expectations.

We’ll address this concern in a moment. But first, let’s not miss the obvious…

Lower cost/reduced energy AI technologies will be a tremendous benefit for what Luke has called the “AI Appliers” – meaning the companies that use AI in their existing operations to improve their profit margins.

For them, AI at vastly reduced cost means they can create and offer far more advanced versions of their products and services at greatly reduced expense. That’s good for their bottom lines.

But they’re not the only ones benefiting.

With an entire new cohort of businesses able to implement AI at lower costs, the companies that make AI applications possible could enjoy an avalanche of new revenue streams.

Back to Luke:

This DeepSeek breakthrough looks like a big-time opportunity.

That’s why we’re telling our subscribers to look for plays in the “AI Application Layer,” with the companies developing cutting-edge AI applications…

We would get exceptionally bullish on AI software and services stocks like Meta and Apple (AAPL) or companies like Spotify (SPOT), Intuit (INTU), ServiceNow (NOW) and Atlassian (TEAM) – those creating and deploying AI models and solutions. 

Let’s return to the potential losers of AI technologies at lower cost/reduced energy consumption.

At first blush, high-end chipmakers and datacenter/power facilitators are in the crosshairs. After all, if AI technologies no longer require expensive, high-end microchips, that would hurt the bottom lines of companies such as Nvidia.

Similarly, if AI technologies no longer require enormous volumes of energy, that would weigh on datacenter/power companies and their related component businesses.

Is it time to bail on these stocks?

Not necessarily.

To make the case for why DeepSeek won’t be a death knell for AI infrastructure plays, let’s go to Christophe Fouquet, the CEO of leading chipmaker ASML. From his interview yesterday with CNBC:

A lower cost of AI could mean more applications. More applications means more demand over time. We see that as an opportunity for more chips demand…

For AI to really come to life in the next few years — not only with the hyperscalers [like Microsoft, Amazon and Google], but with all of us in our phone, PC — we need AI to address two things: cost and energy consumption.

We believe that anything that will go in the direction of lowering cost on AI is, in fact, probably news because this will allow applications to go to many, many more devices.

Okay, but what about AI datacenters? If DeepSeek’s technology operates at just a fraction of the energy used by U.S. incumbent platforms, that will mean far less power consumption than previously forecasted.

This is why in a note to clients on Monday, Bank of America analysts flagged this concern, writing that DeepSeek is “raising doubts about the high expectations for…power requirements.”

While this would appear to be a major stumbling block for AI power companies, “Jevons Paradox” suggests it’s the opposite.

Back to Luke:

Originated by 19^th century British economist William Stanley Jevons, the Jevons Paradox states that improvements in a resource’s efficiency tend to increase – rather than decrease – the overall consumption of that resource.

That’s because greater efficiency lowers a resource’s cost, which can lead to increased demand.

In other words, DeepSeek’s technology could mean that the cost-per-unit of energy needed to run AI datacenters will drop substantially…but rather than hurt overall power consumption, this would lead to a tsunami of demand from new companies wanting AI at lower energy cost.

So, though the cost of energy-per-unit could fall, overall energy demand could grow dramatically, supporting the datacenter ecosystem. This is what happened with coal usage in the 1800s.

Microsoft’s CEO Satya Nadella even referenced Jevons Paradox on Sunday on X based on the DeepSeek news.

Despite this potential for a swell in overall demand for chips and power, Luke is more cautious about expectations for AI infrastructure plays.

For example, here’s his take on Nvidia:

We wouldn’t get too bullish on AI hardware and semiconductor stocks like Nvidia.

Some will likely lose their pricing power as the hardware in this industry becomes increasingly commoditized, leading to lower margins and slower profit growth.

That said, it’s far too early to leap to the conclusion that you need to bail on these stocks. For now, a “wait and see” approach is more appropriate.

There are plenty of additional details about DeepSeek and its impact on U.S. AI stocks that we haven’t had space to cover here. That’s why our experts Louis Navellier, Eric Fry, and Luke Lango just sat down with our Editor-in-Chief and fellow Digest writer, Luis Hernandez, for a roundtable discussion.

While you’re likely familiar with Louis, Eric, and Luke, you may not know that in December, they created their AI Revolution Portfolio together.

This is a “best of the best” collection of AI stocks based on our experts’ respective approaches to picking market winners. The portfolio represents what Louis, Eric, and Luke believe are the best ways to profit from the AI revolution over the next 12-26 months.

I’ll note that their AI Revolution Portfolio returned more than 21% last year… and continues to outperform the market this year. So, who better to comment on DeepSeek and its impact on AI stocks than these three experts?

In their video roundtable discussion below, Louis, Eric, and Luke dive into the vast implications of DeepSeek’s sudden emergence, and most importantly, what you should do about it in your portfolio.

Click here (or press the play button below) to watch them break down the winners and losers in this AI revolution, as well as the moves that savvy investors need to make today.

And to learn more about the “best of the best” AI stocks in their AI Revolution Portfolio, click here.

Wall Street is still getting a handle on what DeepSeek will mean for AI, and the takeaways are likely to shift over the coming weeks/months. But as it looks today, this is bullish for AI stocks and your portfolio.

Here’s Luke to take us out:

In our view, DeepSeek’s breakthrough will meaningfully accelerate AI model advancement and meaningfully boost the odds that Big Tech companies achieve AGI much sooner than previously thought.

We view DeepSeek’s efficiency breakthrough as great news for the industry – and great news for AI stocks, too…

So… as it relates to all the fears about DeepSeek’s breakthrough meaning the end of Big Tech or the death of AI… we think those fears couldn’t be further from the truth. 

Have a good evening,

Jeff Remsburg

The post How the DeepSeek Story Is Evolving as New Information Emerges appeared first on InvestorPlace.

As I mentioned in Tuesday’s ÃÛÌÒ´«Ã½ 360, news broke over the weekend that DeepSeek claims that its R1 and V3 models performed better than or close to ChatGPT. What’s more, DeepSeek is bragging that its AI search algorithms use significantly less power than ChatGPT and other AI large language models (LLMs), though information on what percentage varies significantly. 

Now, DeepSeek’s supposed success has occurred despite export curbs, implemented during the Biden administration, that were designed to limit the sales of the advanced AI chips that NVIDIA Corporation (NVDA) makes.

As a result, the entire roadmap of how AI is supposed to evolve is being questioned. Some investors are wondering whether or not the chip-hungry and energy-intensive U.S. AI industry will win the AI race. This led to a massive selloff in AI names, with NVIDIA losing a staggering 17%, and many of the AI infrastructure/power names lost even more than that.

This is a good time to remind all investors that the stock market is really just a manic crowd. The truth of the matter is crowds react and do not think. In fact, the bigger the crowd, the lower the IQ. So, during Monday’s selloff, the stock market’s violent reaction was particularly stupid, since investors were reacting with vigor and not thinking with equal vigor.

The stock market seems to be thinking more clearly again as investors reassess things and realize that we can’t take these claims at face value. 

Still, President Donald Trump was right when he called the DeepSeek news a “wake-up call” for U.S. companies to reassert their dominance over AI.  

If you’re one of the many investors who have been following the AI race closely, you’re probably wondering what to make of this news. So, earlier this week, InvestorPlace Editor-in-Chief Luis Hernandez sat down with the me, Eric Fry and Luke Lango – the creators of the AI Revolution Portfolio – to answer those questions and let you know what we believe investors should do now. (You can find out more about AI Revolution Portfolio by going here.) 

Check out our conversation by going here, clicking the video or you can read the full transcript below. 

As Luis explains, Eric, Luke and I built our AI Revolution Portfolio to represent the best-in-class stocks for the AI Boom.  

Our focus is on finding the AI stocks that could go on to disrupt entire industries and, as a result, go up more than any stock over the next 12 to 36 months. Our AI Revolution Portfolio returned more than 21% last year… and continues to outperform the market this year. 

While this week’s market volatility is no fun, at the end of the day, our AI Revolution Portfolio companies are pumping out more profits than anyone else…. and that’s why we believe this week’s selloff is so overblown. 

To learn more about our AI Revolution Portfolio, click here. 

Video Transcript

Luis Hernandez: Hi everyone. I’m Luis Hernandez, Editor-in-Chief at InvestorPlace.

The markets were rocked Monday when a Chinese AI lab released a new language model named DeepSeek R1. Experts noted that the performance of the model is as good as anything they’ve seen from any other provider.

But what’s really striking isn’t just the results, but the claims about the cost of its development. DeepSeek claims that its breakthrough model costs less than $6 million to train using inferior AI chips. OpenAI’s GPT model costs more than $100 million to train.

Almost immediately, DeepSeek became the most downloaded free app in the U.S. on Apple’s App Store, knocking ChatGPT down to second. Aside from the cheaper cost to train the model, DeepSeek is free for personal use and cheap for businesses. And because DeepSeek is an open-source platform, researchers and developers worldwide are rushing to get access and build on its capabilities.

Now, some hard questions are being asked about tech stocks and companies that have been riding the AI megatrend to big profits so far, especially the Magnificent Seven. The market is asking whether all the billions in spending planned by these companies is really necessary.

No one bore the brunt harder than AI megatrend poster child Nvidia Corp. (NVDA), which dropped 17% on Monday, with other chip makers such as ASML Holding N.V. (ASML) and Broadcom Inc. (AVGO) also taking hits. And let’s not forget that all this happened in the shadow of the Trump administration’s announcement of the Stargate Project aimed at making the U.S. the unrivaled world leader in AI. Noted Silicon Valley observer Marc Andreessen has called DeepSeek AI’s “Sputnik moment.”

For those who don’t remember, Sputnik was the satellite launched by the Soviet Union that kicked the Space Race into high gear. Are we looking at a similar race scenario for AI dominance?

Today, we’re going to get some answers about what to make of this news and what implications it might have for your portfolio.

I’m here with the three analysts who built the AI Revolution Portfolio, Eric Fry, Luke Lango, and Louis Navellier. If you don’t know the product, the AI Revolution Portfolio was built by these three editors to represent the best-in-class stocks for the AI Revolution.

They focus on finding the AI stocks that could go on to disrupt entire industries and, as a result, go up more than any stock over the next 12 to 36 months. The AI Revolution Portfolio returned more than 21% last year, and every stock in the portfolio is focused on the company’s best position to take advantage of the AI megatrend.

Thanks for being here, guys. I know it’s a short notice to call all of you here, but I appreciate your availability.

Eric Fry: Good to be here.

Luis: Eric, let’s start with you.

The three of you have been telling folks for a while that the next phase of the AI Revolution was going to be about AI appliers, those who are using AI to expand profit margins rather than AI builders such as you get with Nvidia and the other Magnificent Seven. Does all this sort of feed into that theory for you?

Eric Fry: I think it’s exactly right, Luis. I mean, obviously, yesterday’s announcement was a somewhat surprising one, and it was certainly a shock across the bow for hardware providers like Nvidia. But it is part of a theme, and it’s also part of the long-term legacy of technological innovation. Technology, as it becomes more ubiquitous… the price falls. This is a version of that.

Different innovators find ways to produce products more efficiently at better and better prices. And what was true of old technologies is also true of AI… or appearing to be true, anyway. I mean, we all have those examples. My parents bought a VCR in 1983. It was $800, so that’s almost $3,000 in today’s money. They didn’t stay at $800. They didn’t stay $3,000. So, this announcement is unnerving for some companies like Nvidia.

I don’t think it’s fatal by any means; but if you look at this canvas more broadly, as prices drop across the, we will call it the AI sphere, that’s going to promote its use, it’s going to promote ubiquity, it’s going to promote adoption. And that is a benefit in general to the companies that are applying artificial intelligence. It’s a dramatic moment. I don’t feel like it’s a terrifying moment. It’s just a step along the way.

Luis: Okay, great.

Louis, going back to that comment about this being AI Sputnik moment, how do you think the administration is going to respond to this kind of news?

Louis Navellier: Well, they already have. They basically said it’s a wake-up call, and Silicon Valley started to scramble obviously yesterday. And I’m sure they’re going to come back with something bigger and better. I think we’re all shocked by the timing of this. While this broke on Sunday during the football playoffs, most traders on Wall Street are big sports fans, so guess what they were doing?

And it just went down in the aftermarket and opened up low. But I’m very, very suspicious of it. At least it’s out there. It can be tested, but why wouldn’t you want better AI, more powerful AI?

So, this narrative that we can use the old Nvidia chips, we don’t need the new ones, that we don’t need extra power – DeepSeek says they use 29% less power – maybe they’re just not looking at certain things that other applications are, which might make some sense because you don’t want to run garbage in garbage out of your model.

So I think it’s basically China’s way of messing with us. And, of course, you can’t download TikTok now because it’s in limbo, and so maybe China wants to use DeepSeek to get all our personal data because they can’t get it from TikTok now.

Luis: Yeah, there’s certainly reason to be skeptical about claims made from China about various technologies because they’ve done that before.

Louis: Correct.

Luis: Luke, can you characterize market selloff as a big overreaction? Can you expand on that a little bit?

Luke Lango: Yes. We call it a big overreaction and a buying opportunity because, similar to what Eric said, but there’s actually a name for it. It’s Jevons Paradox, which is the idea that if you decrease the cost of a certain resource, if that resource is in high demand, then what you’re going to do is dramatically increase the demand for that resource because now it’s accessible and everybody can afford it or can use it.

And that’s exactly what’s going on here. I think of the build-out of fiber optic network, fiber optic cables in the 1990s is a very strong example of this. Before that, transmitting data over the internet was very slow and expensive. With fiber optics, it became fast and cheap; and, all of a sudden, the internet was beaming into everyone’s house. That’s when everybody was using the internet, and that’s when the real internet boom started. It didn’t result in less spend on internet infrastructure. It actually resulted in more spend on internet infrastructure because any decrease in unit pricing was offset by a larger increase in volume of usage.

And so that’s exactly what I think is going to happen here. There is that blowback where it’s like, “Oh no. All of a sudden, maybe we can’t charge a ‘bajillion quadrillion bajillion’ dollars for one single Nvidia GPU. Okay, sure.” But now people are going to buy a “billion bajillion quadrillion quadrillion”of them as opposed to one of them. So, you’re going to go and get this offset and volume increase, and so the overall spending pie to me doesn’t go down.

The reaction suggested the overall spending pie goes down. I think that’s incorrect, and you’re seeing a rethink, a rational rethink of that today. There’s been a lot of commentary over the last 24 hours that is very in line with what I just said, and you’re seeing a rational rethink in markets today. A lot of those names that were hit hard yesterday are rebounding today, though not recouping all their losses. Definitely the beginning of a nice little rebound, rebounding up big technical support levels and a lot of those names as well too.

So that’s how I view it. I do think it’s a very real breakthrough. The cost claims, who the heck knows? Nobody can really verify that. But the actual technological algorithmic breakthrough that they had with the Mixture of Experts model, that’s legit. That’s pretty impressive that they were able to do that. So, to me, it just means more ubiquity and more usage and more application. So I actually think it’s a long-term positive, not a negative, as the market may have took it that first time.

Luis: Hey, Eric, one of the concerns that you’ve been writing about is the sky-high valuations we’ve seen from so many stocks, especially the Magnificent Seven. I mean, is this kind of an opportunity for some repricing of all that kind of stuff?

Eric: Yeah, I think bubbles have a way of finding a pin. I don’t think it’s a bubble exactly, but the valuations are high, and they’re high for legitimate reason. These are world-dominated companies, and they remain so today. So, my knock on them wasn’t really, “Oh gee, these things are a house of cards.” It was simply the law of large numbers.

When you get high valuations, in order to make that investment work, you need to have great things continuing to happen, and you certainly can’t have any bad surprises. Whereas, if your valuations are more middling, the stakes aren’t as high. So, we saw that play out yesterday, particularly with Nvidia. High valuation, the news alarmed shareholders, stock tanked 20%, or whatever. That’s the kind of thing that happens to a company that’s richly valued.

It doesn’t mean Nvidia can’t recoup that loss. It just means that when you’re playing in names like that, you have to expect that any bit of bad news is going to be pretty harmful to their return profile. And so if you’re willing to stay with that, tolerate it, great. A lot of investors don’t like that kind of volatility, so you don’t want to play there.

Luis: Yeah. Louis, I was thinking of you because, of course, when I came in Monday, literally one of the first things I saw from Customer Service was some customer had called in to say, “Should I sell my Nvidia stock?” What would you say to that person since you hold Nvidia in some of your portfolios?

Louis: Well, not that I hold, it’s my largest holding. It’s a stock that can change your life, and it’s honestly changed my life. I mean, we’ve had it for five years, and this is our second time in it. So obviously, the capital gains consequences would be massive to sell it, and there’s no reason to sell it when a strong forecast in sales and earnings is getting more dominant.

I would add that Nvidia, believe it or not – I know it’s bouncing really strongly today – did exhibit rail of strength yesterday. And we were monitoring the companies that build out our power grid and the data centers, and those actually got hit a lot harder. And that’s ridiculous because those are long-term contracts, and once they start to expand the power grid, they’re not going to change because of one Chinese app, and that might be more efficient than ChatGPT.

So, Nvidia was exhibiting row of strength; and I told my wife to load up on it, and she did. All her cash is out in Nvidia as of Monday. So, it’s very exciting, and we don’t get these kinds of buying opportunities very often. But literally, a lot of the stuff that got hit on Monday is going to be up 20 to 30% as the earnings come out.

Luis: Now, Luke, it’s only Tuesday as we film this. So we saw the big dip on Monday, we saw some recovery for some stocks, like Louis just mentioned, on Tuesday. Do you think short term, we’re in for more volatility, or do you think this is going to play out over a longer period?

Luke: Oh, I think the buying opportunity is here for the next few days. So, short-term: big tech earnings. This model was the biggest slap in their face I have ever witnessed as a human being, right. I’ve never seen big tech so publicly embarrassed by a little Chinese startup. They are going to defend their turf on all those earning calls over the next two to three weeks. You best believe they’re going to come out swinging with everything to justify their massive CapEx, talk about all their advancements, and they’re getting close to AGI, and why they’re better than DeepSeek.

They’re going to be ready in their prepared remarks. They’re going to be ready for the Q&A because the analysts are going to grill them there, and big tech’s going to defend their turf very successfully. So, you’re going to get a bounce on that because big tech’s going to defend the turf.

I think Trump’s going to defend this turf because this was also a slap in the face to him. A week after, five days after, he announces a $500 billion initiative to build out AI data centers, all of a sudden, everyone on Wall Street’s questioning whether or not we need to build any more AI data centers, right.

It’s like, whoa!

So now, he’s got to go defend that. He’s going to defend that. So, you’re going to get the Trump defense, you’re going to get the big tech defense, and then you’re just going to get a rational rethink where it’s like, “Oh yeah, maybe their claims aren’t as strong as they probably first said they were.” So, I think between those three things, you’re going to get a very big balance in a lot of those names over the next two to three weeks.

Where it gets murky is beyond that. After big tech defends its turf, after Trump defends the Project Stargate, etc., etc., what happens when OpenAI integrates mixture of experts’ techniques into its modeling? Do they discover that maybe they don’t need as many? Who knows? I don’t know. That’s where it gets murky to me. Two to three weeks pretty clear. You’re going to get a very nice balance.

And I agree with Louis. I think a lot of those stocks that got hammered yesterday, the power names, they got crushed. Constellation Energy Corp. (CEG), Vistra Corp. (VST), those are low-beta stocks that drop 25% in a day. That doesn’t happen. Those are going to bounce 20 to 40% in the next two to three weeks, in my opinion. I think a lot of those names are going to come back with a vengeance. Two to three months down the road, that’s where it’s a little murky. But two to three weeks, I see a very strong short-term balance.

Luis: Bottom line, I think it’s pretty safe to say for the three of you, you’re still very bullish on the AI opportunity here, short-term and long-term, because of all the possibilities that can happen both with big tech and with opportunities for smaller companies now that may have a cheaper version of AI available.

Luke: I think to bring it back to our AI Revolution Portfolio… it was all about the application layer, right, the phase shift into applications. That’s what this is. That’s what I’m telling my subscribers is just that this really was the moment that we officially phase-shifted into the application layer. The breakthroughs prove that the ingenuity is going to be in software.

And now that this becomes a ubiquity, now that it becomes accessible, now that a lot of people can bootstrap models like this, you’re going to see the ingenuity happen at the software layer. And that’s where you’re going to see a lot of growth in the application stocks. So, we talked about the Monday price action. Louis absolutely right. Nvidia outperformed a lot of the big hardware stocks, but what was green on Monday? A lot of software names.

Luis: Yeah.

Luke: A lot of software stocks were green on Monday because it’s actually good for them. This is good for them. And so I think we’re now moving more firmly into that application layer. So I’m not going to pat ourselves on the back or toot our horn a little bit, but I do think it was very prescient to say a few months ago, “Hey, we’re gearing up to move into the application layer of the AI boom because I think we really are in it now.”

Eric: Yeah. What that means from a practical standpoint investing-wise or one of the things that it means is that the AI story has been somewhat monolithic for the last two years. There’s been sort of this big, “Okay, this is AI, and to buy AI, you have to buy these five names.”

Pick your terminology. When it becomes a software-centric opportunity like Luke is talking about or – and that’s a version of applied AI – now you’re talking about something that is heterogeneous and has tentacles all over the place where AI can impact individual companies that are either producing the software or applying the software. And that’s literally every industry on the planet.

So, all of a sudden, every industry in the planet becomes an AI play if they are developing an advanced capability because of AI. So I think it becomes much more interesting now for investors than it was in the first phase.

Luis: Terrific.

Louis: I would add that DeepSeek is open source. So in theory, a lot of the companies that are experimenting with it could have a DeepSeek button on their website. They want to see the DeepSeek AI solution. Of course, I’m sure ChatGPT would like to have a button there too. So this may be a start of the AI arms race, but they’re not going to stop development. It’s going to get bigger and bigger. Just look what Tesla Inc. (TSLA) is doing, mapping out all the roads with all their cars and trying to do self-driving based on all their cameras. The amount of power that takes is ridiculous.

Luis: Yeah.

Louis: So, it’s not going to stop, but it’s healthy. Competition’s good. Obviously, China wants to embarrass the United States, wants to dominate another industry, but Trump has all these allies in Silicon Valley. They were all at his inauguration. He was defending them at Davos, yelling at Europe for fining them and messing with Apple Inc. (AAPL) for taxes and things. So, it’s going to be an economic war with us in China, and we’ll see if we can win. We’ve been winning before.And we certainly got them outnumbered. So let’s just go have fun with this.

Luke: And that’s why I think the spending pie goes up, not down.

I mean, if anything, it’s like, wow, the race is on. The Sputnik moment – that the race is on. So maybe you were saying we were spending dumbly before, that doesn’t mean we’re going to stop spending. It means we’re going to spend more and then be smarter at the engineering as well. We’re going to do everything. We’re going to throw the whole kitchen sink, maybe the whole house at this now.

I just think that I wouldn’t be surprised. I mean, maybe I’d be a little bit surprised, but I think it’s possible that Project Stargate becomes a trillion-dollar project now because we have to win. If China really is doing that, we have to win. This is the final race of all races. Whoever gets to AGI wins world forever and ever, right. So you have to win. There’s no other choice.

If more money’s not doing it, then throw more money at it even still. That’s the American way. Bigger, bigger, bigger, bigger, bigger. So I think we’re just going to spend way more money. I don’t see the pie going down at all and actually think it’s a long-term pause to begin for all AI stocks. So yeah, just to piggyback on what Louis said, making this kind of a U.S. versus China, national security thing.

Luis: Okay, thanks again for your time, gentlemen.

Folks, these three analysts have been telling their followers that the next phase of AI is going to be the culmination of everything before it. It’s going to affect every aspect of society in ways we couldn’t imagine just two years ago.

We’ll keep you up to date on DeepSeek and all the other important AI news in the weekly updates to our AI Revolution Portfolio service, as well as regular updates on the stocks in the portfolio, the best of the best in AI.

Just a little over a month ago, our analysts added seven stocks to the portfolio, and as I record this, they’re all still below the buy-up to prices. So, there’s still a chance to get into your favorite stocks for 2025.

Make no mistake, folks. Anyone who misses this opportunity to invest in the best AI stocks now could end up missing their financial goals and jeopardizing their futures. You can click here to see a special offer so you can follow along with our expert picks in the AI Revolution Portfolio.

Sincerely,

Louis Navellier

Editor, ÃÛÌÒ´«Ã½ 360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA)

The post Must Watch: Our Top Experts Weigh In on DeepSeek and Big Tech’s Selloff appeared first on InvestorPlace.

The free, open-source model’s performance equals or betters pretty much everything else out there. And free works: DeepSeek is now the top download at the Apple App Store and Google Play.

And it not only caused Nvidia Corp. (NVDA) and AI data center stocks to tank … but also threatened to upend the current tech world order.

There are two main reasons why…

If that’s the case, does the U.S. need more so-called hyperscaler data centers, a new fleet of nuclear power plants, and a full electricity grid buildout? We’ll find out in the months to come.

Meanwhile, the market has recovered some since Monday – though not Nvidia. But plenty of hard questions remain about the future profitability of the tech companies that have been riding the AI Revolution to big profits so far.

The market is asking whether all the billions in spending planned by these companies is really necessary.

So, earlier this week, I sat down with InvestorPlace Editor in Chief Luis Hernandez and my AI Revolution Portfolio partners – Louis Navellier and Luke Lango – to answer those questions… and to consider what we all should be doing with our AI investments now. (You can find out more about AI Revolution Portfolio by going here.)

You can watch the full discussion by clicking the play button above, or you can read the full transcript below.

Louis, Luke, and I built the AI Revolution Portfolio to represent the best-in-class stocks for the AI Boom… and to capture AI opportunities like this one. It’s where we focus on finding the AI stocks that could go on to disrupt entire industries and, as a result, go up more than any stock over the next 12 to 36 months.

Our AI Revolution Portfolio returned more than 21% last year, and it continues to outperform the market this year. 

Bottom line: We are firmly moving into the application layer of the AI Revolution.

This is when companies that are applying AI technology within their own products and services, rather than producing the material needed to create AI, will dominate.

These companies are overjoyed at the prospect of the sort of free (or at least affordable), open-source, user-friendly AI that DeepSeek and its innovations promise

So, we are still very bullish on the AI opportunity here. In fact, the biggest investment opportunity of our lifetimes just got bigger.

While this week’s market volatility is no fun, at the end of the day, our AI Revolution Portfolio companies are pumping out more profits than anyone else. 

So, I encourage you to take some time to learn more about our AI Revolution Portfolio here. 

Video Transcript

Luis Hernandez: Hi everyone. I’m Luis Hernandez, Editor-in-Chief at InvestorPlace.

The markets were rocked Monday when a Chinese AI lab released a new language model named DeepSeek R1. Experts noted that the performance of the model is as good as anything they’ve seen from any other provider.

But what’s really striking isn’t just the results, but the claims about the cost of its development. DeepSeek claims that its breakthrough model costs less than $6 million to train using inferior AI chips. OpenAI’s GPT model costs more than $100 million to train.

Almost immediately, DeepSeek became the most downloaded free app in the U.S. on Apple’s App Store, knocking ChatGPT down to second. Aside from the cheaper cost to train the model, DeepSeek is free for personal use and cheap for businesses. And because DeepSeek is an open-source platform, researchers and developers worldwide are rushing to get access and build on its capabilities.

Now, some hard questions are being asked about tech stocks and companies that have been riding the AI megatrend to big profits so far, especially the Magnificent Seven. The market is asking whether all the billions in spending planned by these companies is really necessary.

No one bore the brunt harder than AI megatrend poster child Nvidia Corp. (NVDA), which dropped 17% on Monday, with other chip makers such as ASML Holding N.V. (ASML) and Broadcom Inc. (AVGO) also taking hits. And let’s not forget that all this happened in the shadow of the Trump administration’s announcement of the Stargate Project aimed at making the U.S. the unrivaled world leader in AI. Noted Silicon Valley observer Marc Andreessen has called DeepSeek AI’s “Sputnik moment.”

For those who don’t remember, Sputnik was the satellite launched by the Soviet Union that kicked the Space Race into high gear. Are we looking at a similar race scenario for AI dominance?

Today, we’re going to get some answers about what to make of this news and what implications it might have for your portfolio.

I’m here with the three analysts who built the AI Revolution Portfolio, Eric Fry, Luke Lango, and Louis Navellier. If you don’t know the product, the AI Revolution Portfolio was built by these three editors to represent the best-in-class stocks for the AI Revolution.

They focus on finding the AI stocks that could go on to disrupt entire industries and, as a result, go up more than any stock over the next 12 to 36 months. The AI Revolution Portfolio returned more than 21% last year, and every stock in the portfolio is focused on the company’s best position to take advantage of the AI megatrend.

Thanks for being here, guys. I know it’s a short notice to call all of you here, but I appreciate your availability.

Eric Fry: Good to be here.

Luis: Eric, let’s start with you.

The three of you have been telling folks for a while that the next phase of the AI Revolution was going to be about AI appliers, those who are using AI to expand profit margins rather than AI builders such as you get with Nvidia and the other Magnificent Seven. Does all this sort of feed into that theory for you?

Eric Fry: I think it’s exactly right, Luis. I mean, obviously, yesterday’s announcement was a somewhat surprising one, and it was certainly a shock across the bow for hardware providers like Nvidia. But it is part of a theme, and it’s also part of the long-term legacy of technological innovation. Technology, as it becomes more ubiquitous… the price falls. This is a version of that.

Different innovators find ways to produce products more efficiently at better and better prices. And what was true of old technologies is also true of AI… or appearing to be true, anyway. I mean, we all have those examples. My parents bought a VCR in 1983. It was $800, so that’s almost $3,000 in today’s money. They didn’t stay at $800. They didn’t stay $3,000. So, this announcement is unnerving for some companies like Nvidia.

I don’t think it’s fatal by any means; but if you look at this canvas more broadly, as prices drop across the, we will call it the AI sphere, that’s going to promote its use, it’s going to promote ubiquity, it’s going to promote adoption. And that is a benefit in general to the companies that are applying artificial intelligence. It’s a dramatic moment. I don’t feel like it’s a terrifying moment. It’s just a step along the way.

Luis: Okay, great.

Louis, going back to that comment about this being AI Sputnik moment, how do you think the administration is going to respond to this kind of news?

Louis Navellier: Well, they already have. They basically said it’s a wake-up call, and Silicon Valley started to scramble obviously yesterday. And I’m sure they’re going to come back with something bigger and better. I think we’re all shocked by the timing of this. While this broke on Sunday during the football playoffs, most traders on Wall Street are big sports fans, so guess what they were doing?

And it just went down in the aftermarket and opened up low. But I’m very, very suspicious of it. At least it’s out there. It can be tested, but why wouldn’t you want better AI, more powerful AI?

So, this narrative that we can use the old Nvidia chips, we don’t need the new ones, that we don’t need extra power – DeepSeek says they use 29% less power – maybe they’re just not looking at certain things that other applications are, which might make some sense because you don’t want to run garbage in garbage out of your model.

So I think it’s basically China’s way of messing with us. And, of course, you can’t download TikTok now because it’s in limbo, and so maybe China wants to use DeepSeek to get all our personal data because they can’t get it from TikTok now.

Luis: Yeah, there’s certainly reason to be skeptical about claims made from China about various technologies because they’ve done that before.

Louis: Correct.

Luis: Luke, can you characterize market selloff as a big overreaction? Can you expand on that a little bit?

Luke Lango: Yes. We call it a big overreaction and a buying opportunity because, similar to what Eric said, but there’s actually a name for it. It’s Jevons Paradox, which is the idea that if you decrease the cost of a certain resource, if that resource is in high demand, then what you’re going to do is dramatically increase the demand for that resource because now it’s accessible and everybody can afford it or can use it.

And that’s exactly what’s going on here. I think of the build-out of fiber optic network, fiber optic cables in the 1990s is a very strong example of this. Before that, transmitting data over the internet was very slow and expensive. With fiber optics, it became fast and cheap; and, all of a sudden, the internet was beaming into everyone’s house. That’s when everybody was using the internet, and that’s when the real internet boom started. It didn’t result in less spend on internet infrastructure. It actually resulted in more spend on internet infrastructure because any decrease in unit pricing was offset by a larger increase in volume of usage.

And so that’s exactly what I think is going to happen here. There is that blowback where it’s like, “Oh no. All of a sudden, maybe we can’t charge a ‘bajillion quadrillion bajillion’ dollars for one single Nvidia GPU. Okay, sure.” But now people are going to buy a “billion bajillion quadrillion quadrillion”of them as opposed to one of them. So, you’re going to go and get this offset and volume increase, and so the overall spending pie to me doesn’t go down.

The reaction suggested the overall spending pie goes down. I think that’s incorrect, and you’re seeing a rethink, a rational rethink of that today. There’s been a lot of commentary over the last 24 hours that is very in line with what I just said, and you’re seeing a rational rethink in markets today. A lot of those names that were hit hard yesterday are rebounding today, though not recouping all their losses. Definitely the beginning of a nice little rebound, rebounding up big technical support levels and a lot of those names as well too.

So that’s how I view it. I do think it’s a very real breakthrough. The cost claims, who the heck knows? Nobody can really verify that. But the actual technological algorithmic breakthrough that they had with the Mixture of Experts model, that’s legit. That’s pretty impressive that they were able to do that. So, to me, it just means more ubiquity and more usage and more application. So I actually think it’s a long-term positive, not a negative, as the market may have took it that first time.

Luis: Hey, Eric, one of the concerns that you’ve been writing about is the sky-high valuations we’ve seen from so many stocks, especially the Magnificent Seven. I mean, is this kind of an opportunity for some repricing of all that kind of stuff?

Eric: Yeah, I think bubbles have a way of finding a pin. I don’t think it’s a bubble exactly, but the valuations are high, and they’re high for legitimate reason. These are world-dominated companies, and they remain so today. So, my knock on them wasn’t really, “Oh gee, these things are a house of cards.” It was simply the law of large numbers.

When you get high valuations, in order to make that investment work, you need to have great things continuing to happen, and you certainly can’t have any bad surprises. Whereas, if your valuations are more middling, the stakes aren’t as high. So, we saw that play out yesterday, particularly with Nvidia. High valuation, the news alarmed shareholders, stock tanked 20%, or whatever. That’s the kind of thing that happens to a company that’s richly valued.

It doesn’t mean Nvidia can’t recoup that loss. It just means that when you’re playing in names like that, you have to expect that any bit of bad news is going to be pretty harmful to their return profile. And so if you’re willing to stay with that, tolerate it, great. A lot of investors don’t like that kind of volatility, so you don’t want to play there.

Luis: Yeah. Louis, I was thinking of you because, of course, when I came in Monday, literally one of the first things I saw from Customer Service was some customer had called in to say, “Should I sell my Nvidia stock?” What would you say to that person since you hold Nvidia in some of your portfolios?

Louis: Well, not that I hold, it’s my largest holding. It’s a stock that can change your life, and it’s honestly changed my life. I mean, we’ve had it for five years, and this is our second time in it. So obviously, the capital gains consequences would be massive to sell it, and there’s no reason to sell it when a strong forecast in sales and earnings is getting more dominant.

I would add that Nvidia, believe it or not – I know it’s bouncing really strongly today – did exhibit rail of strength yesterday. And we were monitoring the companies that build out our power grid and the data centers, and those actually got hit a lot harder. And that’s ridiculous because those are long-term contracts, and once they start to expand the power grid, they’re not going to change because of one Chinese app, and that might be more efficient than ChatGPT.

So, Nvidia was exhibiting row of strength; and I told my wife to load up on it, and she did. All her cash is out in Nvidia as of Monday. So, it’s very exciting, and we don’t get these kinds of buying opportunities very often. But literally, a lot of the stuff that got hit on Monday is going to be up 20 to 30% as the earnings come out.

Luis: Now, Luke, it’s only Tuesday as we film this. So we saw the big dip on Monday, we saw some recovery for some stocks, like Louis just mentioned, on Tuesday. Do you think short term, we’re in for more volatility, or do you think this is going to play out over a longer period?

Luke: Oh, I think the buying opportunity is here for the next few days. So, short-term: big tech earnings. This model was the biggest slap in their face I have ever witnessed as a human being, right. I’ve never seen big tech so publicly embarrassed by a little Chinese startup. They are going to defend their turf on all those earning calls over the next two to three weeks. You best believe they’re going to come out swinging with everything to justify their massive CapEx, talk about all their advancements, and they’re getting close to AGI, and why they’re better than DeepSeek.

They’re going to be ready in their prepared remarks. They’re going to be ready for the Q&A because the analysts are going to grill them there, and big tech’s going to defend their turf very successfully. So, you’re going to get a bounce on that because big tech’s going to defend the turf.

I think Trump’s going to defend this turf because this was also a slap in the face to him. A week after, five days after, he announces a $500 billion initiative to build out AI data centers, all of a sudden, everyone on Wall Street’s questioning whether or not we need to build any more AI data centers, right.

It’s like, whoa!

So now, he’s got to go defend that. He’s going to defend that. So, you’re going to get the Trump defense, you’re going to get the big tech defense, and then you’re just going to get a rational rethink where it’s like, “Oh yeah, maybe their claims aren’t as strong as they probably first said they were.” So, I think between those three things, you’re going to get a very big balance in a lot of those names over the next two to three weeks.

Where it gets murky is beyond that. After big tech defends its turf, after Trump defends the Project Stargate, etc., etc., what happens when OpenAI integrates mixture of experts’ techniques into its modeling? Do they discover that maybe they don’t need as many? Who knows? I don’t know. That’s where it gets murky to me. Two to three weeks pretty clear. You’re going to get a very nice balance.

And I agree with Louis. I think a lot of those stocks that got hammered yesterday, the power names, they got crushed. Constellation Energy Corp. (CEG), Vistra Corp. (VST), those are low-beta stocks that drop 25% in a day. That doesn’t happen. Those are going to bounce 20 to 40% in the next two to three weeks, in my opinion. I think a lot of those names are going to come back with a vengeance. Two to three months down the road, that’s where it’s a little murky. But two to three weeks, I see a very strong short-term balance.

Luis: Bottom line, I think it’s pretty safe to say for the three of you, you’re still very bullish on the AI opportunity here, short-term and long-term, because of all the possibilities that can happen both with big tech and with opportunities for smaller companies now that may have a cheaper version of AI available.

Luke: I think to bring it back to our AI Revolution Portfolio… it was all about the application layer, right, the phase shift into applications. That’s what this is. That’s what I’m telling my subscribers is just that this really was the moment that we officially phase-shifted into the application layer. The breakthroughs prove that the ingenuity is going to be in software.

And now that this becomes a ubiquity, now that it becomes accessible, now that a lot of people can bootstrap models like this, you’re going to see the ingenuity happen at the software layer. And that’s where you’re going to see a lot of growth in the application stocks. So, we talked about the Monday price action. Louis absolutely right. Nvidia outperformed a lot of the big hardware stocks, but what was green on Monday? A lot of software names.

Luis: Yeah.

Luke: A lot of software stocks were green on Monday because it’s actually good for them. This is good for them. And so I think we’re now moving more firmly into that application layer. So I’m not going to pat ourselves on the back or toot our horn a little bit, but I do think it was very prescient to say a few months ago, “Hey, we’re gearing up to move into the application layer of the AI boom because I think we really are in it now.”

Eric: Yeah. What that means from a practical standpoint investing-wise or one of the things that it means is that the AI story has been somewhat monolithic for the last two years. There’s been sort of this big, “Okay, this is AI, and to buy AI, you have to buy these five names.”

Pick your terminology. When it becomes a software-centric opportunity like Luke is talking about or – and that’s a version of applied AI – now you’re talking about something that is heterogeneous and has tentacles all over the place where AI can impact individual companies that are either producing the software or applying the software. And that’s literally every industry on the planet.

So, all of a sudden, every industry in the planet becomes an AI play if they are developing an advanced capability because of AI. So I think it becomes much more interesting now for investors than it was in the first phase.

Luis: Terrific.

Louis: I would add that DeepSeek is open source. So in theory, a lot of the companies that are experimenting with it could have a DeepSeek button on their website. They want to see the DeepSeek AI solution. Of course, I’m sure ChatGPT would like to have a button there too. So this may be a start of the AI arms race, but they’re not going to stop development. It’s going to get bigger and bigger. Just look what Tesla Inc. (TSLA) is doing, mapping out all the roads with all their cars and trying to do self-driving based on all their cameras. The amount of power that takes is ridiculous.

Luis: Yeah.

Louis: So, it’s not going to stop, but it’s healthy. Competition’s good. Obviously, China wants to embarrass the United States, wants to dominate another industry, but Trump has all these allies in Silicon Valley. They were all at his inauguration. He was defending them at Davos, yelling at Europe for fining them and messing with Apple Inc. (AAPL) for taxes and things. So, it’s going to be an economic war with us in China, and we’ll see if we can win. We’ve been winning before.And we certainly got them outnumbered. So let’s just go have fun with this.

Luke: And that’s why I think the spending pie goes up, not down.

I mean, if anything, it’s like, wow, the race is on. The Sputnik moment – that the race is on. So maybe you were saying we were spending dumbly before, that doesn’t mean we’re going to stop spending. It means we’re going to spend more and then be smarter at the engineering as well. We’re going to do everything. We’re going to throw the whole kitchen sink, maybe the whole house at this now.

I just think that I wouldn’t be surprised. I mean, maybe I’d be a little bit surprised, but I think it’s possible that Project Stargate becomes a trillion-dollar project now because we have to win. If China really is doing that, we have to win. This is the final race of all races. Whoever gets to AGI wins world forever and ever, right. So you have to win. There’s no other choice.

If more money’s not doing it, then throw more money at it even still. That’s the American way. Bigger, bigger, bigger, bigger, bigger. So I think we’re just going to spend way more money. I don’t see the pie going down at all and actually think it’s a long-term pause to begin for all AI stocks. So yeah, just to piggyback on what Louis said, making this kind of a U.S. versus China, national security thing.

Luis: Okay, thanks again for your time, gentlemen.

Folks, these three analysts have been telling their followers that the next phase of AI is going to be the culmination of everything before it. It’s going to affect every aspect of society in ways we couldn’t imagine just two years ago.

We’ll keep you up to date on DeepSeek and all the other important AI news in the weekly updates to our AI Revolution Portfolio service, as well as regular updates on the stocks in the portfolio, the best of the best in AI.

Just a little over a month ago, our analysts added seven stocks to the portfolio, and as I record this, they’re all still below the buy-up to prices. So, there’s still a chance to get into your favorite stocks for 2025.

Make no mistake, folks. Anyone who misses this opportunity to invest in the best AI stocks now could end up missing their financial goals and jeopardizing their futures. You can click here to see a special offer so you can follow along with our expert picks in the AI Revolution Portfolio.

Thanks again for your attention.

Regards,

Eric Fry

Frequently Asked Questions (FAQs)

What is DeepSeek AI, and why did it shake up the market?

DeepSeek AI is China’s latest open-source AI model, and its debut sent shockwaves through the market. It performs on par with top Western AI models but was reportedly trained at a fraction of the cost—just $5.6 million compared to the $100 million+ typically spent by U.S. firms. It quickly became the top download on the App Store and Google Play, raising big questions about the future of AI development.

Why did Nvidia and other AI stocks drop after DeepSeek’s debut?

DeepSeek’s efficiency raised doubts about whether massive AI infrastructure investments are still necessary. The model was reportedly trained using only 2,000 Nvidia chips, far fewer than what leading AI companies have been using. That sent Nvidia (NVDA) down 17%, with other AI data center stocks following.

Does DeepSeek mean AI infrastructure stocks like Nvidia are in trouble?

Not necessarily. While DeepSeek has shaken things up, history shows that lower AI costs could actually drive more AI adoption—which may still benefit companies like Nvidia in the long run. Our experts see this as a temporary market shakeup, not the end of AI hardware growth.

What does this mean for the future of AI investing?

This marks a clear shift from the hardware phase of AI to the application phase. The next wave of winners won’t be just chipmakers, but companies applying AI to their businesses. This is where the biggest opportunities are emerging.

Should investors be worried or excited?

Our experts are more bullish on AI than ever. While this week’s market volatility was dramatic, DeepSeek’s debut confirms AI’s rapid acceleration. The real winners will be companies that use AI to drive profits, and our AI Revolution Portfolio is focused on capturing those opportunities.

The post Why China’s New AI Could Unlock the Next Big AI Investment Opportunity appeared first on InvestorPlace.

Today, the Federal Reserve kept interest rates steady at the current target rate of 4.25% – 4.50%.

This was widely expected. Going into the meeting, traders put 99.5% odds on no changes to the fed funds rate.

As to where the Fed goes from here, its approach boils down to “wait and see.”

In his live press conference, Federal Reserve Chairman Jerome Powell noted that because interest rates are now “significantly less restrictive” than they were before cuts began last fall, “we do not need to be in a hurry to adjust our policy stance.”

When asked about the timing of the next rate cut, Powell deflected, not allowing himself to be boxed into any corners. However, he did maintain an optimistic, confident tone about the path of inflation and his expectation of further progress.

I’ll note that traders are putting the heaviest odds (32%) on two quarter-point cuts this year. This is unchanged from yesterday. As to the timing of the first cut, most traders are pegging June.

Several reporters asked about President Trump’s recent comment that he would “demand” lower interest rates. Powell sidestepped the question, noting “I’m not going to have any response or comment whatsoever on what the president said. It’s not appropriate for me to do so.” He redirected, saying:

The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals and really keeping our heads down and doing our work.

Apparently, Trump doesn’t need Powell to be combative to escalate the tension. As we’re going to press, I’m reading that Trump has just slammed Powell, saying that he and the Fed “failed to stop the problem they created with Inflation” and that they’ve done a “terrible job on bank regulation.”

We’ll follow up on this later this week in the Digest.

Barring these late-breaking comments from Trump, it was a rather uneventful meeting and press conference because – as noted at the top of this Digest – it largely reduced to “wait and see.”

And on that note, there’s one central issue that Powell & Co. are waiting to see about…

Trump’s tariffs.

Trump has threatened to implement a 25% tariff on all imports from Mexico and Canada, anywhere between 10% – 60% tariffs on all goods from China, and another 10% – 20% tariffs on all other goods entering the U.S. Plus, in recent days, we’ve heard additional saber rattling about tariffs on good imported from Colombia and Taiwan.

When asked about the impact of Trump’s potential tariffs earlier today, Powell responded:

The range of possibilities is very, very wide.

We don’t know for how long or how much, what countries. We don’t know about retaliation.

We don’t know how it’s going to transmit through the economy to consumers. That really does remain to be seen.

There are two inflationary angles here that could complicate the Fed’s path forward…

First, we have the actual tariff-related price increases themselves. For example, take avocados.

About 90% of the avocados eaten here in the U.S. come from Mexico. If you love them on your salad or in your burrito, and Trump slaps Mexico with a 25% tariff, your meal just got more expensive. This is inflation in action.

Second, there’s the expectation of accelerating inflation that is dangerously self-actualizing. 

Inflation has a huge psychological component. If consumers become convinced that inflation will worsen, they’ll buy goods and services today at prices that they believe will be lower than prices tomorrow.

Of course, it’s this very buying pressure that results in higher demand, fueling the exact price increases that consumers fear. It’s a self-reinforcing feedback loop.

This perceived threat of inflation, without being checked, turns into inflation in action.

Trump has spoken frequently about tariffs in recent weeks, threatening to implement them on Canada, Mexico, and China this coming Saturday, February 1. Will he?

The answer could have a substantial impact on Fed policy.

Consider the enormity of U.S. imports from China and how new tariffs would impact prices for all sorts of goods throughout our entire economy.

If you’re a U.S. supply-chain executive relying on foreign components, how do you make cost-effective purchase forecasts with these uncertainties?

If you’re a Main Street consumer looking to make a big-ticket purchase, what do you do?

Returning to the Fed, if you’re Powell, trying to guess how these executives and consumers will behave based on their expectations of inflation, do you make preemptive moves or wait until tariffs have been implemented? Both approaches carry risks.

In his press conference this afternoon, Powell sided with the “wait and see” approach:

We need to let [tariff] policies be articulated before we can make a plausible assessment.

We are going to be watching carefully.

An article in The Wall Street Journal made an interesting point comparing inflation in 2018 with potential inflation today. The difference boils down to how Trump might enact tariffs.

In 2018, various Fed economists modeled the impact of a tariff increase. The takeaway was that the Fed could ignore higher inflation readings if two conditions held up: Inflation expectations remained low, and the price increases from tariffs flowed through the economy fast.

The idea was that one-time tariffs, implemented at the same time and never repeated, would result in a one-time price jump, but then inflation would go away. So, we’d be left with higher prices, but those prices wouldn’t rise much from there.

Today, there’s different modeling, which increases the challenge for the Fed.

Here’s The Wall Street Journal:

If tariff increases are applied at different times to different countries and on varying goods, it could be harder for the Fed to tease out whether prices are rising because of tariffs or whether broader macroeconomic forces were responsible.

“Will it be a ‘one-and-done’ or will it be two years of a sequence of tariffs in many different sectors of the economy?” St. Louis Fed President Alberto Musalem said in an interview this month.

“If it’s over two years, incrementally, every month or every two months, it gets harder to parse out.”

This is the challenge facing the Fed.

All eyes are on this Saturday, and whether Trump will follow through on his prior tariff threats.

We’ll keep you updated.

As you’re aware, on Monday, leading U.S.-based AI stocks sold off sharply when news of China’s DeepSeek AI platform shocked investors. The selling reduced to three primary fears:

• DeepSeek’s alleged cost advantage meant incumbent U.S.-based AI platforms were vastly overspending on their AI initiatives
• DeepSeek’s lower-cost AI platform would mean far less spending would be required to develop AI systems, which would result in lower profits within the AI ecosystem
• DeepSeek’s ability to operate with greatly reduced energy consumption would kneecap energy/datacenter plays

Let’s zero in on the third fear, since datacenters has been an investment opportunity we’ve highlighted and endorsed many times in the Digest.

Here’s Reuters:

The wider adoption of AI models like the one developed by DeepSeek, which it says it built in under two months and is cheaper than models currently used by U.S. companies, could result in less electricity demand overall and result in a smaller power build-out, analysts and economists said.

“If proven true, the efficiencies used within DeepSeek’s open-source model can be applied by the hyperscalers to their models, which would result in a more moderated demand,” analysts with Evercore ISI said in a note…

Independent power provider Constellation Energy (CEG.O), whose shares had shot up about 100% in 2024 largely on its ability to sell nuclear and gas-fired power to U.S. data centers, sunk by about 20% in trading on Monday after news of DeepSeek’s advancements.

Now, we shouldn’t take this lightly, but if you’re thinking about selling your energy/datacenter stocks, hold on.

Let’s go to legendary investor Louis Navellier. From his Growth Investor Flash Alert yesterday:

Right now, AI is controlling about 10% of our power grid, and it’s going to get more and more over time. The biggest victims of the DeepSeek AI reaction were companies involved in building out the power grid… 

But when you look at the utility grid and the data centers, this is a big, long-term thing. You don’t just stop development.

To Louis’ point, below is a chart from Edward Jones showing the forecasted energy requirements measured in terawatt hours for U.S. datacenters over the next five years.

Even if DeepSeek’s technology can reduce energy usage, we’re still likely facing substantial energy demand.

Given data like this, here’s Louis’ take on the market’s response to DeepSeek:

The reaction was ridiculous, and I expect most of the [top-tier utility grid and the data centers] stocks to be up 20-30% by the time the earnings come out.

They’ll pop. We’re going to get a big bounce back.

This echoes one of our takeaways in yesterday’s Digest: Some of the market’s top AI stocks suddenly went on sale this week, and you’ll want to consider taking advantage.

I was on a call with InvestorPlace analysts Tuesday morning, and the collective sentiment was “this selloff is a gift – back the truck up.”

If you’d like to join Louis in Growth Investor for which datacenter/energy opportunities he’s bullish on in the wake of the selloff, you can learn more here.

Here’s his bottom line:

I think this is a huge overreaction. Please remember that markets are manic crowds, and sometimes the market reacts and doesn’t think…

I just want you to hang on and enjoy the ride… I don’t think DeepSeek is going to dominate things.

As regular Digest readers know, the 10-year Treasury yield is single most important number in the global financial market. The higher it climbs, the more pressure it puts on most stock prices because a higher yield means a higher discount rate, which lowers the current valuation of a stock.

Earlier this week, when scared tech investors bailed out of AI plays, much of that money went into “risk free” bonds – specifically, the 10-year Treasury. All that buying pressure meant that bond prices rose…which pushed yields lower.

The 10-year Treasury yield fell from a high of roughly 4.65% last Friday to 4.50% on Monday after the DeepSeek news broke.

As I write Wednesday, the yield has edged slightly higher but remains at 4.52%. And if we step back, the 10-year Treasury yield has fallen from almost 4.80% in mid-January.

This is a solid tailwind for stocks. And if this trajectory continues, it should support additional gains in the coming months.

The wildcard is inflation…which brings us full circle to Trump, tariffs, and the Fed.

We’ll keep you updated here in the Digest.

Have a good evening,

Jeff Remsburg

The post Will Trump Be Satisfied With Powell’s “Wait and See?” appeared first on InvestorPlace.

Tom Yeung here with today’s Smart Money.

Since OpenAI launched ChatGPT in November 2022, everything in tech has been about more.

More computing power…

More chips…

More electricity…

More resources…

This quest for “more” has slowed the progress of AI development. New models take months to train. Cloud computing firms wait around for deliveries of next-generation AI servers, which can cost in the millions. And many AI data centers wait as long as seven years for hookups to the electrical grid.

When you have a hungry, hungry AI architecture, it can take a long time to feed.

That was until Americans got their hands on DeepSeek R1, a Chinese-developed large language model (LLM), over the weekend.

The open-source software performs almost as well as OpenAI’s latest model, o1, and was supposedly trained with a tiny $6 million budget – a fraction of what American companies have spent. What’s more, some online commentators believe DeepSeek’s model costs one-sixth of OpenAI’s to run. (OpenAI keeps its costs a secret.)

And perhaps most shocking of all, the Chinese startup built R1 without the latest chips or hardware due to chip sanctions from America.

In other words, DeepSeek is doing more with less.

As such, the major U.S. AI players were treated to a rude awakening this week. On Monday, shares of Nvidia Corp. (NVDA), the world’s leading AI chipmaker, sank 17%, while suppliers like Astera Labs Inc. (ALAB) dove more than 30%.

Suddenly, the leading edge of AI architecture has gone on a diet.

Tech giants previously planned to spend $50 billion to $150 billion on AI infrastructure. These figures now seem comically large after OpenAI’s best models were almost beaten by a Chinese startup with – as Andrej Karpathy, the former head of AI at Tesla Inc. (TSLA), put it – “a joke of a budget.” 

The AI Arms Race Just Got Real—What This Means for Investors

So, in today’s Smart Money, let’s discuss how DeepSeek achieved this feat.

And since massive AI investments may now be unnecessary, we’re going to start seeing models improve faster than ever before. This will have major implications for our investments… and our livelihoods. So, I’ll also share how you can best prepare for the incredible technological changes to come.

Let’s take a look…

DeepSeek likely built R1 by turning to a “Mixture of Experts” (MoE) model, a more efficient form of machine learning.

Imagine an LLM as a human brain (which is incidentally how the technology was conceived). These AI models have billions of “neurons” and adjust the strength of their connections to learn. It’s much like how human brains work.

In dense LLM models, every neuron is connected. These connections link the LLM to an external data source, which allows the AI system to process information from that source. These connections are essentially a bridge to the LLMs knowledge. However, while every neuron is connected, not every connection is used. This creates a problem of having too many connections.

This is where DeepSeek differs. Its MoE uses a “gate network” (or router) to determine which connections must be made. This significantly reduces the connections required, because only a small subset of neuron sections is used for each prompt.

That means fewer connections for chips to calculate, and slashing the costs involved.

This is what turned DeepSeek into an overnight success. On Monday, the firm’s AI Assistant app surged to the top of Apple’s App Store, leaving OpenAI’s ChatGPT in second place.

However, the tech giants will not be content to fall behind. Over the next several months, American AI developers will scrutinize DeepSeek’s open-sourced software and copy everything they can. It only took three months for Google’s Gemini model to incorporate the “thinking” concept used by OpenAI’s o1 model to solve logic problems.

So, this “Sputnik moment” will cause tech firms to work even harder now that their dominance is on the line.

In any case, we know that DeepSeek R1 is very good. We are treating this new competitor as a wake-up call to American LLM developers… and a warning bell that we could arrive at artificial general intelligence (AGI) faster than previously expected.

AGI Is Coming for White-Collar Jobs—How to Stay on the Right Side of the Divide

AGI refers to AI technology that has reached human-like intelligence. Most importantly, it has the ability to solve problems through reasoning, just as we do.

Last September, Eric began a 1,000-day countdown to AGI following OpenAI’s release of a series of AI models designed to reason instead of recognize patterns.

The launch of DeepSeek signals that AGI remains on track to reach that 1,000 day target. We’re soon going to see super-intelligent AI begin making better versions of itself, which will make even better versions, and so on.

Here’s why this is so important…

By now, you’ve heard us warn that AI is coming for people’s careers. Accounting, legal research, medicine, even high-powered decision-makers near the C-suite could eventually be outsourced to superintelligent AIs.

In the workplace, AGI is like the equivalent of having a human you could hire, or compete against, as a coworker. Once AI hits this tipping point, there’s no reason a model couldn’t develop even better versions of itself to replace humans in almost any role.

That’s going to be disruptive, to say the least.

The world will suddenly see a split between the “haves” on the right side of this technological divide who control this technology… and the “have-nots” being replaced by it.

Entire sections of the population will become multimillionaires, thanks to timely investments in AI firms. Others will be employed by companies that know how to use tech.

Meanwhile, millions more will lose their jobs overnight – replaced by the very same AI that was once seen as a novelty.

Many experts initially thought we had time to prepare. DeepSeek changes that.

That’s why I believe investors only have a tiny window to prepare during this “pre-AGI” moment before it’s too late. It’s a period where we know certain things will happen before the curtain of AGI comes down.

Luckily, Eric has identified several companies that are strategically positioned to capitalize on AGI’s imminent arrival, and he wants to share them with you.

You can learn more about these companies in Eric’s free 1,000 Days to AGI special broadcast.

Click here to access the special presentation.

Regards,

Thomas Yeung

ÃÛÌÒ´«Ã½s Analyst, InvestorPlace

Frequently Asked Questions (FAQs)

1. What is DeepSeek, and why does it matter?

DeepSeek just turned the AI world on its head. This Chinese-developed model delivers performance on par with OpenAI’s latest tech, but with a fraction of the cost and computing power. It’s a clear sign that AI doesn’t need endless resources to advance—and that the U.S. might not have the AI lead it once thought.

2. Why did Nvidia’s stock drop after DeepSeek’s launch?

Because DeepSeek just proved that AI doesn’t need the most expensive chips to run. Investors panicked, sending Nvidia (NVDA) down 17% and AI chip supplier Astera Labs (ALAB) tumbling over 30%. If AI models can get smarter without high-end hardware, the demand for AI chips could shrink fast.

3. How is DeepSeek different from other AI models?

Instead of running every calculation at once, DeepSeek likely uses a Mixture of Experts (MoE) architecture—a method that only activates the exact neurons needed for each task. That means faster processing, lower costs, and higher efficiency—a game-changer for AI development.

4. Is AGI coming faster than expected?

All signs point to yes. DeepSeek’s breakthrough reinforces the idea that AGI—AI with human-like reasoning—isn’t decades away, it’s just around the corner. When AI starts improving itself at this speed, it’s only a matter of time before it reaches true intelligence—and starts replacing even high-level jobs.

5. How can investors get ahead of this AI shift?

The window of opportunity is shrinking fast. With AI advancing at this pace, the best-positioned companies will see massive upside, while others get left behind. That’s why Eric Fry has identified key stocks primed for the AGI revolution—and he’s revealing them now in his “1,000 Days to AGI” special presentation.

The post DeepSeek Just Fast-Tracked AI Job Disruption – Here’s How Investors Can Prepare appeared first on InvestorPlace.

The news was explosive, sparking fears that companies will pull back on their extreme AI spending. That led chipmaker Nvidia (NVDA) to lose $600 billion in market value within just a few hours on Monday – the biggest single-day drop in market history. 

Unsurprisingly, there’s been a lot of talk about DeepSeek, Nvidia, and the rest of the AI universe over the past few days. 

But the main question most are left wondering is: How? 

How did a virtually unknown Chinese startup disrupt the entire global AI industry, reportedly developing the world’s most advanced model for just around $5 million? 

Yet, we think the more important question may be: What does it mean? 

What does DeepSeek’s breakthrough mean for the industry as a whole? Will it mark the end of the big bull run in AI stocks? Or is the recent selloff just an overreaction, making this a very compelling buying opportunity?

In this issue, we will attempt to answer these questions, to the best of our ability. And in so doing, we hope to point you in the direction of some future winning stock picks. 

Doing More With Less

So… how did DeepSeek do it? 

Based on our research, the startup’s success came via innovative engineering born out of geopolitical necessity. 

That is, over the past two years, the U.S.’ approach to building next-gen AI models has been to “throw money at it.” Build more data centers. Buy more GPUs. Hire more engineers to build, train, and advance more models on top of all those GPUs. 

But due to ongoing geopolitical tensions, Chinese AI companies have had to employ a different strategy. Ever since the AI Boom began, the U.S. has consistently enforced export bans on AI chips to China, thereby limiting the number of chips Chinese firms can buy. They haven’t been able to employ the “more, more, more” approach that Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN) and others have in the past few years. 

Instead, Chinese developers were forced to embrace a “do more with less” mentality. 

That led DeepSeek to focus on an innovative blend of engineering techniques to create a super-efficient AI model. 

Now, I won’t pretend to understand these techniques at a granular level. While I am familiar with different AI modeling composition, I am not a world-class developer myself. 

However, I have studied this topic enough to have a general understanding of what made DeepSeek’s model tick. And spoiler alert: it’s pretty neat. 

An Innovative Architecture Makes DeepSeek Tick

At the heart of DeepSeek’s breakthrough is something called a Mixture-of-Experts (MoE) architecture. 

In short, most AI models today are created to be omnipotent. They try to be doctors, lawyers, and engineers all rolled into one – experts on a near-infinite number of subjects. When you ask a general model like ChatGPT a question, its entire architecture “wakes up” to answer because all its expert knowledge is rolled into one model. 

But DeepSeek employs a MoE architecture. In a sense, it’s created a room of multiple experts, where each is separate and distinct. It is a model composed of multiple topic-specific sub-models. Therefore, when you ask DeepSeek a question, the only part of the model that “wakes up” is the expert sub-model relevant to your question. 

Thanks to this modular approach, DeepSeek can save an immense amount of computing power on each query because only part of the model is roused per query. According to DeepSeek’s own numbers, its V3 model is trained on nearly 700 billion parameters. But only about 20 billion of those – or less than 5% – are activated simultaneously at any given time. 

This drastic reduction in activated parameters is partially what has allowed DeepSeek to create an AI as good as leading models for ~95% lower costs. 

To be sure, DeepSeek isn’t the only company in the world employing MoE architecture. But through a variety of novel engineering techniques, it appears to be the firm that was able to perfect and scale it. 

And that is how a virtually unknown Chinese AI startup disrupted the entire global AI industry.  

But what does that mean for others in the space? Is this the start of the AI Boom’s own dot-com crash? 

On the contrary, we actually view DeepSeek’s efficiency breakthrough as great news for the industry – and great news for AI stocks, too. 

Gaining Ground on AGI

I fundamentally believe that the best solutions require a combination of innovation and capital. 

Solutions powered by unlimited innovation, but without ample money, will run into resource challenges. Those powered by unlimited money, but without ample innovation, will run into development challenges. 

But with unlimited money and unlimited innovation, initiatives will advance far and fast. 

That’s why I’m highly confident that, thanks to the DeepSeek efficiency breakthrough, the stage is now set for the world’s most powerful companies – like Microsoft, Amazon, Alphabet, Meta (META), etc. – to go all-out with ‘unlimited’ money and ‘unlimited’ innovation, putting them on an accelerated path to creating superintelligent AI that transforms the world forever. 

DeepSeek is entirely open source. Its MoE architecture and other underlying designs are public. Big Tech companies can and will copy those techniques and incorporate them into their own model building. Then, on top of that, they’ll invest billions of dollars to take those models to the next level – putting us one step closer to artificial general intelligence (AGI). 

So… as it relates to all the fears about DeepSeek’s breakthrough meaning the end of Big Tech or the death of AI… we think those fears couldn’t be further from the truth. 

The Final Word on the DeepSeek Breakthrough’s Lasting Impact

The truth, in our view, is that the DeepSeek breakthrough will meaningfully accelerate AI model advancement and meaningfully boost the odds that Big Tech companies achieve AGI much sooner than previously thought. 

Does that mean you should be buying the dip in AI stocks after this week’s gut-wrenching selloff?

Absolutely. 

We wouldn’t get too bullish on AI hardware and semiconductor stocks like Nvidia. Some will likely lose their pricing power as the hardware in this industry becomes increasingly commoditized, leading to lower margins and slower profit growth.

But we would get exceptionally bullish on AI software and services stocks like Meta and Apple (AAPL) or companies like Spotify (SPOT), Intuit (INTU), ServiceNow (NOW) and Atlassian (TEAM) – those creating and deploying AI models and solutions. 

For those firms, this DeepSeek breakthrough looks like a big-time opportunity. 

That’s why we’re telling our subscribers to look for plays in the “AI Application Layer,” with the companies developing cutting-edge AI applications. 

One of the more interesting companies in that sphere right now is xAI – Elon Musk’s AI startup. Over the past few years alone, it has grown from obscurity to sport a multi-billion-dollar valuation. 

We think it could be a major beneficiary of the DeepSeek breakthrough. And while it isn’t yet publicly traded, we’ve found a compelling ‘backdoor’ way to play it. 

Learn more about how to invest in xAI right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post DeepSeek Has Big Tech Sweating, But Investors Should Stay Cool appeared first on InvestorPlace.

Like everyone else, we’re continuing to process yesterday’s DeepSeek news that sent leading tech stocks reeling.

To help us, we’ll turn to our resident tech expert, Luke Lango. In Luke’s Innovation Investor Daily Notes yesterday, he did a deep dive into the situation.

After walking through DeepSeek’s alleged cost advantage over U.S. incumbent AI platforms (and expressing suspicion about it), Luke pivoted toward why yesterday’s news was a net win for U.S. AI investors:

Even assuming all of DeepSeek’s cost claims are true – which we doubt – we believe the implications of such a massive AI model efficiency breakthrough are hugely positive for AI stocks. 

On the AI Builder side, we do not think this means that less money will be spent on the AI infrastructure buildout.

The total volume of money spent on AI infrastructure over the next several years will equal the training cost per model times the number of models built. An AI model efficiency breakthrough does theoretically mean lower training costs per model. But it should also mean more models being built. 

Regardless of this breakthrough, AI is still the future of everything. Every company knows that.

So, if AI model training costs drop dramatically, do you really think companies are going to cut their AI budgets? No – they’re just going to start creating more and more AI models… 

Meanwhile, on the AI Applier side, it’s all great news.

[Companies like Coca-Cola and Pepsi can] leverage the DeepSeek breakthrough to create more AI models with the same level of spend. That means both companies will be getting far more bang for their buck. They’ll become even bigger AI Appliers. And they’ll likely see their revenues soar while their costs stay constrained.

The DeepSeek breakthrough is a huge net positive for AI Applier stocks.

The bottom line is that Luke remains very bullish on top-tier AI stocks, with a slight tilt toward AI Appliers over AI Builders. And – critically – yesterday was not a reason to follow the herd and sell your quality AI holdings.

We’ll keep you updated as our analysts continue digesting the DeepSeek news along with its implications and opportunities.

On that note, later today, our editor-in-chief and fellow Digest writer, Luis Hernandez, is interviewing Luke along with Louis Navellier and Eric Fry. He’ll be getting their take on DeepSeek, its impact on the AI stocks that are likely in your portfolio, and how investors should respond.

We’ll bring that to you as soon as it’s available.

Behind this is a simple reality…

The average stock is not attractive at today’s valuation.

Let’s jump to The Wall Street Journal from yesterday:

Stocks haven’t looked this unattractive, by at least one measure, since the aftermath of the dot-com era. Plenty of investors are piling in anyway.

The equity risk premium, often defined as the gap between the S&P 500’s earnings yield and that of 10-year Treasurys, turned negative in late December for the first time since 2002 and sat last week at negative 0.15 percentage point.

To make sure we’re all on the same page, the equity risk premium (ERP) is a way to compare the relative attractiveness of stocks versus bonds.

We begin with the expected earnings of stocks, divided by their price. We then take this “earnings yield” and compare it with the return on the “risk free” 10-year Treasury Note.

The difference tells us how much additional return that stock investors are receiving for accepting the heightened risk of investing in stocks over bonds.

Without such a higher return, investors have no reason to accept the additional risk that comes with stocks. After all, doing so would be what the legendary Jim Grant calls taking on “return-free risk.”

Back to the WSJ:

In recent weeks, a combination of higher Treasury yields and soaring equity valuations pushed the equity risk premium into the red.

That could pose a threat to the recently rekindled stock rally.

You could throw a dart at a wall of stock market valuation indicators and pretty much hit one that’s at or near an all-time high.

To illustrate, below we look at a chart from Bloomberg and Macrobond. It’s showing us the S&P 500’s return since 1900 along with a compilation of the average percentile reading of the S&P’s trailing price-to-earnings ratio, forward price-to-earnings ratio, CAPE ratio, price-to-book ratio, price-to-sales ratio, EV/EBITDA, Q Ratio, and ÃÛÌÒ´«Ã½ Cap to GDP.

This valuation reading has never been higher, even exceeding the Dot-Com Bubble and the pre-Great Depression 1920s.

We’re not predicting that stocks must fall tomorrow. However, as we’ve pointed out in the Digest many times, valuation matters. The more you pay for an asset today, all things equal, the lower your return will be tomorrow.

To illustrate, below are data from LPL Financial. We’re looking at what subsequent 10-year returns have been for the S&P based on starting price-to-earnings valuations.

With today’s starting valuation of 30.5, LPL’s study suggests 10-year return will be flat or negative. In the graphic below, I’ve added a red circle and a red line below to make this easier to identify.

Here’s LPL’s take:

That forecast may end up being overly pessimistic given the potential for a further structural shift higher in valuations as in prior decades, but it does suggest that another decade of double-digit annualized returns, which investors have enjoyed over the past 10 years, is unlikely.

To be very clear, the takeaway here is not “get out of stocks.”

We remain very bullish on a handful of thematic plays, especially top-tier AI stocks that are suddenly selling at far lower prices today after yesterday’s bloodbath.

But the data tell us that the average stock does not offer an attractive risk/reward tradeoff today for investors.

First, evaluate which stocks in your portfolio are fantastic stocks that are long-term holdings. These are the stocks that you plan to own despite any correction.

Make sure you’re comfortable with a major pullback, call it 40% – 50%. While this might sound like a lot, remember, the Nasdaq fell about 80% in the Dot Com crash.

Also, based on LPL’s research, make sure you’re able to hold these positions for 10+ years before returning to today’s price.

Again, for perspective, following the Nasdaq’s high in March 2000, it took 15 years for the Nasdaq to final surpass that level.

Second, designate which of your stocks are not long-term holdings. These are your speculative stocks (or trades) that you’ll sell if/when they fall to a pre-appointed stop-loss level.

Make sure you know exactly what this level is for each of these holdings.

If you’d like help, I’ll point you toward our corporate partner, TradeSmith. They’re one of the leading quant shops in the investment industry.

Unlike how most investors use trailing stops (a blanket “20%” lower), TradeSmith’s trailing stop system factors in the specific volatility of any given stock/ETF to help investors answer a crucial question: When you’re in a pullback, how do you know whether it’s just normal volatility to ride through, versus a “this time is different” drawdown to avoid immediately?

You can learn more about it here.

Whatever is right for you, make sure you have some steps in place to protect your capital if/when your speculative stocks begin pulling back.

While emotional investors were bailing on AI stocks yesterday, legendary quant investor Louis Navellier told his subscribers that many of AI’s brightest stocks are due for an “incredible reversal.”

Let’s return to Louis’ Flash Alert podcast update from Growth Investor yesterday:

[Yesterday’s] sell-off today is a reaction.

People this weekend were engrossed in watching football and other things – there were thin market conditions in the aftermarket.

Now we’re getting some liquidity coming in, and I think once we learn more about the situation, we’re going to see an incredible reversal.

This has us looking for buying opportunities in the market’s best AI plays.

For months, Eric has been tracking the advancements toward artificial general intelligence (AGI). In September, he began the clock on this “1,000 Days to AGI” countdown. He’s been eying which stocks are best positioned to capitalize on the transformative technology.

Earlier this month, we featured analysis from Eric that highlighted leading datacenter plays – many of which were dinged up yesterday.

From that analysis:

Data centers provide the essential foundations that enable AI technologies to function and progress toward AGI.

Therefore, companies that supply or enable various facets of data center infrastructure could enjoy years of boomtime conditions.

Eric flagged three leading datacenter-related companies that he liked but hadn’t recommended because each was trading at an elevated valuation. One of those stocks was Quanta Services (PWR).

Well, yesterday, in the wake of the DeepSeek news, Quanta fell 18%. As I write Tuesday, it’s yet to bounce.

A sale price of “18% off” goes a long way to a more attractive entry valuation.

I’m talking about “LEAPS,” which stands for “Long-Term Equity Anticipation Security.”

These long-dated option can generate returns of 100%, 200%, and even 1,000%, and more while the underlying stock itself moves just a fraction of that amount.

That’s not an embellishment. Here’s Eric with one of his most recent LEAPS winners:

Just [last] week my Leverage subscribers booked partial gains of more than 550% on a dynamic LEAPS call option I recommended just a year ago on an AI-focused high-tech materials firm.

We’ve still got a quarter position open on that trade – and thanks to taking profits along the way, we’re guaranteed a total gain of at least 230% on this trade, even if the stock goes to zero from here.

Eric just put together a free research video that dives into more details of his LEAPS strategy. As Eric puts it, “You can use this strategy to turn small moves in stocks over a year or two into huge gains.” Click here to learn more.

• Don’t bail on your leading AI plays – yesterday’s news is not a death knell…
• Be careful about any “average” stocks in your portfolio – they’re likely not providing you an attractive risk/reward tradeoff…
• It’s time to bargain hunt for top-tier AI stocks that were caught up in yesterday’s emotion-based selloff…

We’ll keep you updated on all these stories here in the Digest. 

Have a good evening,

Jeff Remsburg

The post Don’t Sell Your AI Stocks appeared first on InvestorPlace.

First, President Donald Trump’s announcement about Stargate last Wednesday triggered a lot of excitement about the future of AI in the U.S. In fact, the tech-heavy NASDAQ soared 2.4% higher on Wednesday in the wake of the announcement.

We covered the details of Stargate in a ÃÛÌÒ´«Ã½ 360 last week.

But yesterday’s sharp pullback in technology stocks wiped out those gains – and then some. NVIDIA Corporation (NVDA), for its part, lost 17% yesterday. That’s a staggering $589 billion loss in market cap – the largest value destruction for a single stock in market history.

The reason? A Chinese AI company called DeepSeek.

So, in today’s ÃÛÌÒ´«Ã½ 360, I want to touch on what happened with DeepSeek and explain why it has the tech world in such a tizzy. Then, I’ll give you my two cents on all of this and share how investors should prepare for what’s next.

What Is DeepSeek – and Why Does it Matter?

On January 20, a Chinese AI company, DeepSeek, released a new AI model called R1 that it claims is nearly on par with the U.S.’s AI models. In fact, DeepSeek claims the R1 model has a comparable performance to OpenAI’s o1-mini model for ChatGPT. What’s more, it utilizes inferior NVIDIA chips, called H800s, that are compliant with the export bans that were put in place by the Biden administration.

Oh, and the company claims it was built in about two months and cost just $5.6 million to train.  

As a result, DeepSeek is now the number-one app downloaded from the Apple Inc. (AAPL) App Store.

Now, the tech world began to put all of this together late last week. And it rocked Wall Street as well as hammered AI stocks yesterday.

The fact is the entire roadmap of how AI is supposed to evolve is being questioned. As a result, some investors are wondering whether the U.S. tech sector will win the AI race.

And there are two primary reasons why…

Both raised concerns that NVIDIA was overvalued and triggered questions about the necessity for more data centers and an electricity grid buildout if AI doesn’t take as much computing power as originally anticipated.

Personally, I think these concerns are a bit overblown. Let me explain…

There’s Still a Lot We Don’t Know…

We are still in the dark with a lot of this, folks.

First of all, these claims need to be verified.

Second, as I discussed in a Special ÃÛÌÒ´«Ã½ Podcast with my Growth Investor subscribers, folks are failing to consider the nature of machine learning.

Yes, AI can be as simple as optimizing various packets of data – which it sounds like that’s what Deep Seek is focused on – or it can be much more complicated.

I suspect DeepSeek is simply not using non-correlated data to do their AI.

You see, you have to be careful when you build a model: You don’t want to put things in it that might not have any impact on the model whatsoever. You want to put restrictions and rules in place – and you definitely don’t want to feed it irrelevant data.

I suspect that’s all DeepSeek is doing.

But this suggests the possibility that the other big AI firms weren’t doing this. And that could be a problem if it is true. They might want to be more focused when they build their prediction models.

What This Means for the AI Buildout

Now, longtime readers may know that NVIDIA is one of the longest holdings in my Growth Investor service. We’re currently up by more than 3,000% on the stock – and I have consistently said that it is poised to dominate the next decade.

So, what does this mean for NVIDIA?

Remember, NVIDIA supplies the crucial hardware and frameworks for large-scale deep learning, including generative AI. But a lot of folks are questioning the case for NVIDIA moving forward. They argue that if we can do advanced AI computing for cheaper, then that will hurt the demand for NVIDIA’s chips.

I couldn’t disagree more. Now, whether it means NVIDIA needs to lower their prices remains to be seen. But, if anything, this means that more folks can build AI models, not less. And that’s good news for NVIDIA.

In fact, NVIDIA seems to agree. They responded to the DeepSeek news, saying it is “an excellent AI advancement” and that “DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant.”

This suggests the possibility that DeepSeek “leveraged” something that was already there, but also that it will lead to more demand for its chips. Investors seem to be thinking more clearly again. NVIDIA was up roughly 9% on Tuesday, and many of the infrastructure-related plays are up as well.

Addressing the Infrastructure Plays

Right now, AI is controlling an increasing share of the power grid. And the biggest victims of the DeepSeek news were companies involved in building out the data centers and the power grid.

But the point remains that machine learning utilizes a lot of computing power – and it’s going to need more, even if DeepSeek has found a more efficient way to do it. So, you will still need all the AI hardware and software and need to double the utility grid and build more data centers.

In my opinion, the notion that DeepSeek is going to reduce AI electricity demand is highly improbable. Moreover, the idea that methodical utility companies are going to abandon their plans to double grid capacity because of a Chinese software app is, frankly, ludicrous. 

So, I view the pullback in these infrastructure/grid plays as a great buying opportunity.

The Trump Factor – and How to Respond

Folks, in my opinion, this is way overblown. I am highly confident that even if DeepSeek has a temporary AI advantage, its success will not persist, because few developments are more motivating to Silicon Valley than a wake-up call. 

So, in case there’s any question, under no circumstances, is NVIDIA about to lose its market dominance due to a Chinese software app. In fact, the deep dive many of these stocks experienced on Monday gives you a chance to load up on NVIDIA and the power-grid stocks.

 A new AI economic war is breaking out, and I would not recommend that any investors sell NVIDIA and the companies helping to expand the utility grid due to possible Chinese propaganda. 

Still, President Donald Trump called this news a “wake-up call” for U.S. companies to reassert their dominance over AI. Silicon Valley is expected to win the AI wars because it will enjoy the level of support that Chinese companies enjoy from the Chinese Communist Party, but within the context of capitalism. 

Bottom line: President Trump has been very vocal about the U.S. dominating AI, and I don’t foresee him stepping aside to let a Chinese app derail the U.S. tech industry.

I have been telling my Growth Investor subscribers for months to prepare for Trump 2.0. I’ve said that as soon as Trump takes office, the U.S. economy will begin to hit the overdrive button.

I’ve prepared everything you need to know in a special presentation. Click here for all the details now.

Sincerely,

Louis Navellier

Editor, ÃÛÌÒ´«Ã½ 360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA)

Frequently Asked Questions (FAQs)

Q: How did DeepSeek cause NVIDIA’s market cap to drop so drastically?

A: DeepSeek launched an affordable AI model that rivals U.S. counterparts, leading to significant investor concerns about NVIDIA’s valuation and AI leadership.

Q: What makes DeepSeek’s R1 model a game-changer?

A: The R1 model offers comparable performance to top U.S. AI models like OpenAI’s GPT-o1-mini model at a fraction of the cost, utilizing fewer NVIDIA chips.

Q: Why is the demand for AI hardware and data centers still booming despite DeepSeek’s efficiency?

A: The overall growth of AI applications continues to drive demand for robust AI hardware and expanded data centers, offsetting efficiencies introduced by competitors like DeepSeek.

Q: What investment opportunities arise from the current market drops?

A: ÃÛÌÒ´«Ã½ pullbacks present strategic buying opportunities in AI and utility stocks, especially in infrastructure and power-grid sectors poised for sustained growth.

The post What’s Next for NVIDIA: DeepSeek’s AI Impact and the $589 Billion ÃÛÌÒ´«Ã½ Loss appeared first on InvestorPlace.

According to Ben Reitzes, head of technology research at Melius, DeepSeek achieves better learning and more efficient use of memory, as noted by CBS News. But perhaps the real kicker? It’s also vastly cheaper than ChatGPT. This revelation incited fears on Wall Street that companies won’t need to spend as much money to develop next-gen AI as previously thought. 

As a result, AI chipmaker Nvidia (NVDA) crashed as much as 15%. Vertiv (VRT), a data center equipment supplier, got clobbered, plunging more than 25%. Vistra (VST) and Oklo (OKLO) – two nuclear energy companies hoping to power the AI data center boom – each dropped 20%. 

It was a terrible day for AI stocks. 

But what if I told you that this whole DeepSeek-inspired selloff is actually a fantastic buying opportunity?

Because that’s exactly what we believe. 

DeepSeek: A Potential Paradigm Shift

China’s DeepSeek potentially represents a disruptive paradigm shift in the world of foundational AI models. 

Of course, the model operates a lot like ChatGPT. But as Reflexivity’s Giuseppe Sette put it, it “activate(s) only the most relevant portions of their model for each query.” That means DeepSeek is more efficient than its incumbents.

But the pièce de résistance? DeepSeek is way cheaper than ChatGPT.

When it comes to AI models, there are two primary costs – training and inferencing; or how much they cost to develop and how much they cost to run regularly. And reportedly, DeepSeek has significantly lower training and inference costs than incumbent foundational AI models. 

Indeed, it cost about $80 million to train ChatGPT-4. Google’s Gemini Ultra cost nearly $200 million. Across the board, foundational AI models in the U.S. have taken $100 million-plus to train. 

But DeepSeek is claiming that it cost less than $6 million to train its own AI model, which is perhaps even better than those other big-budget AI. 

Meanwhile, DeepSeek also boasts about 95% lower inference costs than ChatGPT. Its reasoning model – R1 – currently charges about $0.55 per million input tokens. (A token is a character in a query, i.e. a letter, punctuation mark, etc.) Now, ChatGPT charges on a monthly basis, so it’s not exactly an apples-to-apples comparison. But a breakdown from Bernstein found that the incumbent charges around $15 per million input tokens. 

Point being: DeepSeek reportedly has drastically lower training and inference costs than incumbent foundational models. 

Understanding the Initial ÃÛÌÒ´«Ã½ Meltdown

Now, why does that matter to the market?

This reported cost breakthrough suggests that companies will spend less money developing new AI models over the next several years. That means less money going into the AI infrastructure buildout, less money for companies supporting that buildout – and lower stock prices for those firms, too. 

A core tenet of the AI-stock bull thesis has been that companies and governments alike will collectively spend hundreds of billions of dollars per year to build out all the infrastructure necessary to support further AI model development. 

That core tenet rested on the critical (and, until now, unchallenged) assumption that AI models require a ton of time, money, resources, and computation power to build. 

DeepSeek challenges that assumption. 

If the firm’s claims are true, U.S. companies could replicate the same tactics and methods used to create DeepSeek – because the model is open-source – to significantly drive down their own training and inferencing costs. In that world, companies and governments would have to spend much less than previously expected over the next few years to create new AI models. 

Of course, that means that the projected AI infrastructure boom may be much smaller than once anticipated. For example, instead of companies and governments collectively spending hundreds of billions per year on the AI infrastructure buildout into 2030, maybe they only spend… say… $100 billion per year. 

That is the big fear driving AI stocks lower. 

DeepSeek News Is Bullish for ‘Appliers’

If AI infrastructure spend over the next few years ends up being an order of magnitude less than previously anticipated, less money will flow into AI infrastructure stocks like chip, data center, energy stocks, etc. – what we call the “AI Builders.” 

Note that those AI Builders were at the epicenter of the market’s recent selloff. 

Meanwhile, AI software stocks – or “AI Appliers,” as we like to call them – actually did fine yesterday. Firms like Samsara (IOT), Procore (PCOR), Zscaler (ZS), Intuit (INTU), Monday.com (MNDY), ServiceNow (NOW), AppFolio (APPF), Workday (WDAY), Atlassian (TEAM), and others mostly rose amid the turmoil. After all, if the DeepSeek model breakthrough is duplicable, developers will be able to spend less to build AI models. 

Understated or Overblown?

Now, we think it’s important to note that we mostly disagree with the market’s initial reaction.

As we previewed in our first statement on the matter, we think the market is grossly overreacting to the DeepSeek news. And in fact, we view the big crash in AI stocks as a fantastic buying opportunity for a few reasons. 

For starters, we do not think DeepSeek’s cost claims should be taken at face value. 

This is a Chinese company, and Chinese companies have a long history of overstating facts. While the model is open-source – and therefore its legitimacy is not in question – claims regarding training costs are not rigorously backed or detailed. They also only include “official training” costs of DeepSeek-V3 and exclude costs associated with prior research and ablation experiments on architectures, algorithms and data.

Elon Musk and others have similarly cast doubt on DeepSeek’s training costs. It seems that the general consensus among AI leaders is that DeepSeek may be dramatically understating how many Nvidia GPUs were used to train the model. 

Meanwhile, the inference costs are simply what DeepSeek is charging. And for all we know, DeepSeek may not care about profits. OpenAI, on the other hand, is trying to price ChatGPT at a level that makes the company profitable. 

Being a largely stealth Chinese company, we have no idea what DeepSeek’s ultimate goal is. Therefore, we do not know what its profitability looks like with such low charged costs to users. 

Implications of the DeepSeek Breakthrough

Additionally, even assuming all of DeepSeek’s cost claims are true, we believe the implications of such a massive efficiency breakthrough are hugely positive for AI stocks. 

As far as the AI Builders are concerned, we do not think this means that less money will be spent on the infrastructure buildout. The total volume of money spent on AI infrastructure over the next several years will equal the training cost per model times the number of models built. Theoretically, an efficiency breakthrough does mean lower training costs. But it should also mean more models being built. 

Regardless, AI is still the future. Every company knows that. So, if AI model training costs drop dramatically, do folks really think companies will cut their AI budgets? No – they’ll just start creating more and more AI models. 

That’s the essence of competitive capitalism. 

Say Coca-Cola (KO) and Pepsi (PEP) are both spending the same amount on AI models to predict demand and create new products. If Coca-Cola leverages the DeepSeek efficiency breakthrough to merely bring down costs and run the same AI models… while Pepsi leverages it to simultaneously bring down costs and create dozens more models that accurately predict channel-specific demand… Pepsi could run Coca-Cola out of business. 

We predict that any and all AI model efficiency breakthroughs will simultaneously reduce per-model training costs and boost total volume of models trained, with the two largely offsetting each other, having a net-neutral impact on overall infrastructure spend. 

In other words, we see this news as net-neutral to AI Builder stocks. 

AI and the Jevons Paradox

For the economists in the room, this is not a new idea; it is called Jevons Paradox. 

Originated by 19^th century British economist William Stanley Jevons, the Jevons Paradox states that improvements in a resource’s efficiency tend to increase – rather than decrease – the overall consumption of that resource. That’s because greater efficiency lowers a resource’s cost, which can lead to increased demand.

This happened with coal usage in the 1800s. Improvements in steam engine efficiency reduced coal consumption per unit of output. However, these improvements also made coal-powered technology more economically attractive, leading to broader adoption and ultimately increasing overall coal consumption.

It also happened with the internet. Over time, computers got smaller and cheaper – and access to the internet became much more affordable. That led us into the digital age, wherein computers proliferated. Here today, most folks around the world are plugged into the internet nearly 24/7. 

And we believe that right now, it is happening with AI. As model training and inference costs are greatly diminished, more and more AI models will emerge, paving the path for artificial intelligence to become a global ubiquity. 

For the AI Appliers, we’re confident this is all great news. 

The Final Word on DeepSeek

Let’s revisit the Coca-Cola and Pepsi example. 

Say both companies leverage the DeepSeek breakthrough to create more AI models with the same level of spend. That means both companies will be getting far more bang for their buck. They’ll become even bigger AI Appliers. And they’ll likely see their revenues soar while costs stay constrained. 

That’s why we see this development as a huge net positive for AI Applier stocks. 

Not to mention, such AI model efficiency breakthroughs suggest that we are closer than anyone ever thought to creating artificial general intelligence (AGI). If indeed we can make foundational AI models for ~95% cheaper than anticipated, we can theoretically create 20X more models for every dollar spent as well. Of course, that means we can improve AI model throughput by 20X, potentially advancing AI reasoning 20X faster than expected. 

In other words, we may be a lot closer to AGI than we realized. 

That is a huge positive for all AI stocks – and Applier stocks in particular. 

So… where do we go from here?

We think the investment strategy response here is pretty simple. 

In the medium to long term… stay fully bullish on the AI trade. But tilt more than ever toward Appliers over Builders. While we think AI Builder stocks will rebound and perform well in the coming months and years, AI Applier stocks should do far better.

And in the short term… don’t make any moves just yet. Wait a few days. Let the dust settle. Then, think about buying the dip in some top Applier stocks. 

To help us find some of the best AI stocks to buy on this dip, we’re looking to Elon Musk – the world’s richest man – and his big venture, xAI.

While that startup isn’t yet a publicly traded company, we’ve found a promising ‘backdoor’ way to invest in it today.

Learn more about how to play Musk’s startup right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Why the DeepSeek Breakthrough Is Good News for AI Stocks appeared first on InvestorPlace.

Editor’s Note: The markets experienced a sharp selloff this morning, triggered by a Chinese AI lab releasing a new and free large language model called DeepSeek R1. This LLM appears to be just as good – if not better – than ChatGPT, which OpenAI created. This has caused AI stocks to sell-off, led by NVIDIA Corp. (NVDA).

Now, we know many of you may be worried about what this means for AI stocks… and your portfolio. So, Eric and his team will cover this story in tomorrow’s Fry’s Investment Report weekly update (subscription required) and, later this week, here in Smart Money. If any immediate action needs to be taken in any of our services, Eric will let you know.

Do you remember 1990?

That was the year when Driving Miss Daisy won Best Picture at the Academy Awards, and when Tom Cruise and Nicole Kidman tied the knot.

But 1990 was also the year that Japanese businessman, and golf enthusiast, Minoru Isutani spent $841 million to buy California’s iconic Pebble Beach Resorts.

The Peak of the Japanese Economic ‘Miracle’

This high-profile transaction marked the peak of the Japanese economic “miracle” that dominated the world of finance throughout the 1980s. By the end of that decade, two-thirds of the world’s 50 largest companies were Japanese.

“Japan Inc.” was a marvel without equal.

Japan’s awe-inspiring might throughout that period was not merely an economic phenomenon. It was a seismic sociological event that inspired a mythology of Japanese economic superiority. But just as the new mythology was becoming irrefutable gospel, it faltered and became a relic of financial history.

Japan’s “Lost Decades” followed.

Within nine months of hitting its all-time high in 1989, Japan’s Nikkei 225 index had tumbled nearly 50%… and it continued sliding lower for two decades. Finally, in 2009 the Nikkei hit its ultimate post-bubble low. At that point, the once-mighty Nikkei had collapsed nearly 80%.

But from that low-water mark, the Japanese stock market started a long road back to respectability and relevance. Finally, last February, the Nikkei surpassed its ancient all-time high of 38,957.

The Nikkei’s resurgence over the last couple of years could be signaling a new era of superior economic growth. Already, the Japanese economy has regained a solid financial footing.

Japanese businesses are also opening their wallets and spending. Capital investment rose 8.1% last year and is trending sharply higher. Expressed as a percentage of GDP, capital investment has climbed to 26%, which is the highest level in 16 years.

Why Japanese Stocks Offer Compelling Diversification

Japanese stocks are beginning to reflect these positive trends, but their valuations remain subdued, relative to both their own history and to U.S. stocks. At 15 times earnings, the MSCI Japan Index is trading nearly 20% below its 30-year median level… and 43% below the current valuation of the S&P 500.

But these depressed valuations may not persist for long. Three powerful factors could combine to boost Japanese share prices sharply higher…

As positive economic trends build upon one another, Japanese economic growth should accelerate, which would light a fire under Japanese stocks. Even modest economic improvement could produce outsized stock market gains.

To capitalize on the nascent opportunity Japanese stocks are offering, I recommend using a “broadbrush” approach. Specifically, I recommend a $12.9 billion ETF devoted to Japanese stocks. 

Already, shares of this ETF are up nearly 5% since I recently recommended it to my Fry’s Investment Report subscribers, due to the news that the Bank of Japan will raise rates to their highest levels in 17 years. All else equal, higher interest rates raise the value of Japan’s currency, making its stocks more attractive.

Importantly, this trade offers a compelling way to diversify from U.S. stocks. Assuming the Japanese economy continues its current growth trajectory, this play could produce solid double-digit gains for several years – even if the U.S. stock market falters somewhat.

To learn more about this recommendation, join me at Fry’s Investment Report today.

As a member, you will also receive all of my latest research and recommendations. My team and I are actively researching and vetting additional prospects to introduce to our portfolio.

Now, let’s look at what we covered here at Smart Money this past week…

Smart Money Roundup

The Most Profitable 100 Days of Your Life Are About to Begin

Last Monday, Donald Trump took the oath of office and began his second term as President of the United States. We are now in an unprecedented period of change, especially over the next 100 days. As one of the most accomplished traders of our time, my colleague Jeff Clark has spent the past 40 years successfully using chaos and volatility to his advantage. And for the first time ever, Jeff is pulling back the curtain to reveal a trading strategy tailored to harness the chaos and opportunities Trump’s first 100 days are sure to bring.

Trump’s Second Inauguration Marks a New Era for AI – Here’s How to Profit

Donald Trump’s pro-innovation mentality signals a fundamental shift in how the U.S. will approach AI development and regulation. This will impact what technological developments and opportunities will arise. So, I’ll share what Trump’s deregulation stance means for the industry… and how you can position yourself to profit from AI’s next phase – artificial general intelligence, or AGI.

The Best Stock to Buy for Trump’s Stargate Project (and the Best Way to Play It)

Last Tuesday, President Trump announced a joint venture – called Stargate Project – that will fund American AI infrastructure development over the next four years to the tune of $500 billion. One company in particular stands to benefit. Let’s take a look what this company is all about… and where I expect it to go. I’ll also offer up an idea on how to play it… a strategy that can turn small gains into triple-digit ones, with little risk.

The Two Best Ways to Trade “Drill, Baby, Drill”

I’ve found two ways to take advantage of the natural gas opportunity we’re seeing. The first is a stock. The second is that simple twist in your investment strategy that can turn 2X winners into 5X winners – and beyond. Click here to read on.

The Simple Reason Why Stocks Are Soaring Right Now

Before President Donald Trump returned to the White House, he was persistently vocal about tariffs. Having yet to see any action, suspense is building. So, my InvestorPlace colleague Luke Lango is sharing his perspective on why tariffs have yet to be front and center, and what Wall Street is anticipating. Continue reading here.

Regards,

Eric Fry

Editor, Smart Money

The post Japanese Stocks Are Set to Soar: A Compelling Way to Diversify From U.S. ÃÛÌÒ´«Ã½s appeared first on InvestorPlace.

A few months ago, I started a YouTube channel called Navellier ÃÛÌÒ´«Ã½ Buzz with my youngest daughter, Crystal. In these videos, we preview the market week ahead and address any stocks or events that are hot topics. We also answer any questions from subscribers.

Now, I want to share as much useful information with you as possible. So, to help get your week off on the right foot, I will be sharing these ÃÛÌÒ´«Ã½ Buzz videos with you each week.

This week, we brought in a special guest, Jason Bodner, to talk about our expectations for a handful of stocks during earnings announcement season, including a couple of Magnificent 7 Stocks: Apple Inc. (AAPL) and Microsoft Corporation (MSFT).

We also talk about Trump’s recent address to the World Economic Forum about Davos, and developments on Trump’s attempt to buy Greenland.

You can click play on the video below to check it out now!

I hope you enjoy the video – we’ll keep doing them as long as folks are interested. If you do, please consider “liking” the video and subscribing to Navellier ÃÛÌÒ´«Ã½ Buzz on YouTube. You can do that here.

In the meantime, as I’ve been saying for a while now, investors need to prepare for what a Trump 2.0 administration will bring – and how it will impact their portfolio.

We’ve already seen Trump sign a series of executive orders related to energy, manufacturing and artificial intelligence that could have profound effects on certain stocks.

Now, my system gave a “buy” rating to all of the top 30 performing stocks of Trump’s first term. And it’s just flagged a number of stocks that could end up being the top performers during Trump’s second term. 

Click here to learn more now.

Sincerely,

Louis Navellier

Editor, ÃÛÌÒ´«Ã½ 360

The post Earnings Reports, Davos Discussions and More… appeared first on InvestorPlace.

This Week’s Ratings Changes:

Upgraded: Buy to Strong Buy

Downgraded: Strong Buy to Buy

Upgraded: Hold to Buy

Downgraded: Buy to Hold

Upgraded: Sell to Hold

Downgraded: Hold to Sell

Upgraded: Strong Sell to Sell

Downgraded: Sell to Strong Sell

To stay on top of my latest stock ratings, plug your holdings into Stock Grader, my proprietary stock screening tool. But, you must be a subscriber to one of my premium services. Or, if you are a member of one of my premium services, you can go here to get started.

Sincerely,

Louis Navellier

The post Weekly Stock Grader Analysis: Upgrades & Downgrades on Top Blue-Chip Stocks appeared first on InvestorPlace.

Editor’s note: Before President Donald Trump returned to the White House, he was persistently vocal about tariffs. Having yet to see any action, suspense is building.

Today, my InvestorPlace colleague Luke Lango is joining us to share his perspective on why tariffs have yet to be front and center, and what Wall Street expects next.

Take it away, Luke…

Stocks Keep Climbing as Trump Holds Off on Tariffs

Ever since Donald Trump was inaugurated as the 47^th President of the United States, the stock market has been soaring higher, for one simple reason. He hasn’t enacted new tariffs. 

We think that will continue – and that the rally on Wall Street will keep roaring.  

Why? Well, investors like a lot of things about Trump’s economic agenda. They like the deregulation and the tax cuts. They like the pro-growth initiatives such as the newly announced Stargate project – a $500 billion investment into building advanced AI infrastructure in the U.S. 

Wall Street likes all those things. But it does not like tariffs. 

That’s the one part of Trump’s economic agenda that worries investors. They don’t want tariffs because they could lead to higher inflation, higher interest rates… and lower stock prices.

Higher inflation may mean no more rate cuts (or, even worse, more hikes) at a time when interest rates are already sky-high and consumers are heavily burdened by them. 

As such, stocks stumbled in November and December any time that Trump pounded the table on tariffs.

But Trump has been back in the White House for several days now. And despite acting on a lot of his other key political initiatives like energy deregulation, immigration reform, and federal spending, he has yet to take any action on tariffs. 

Tariffs So Far: All Talk, No Walk

Sure, President Trump has talked about them. On Inauguration Day, he said that he may consider imposing tariffs on Canada and Mexico in February. He followed that up on Tuesday with similar threats against the EU and China as well. 

But so far, the tariff talk has been just that – talk. 

And that’s comforting Wall Street because that talk was supposed to turn into walk by now. 

Trump had said that he planned to introduce tariffs on Day One… not February.

Wall Street is interpreting the lack of action as a sign that maybe Trump will go ‘light’ with tariffs in his second term. 

We think that’s the correct interpretation. And if so, it means stocks should keep rocketing higher.  

Two plain truths are that: 1) Trump loves the stock market, and 2) The stock market doesn’t love tariffs. 

Given those realities, we think Trump is purposely delaying action here to see if he can use the threat of tariffs to accomplish his goals – tighter border security, better trade deals, etc. – without actually enforcing them. If successful, he would achieve a win-win situation: delivering on campaign promises and sending stocks higher. 

We think that’s what Trump wants to do. Therefore, we expect the ‘tariff talk’ will remain just that for the foreseeable future. And stocks should push higher on pro-growth optimism.

The Final Word

Indeed, the market’s fundamental and technical setups are very bullish right now. 

After last week’s soft inflation reports – and oil prices retreating significantly over the past few days – real-time inflation pressures appear to be easing. We’ve also entered the fourth-quarter earnings season. And thus far, the results have been stellar, headlined by robust results from Netflix (NFLX), Seagate Technologies (STX), Bank of America (BAC), and more. Plus, there’s now even more optimism surrounding the AI Boom following the newly announced $500 billion Stargate initiative. 

Technically speaking, things look just as good. The S&P 500 just bounced off major support levels at its 100-day moving average and the bottom side of its 2024 uptrend trading channel. The bounce has been strong enough to trigger a bullish crossover on the moving average convergence/divergence (MACD) line. Meanwhile, the relative strength index (RSI) is shooting up toward 70. 

The fundamentals and technicals underpinning the stock market right now are incredibly bullish. As such, so long as tariff talk remains talk, stocks should continue to rise over the coming weeks. 

And to help us find some of the best stocks to buy for this ongoing rally and beyond, we’re looking to Elon Musk – the world’s richest man – and his big AI venture, xAI. 

We’re confident that firm has the opportunity to become a major winner in this next phase of the AI Boom.

And while it’s not yet publicly traded, we’ve found a promising ‘backdoor’ way to invest in the company. 

Learn more about xAI and its portfolio-boosting potential now.

Regards,

Luke Lango

Editor, Hypergrowth Investing

P.S. Eric, here. For the past five years, I’ve been developing and refining a strategy that gives you the powerful upside potential of options… without the risk of short-term expirations that doom so many option trades.

Using this strategy – called LEAPS – my trading history shows remarkable results. The SPDR Gold Shares (GLD) climbed 9% while my LEAPS play went up 117%…

And the iShares 20+ Year Treasury Bond ETF (TLT) rose 18% with my preferred LEAPS play jumping 107% over the same period.

I’ve put together a free, special broadcast explaining why this approach differs from most traders’, how it has worked in both bull and bear markets, and its proven track record.

Click here to watch now.

The post Why Stocks Are Surging: Trump’s Tariff Delay and the $500B AI Boom appeared first on InvestorPlace.

InvestorPlace Senior Analyst Eric Fry – our global macro expert – did just that in 2022 with FCX stock. As a reminder, Eric is one of the most successful analysts in the newsletter industry. While most investors are lucky to find one or two 1,000%+ recommendations over the course of their career, Eric has found 42. 

Back to that FCX trade… Eric waited until shares had dropped from $50 to $30 on macroeconomic concerns… and then established a large position in his Leverage trading service before the stock rose 67% back to $50. He sold his position in chunks near the top for an average of 119% gains. (We’ll talk more later on how he did that.) 

These high-quality picks exist in other industries as well. Last week, I introduced two trading exchanges and three power-producing firms to buy. These cyclical firms are also quasi-monopolies. Even if there’s a down-cycle, they’re almost certain to weather the storm. The CME Group Inc (CME), after all, has exclusive licenses to issue futures contracts on the S&P 500, Russell 2000, and Nasdaq indexes. 

This week, I’m pleased to add three more cyclical companies to that list. 

I’ll also reveal how Eric turned Freeport’s 67% rise in the chart above into those 119% gains… and did so with far less risk than you might think, thanks to his use of long-term options. Eric just put together a free research video that dives into more details on the strategy. It provides a more detailed analysis of how these so-called LEAPS trades can transform your portfolio returns… and you can check it out here. 

I’ll have some more thoughts on Eric’s strategy myself below, but first…  

Let’s take a look at three more high-quality cyclical stocks to buy to ride this new bull market. 

Winding Back Up: Eversource’s 2025 Rebound 

In 2022, shares of Boston-based electrical utility Eversource (ES) began a long 40% slide after the company abandoned its offshore wind projects.  

The company was one of the first in America to pursue offshore wind power, making it also one of the first to fail at the endeavor. The company took almost $2 billion in impairment charges in 2023 and recognized an additional $464 million of losses in third-quarter 2024 year after failing to sell its remaining wind assets for an expected $1.12 billion. (The firm received just $745 million.) 

The picture is changing now that Eversource’s wind bet is in the rearview mirror. For 2025, analysts expect revenue growth to flip back positive to 4%, up from a -3% decline last year. Cash flows are set to surge 75%. 

The Stargate Project announcement is another catalyst for a new up-cycle for Eversource. On Tuesday, President Trump revealed a joint venture between Oracle Corp. (ORCL), OpenAI and SoftBank Group Corp. (SFTBY) to raise $500 billion in order to build American AI infrastructure. The president billed it as “the largest AI infrastructure project by far in history.” 

“We have to get this stuff built,” Trump said in the press briefing. “They have to produce a lot of electricity, and we’ll make it possible for them to get that production done very easily.” 

That’s good news for Eversource, which generates 40% of consolidated earnings from interstate transmissions – an increasingly important component for stabilizing the power grid in the face of growing AI infrastructure demand.  

This marks a turn of events. In 2014, the Federal Energy Regulatory Commission (FERC) cut Eversource’s allowed return on equity to 10.57% from 11.14%, digging into one of Eversource’s main sources of profits. Under the Biden administration, the utility continued to face pending FERC rate challenges, keeping share prices depressed. 

The Trump administration will change that calculus. The five FERC commissioners are appointed by the president on a one-year rolling basis, so the committee will flip back to a 3-2 Trump-appointed majority by July 2027. And if America is serious about developing the largest AI infrastructure project in history, it will need to allow higher returns to spur firms like Eversource to invest. 

That could send shares of Eversource back to the $80 to $90 range, a 55% upside, making it one of the best cyclical stocks to consider for 2025. 

2 New Tailwinds: AbbVie’s Cyclical Reversal 

Pharmaceutical companies can be notoriously cyclical because of patent cliffs – the 20-year limit on how long new drugs are protected from copycats. Once patents expire, competitors are free to create generic versions of drugs, pushing prices down by 80% to 85% and depressing the earnings of the original patent-holder. 

Other times, pharma firms are cyclical because of changes in drug pricing regulations. In 2014, the Affordable Care Act led to a broad contraction in the industry. Pharma stocks, as measured by the VanEck Pharmaceutical ETF (PPH), fell more than 20% over the following two years. Similar concerns over Biden-era drug price cuts have pushed the index down 13% since August. 

AbbVie Inc. (ABBV) finds itself stuck with both issues. 

• Patent Cliffs. AbbVie’s blockbuster arthritis drug Humira went off patent in late-2023, opening the doors to cheaper generics. Sales plummeted 42% in its most recent quarter, and are expected to keep falling by double digits in 2025. 
• Regulation. The company was a target of President Biden’s signature Inflation Reduction Act, which allowed Medicare to negotiate prices of the costliest drugs. AbbVie’s cancer drug Imbruvica saw a 38% price cut. 

However, we’re seeing a turnaround happen before our eyes. 

On the patent front, two of AbbVie’s recent drug launches, Skyrizi and Rinvoq, have shown even greater efficacy than its legacy blockbuster. Analysts expect combined sales of the two newer therapies to reach Humira’s peak 2022 sales this year. 

Meanwhile, the regulatory landscape is also turning positive, at least for pharmaceutical developers. (The picture is more mixed in vaccines.) On Monday, Donald Trump signed an executive order that pared back Biden-era initiatives aimed at reducing prescription drug costs for Medicare and Medicaid recipients. More rollbacks, including Medicare’s ability to negotiate drug prices, could be on the way if Trump seeks to overhaul healthcare rules. 

For better or worse, that puts AbbVie’s shares in a position for a swift reversal. Shares of this firm trade within 10% of their 52-week low, and two new tailwinds suggest roughly 20% upside from current prices over the next 12 months, and 40% upside over three years, meaning AbbVie remains a key pick for investors seeking top cyclical stocks in 2025. 

The Safe Bet: Kimberly-Clark’s 2025 Potential 

Finally, some businesses are so stable that shifts in market moods can show up as cyclicality. 

Perhaps the best example of this is Kimberly–Clark Corp. (KMB), the maker of tissue paper, Huggies diapers, and more. Since 2015, the Irving, Texas-based company has generated a consistent stream of profits thanks to its strong brand recognition, global scale, and wide distribution network. 

The stock, however, traded as low as $100 during the 2018 bear market, and as high as $160 during the height of the Covid-19 scare when germ-reducing goods from paper towels to hand sanitizer was flying off shelves. (Kimberly-Clark produces both.) Shares continue to gyrate between $120 and $145, depending on market moods. 

This offers an opportunity for investors to pick up some small profits along the way. Shares of the consumer product giant currently trade for $127 from broader concerns over a “tepid economic environment and elevated cost pressures,” as Morningstar analysts put it. Here’s more: 

In this context, management has been forthright that its market share has lagged, and consumers are increasingly trading down to lower-priced options in select categories to preserve cash. 

Shares now trade at 17.2 times forward earnings, a 10% discount compared to its five-year average of 19.0. 

That gives Kimberly-Clark room for upside. The same analysts note this drawdown is likely temporary and that gross profits are expected to rise 4% this year.  

That should translate into an 11.8% increase in earnings per share, and roughly 15% share-price upside, given the faster growth, which is why Kimberly-Clark could deliver stable gains for the 2025 bull market. 

Turning Small Gains Into Large Ones: How LEAPS Boost Returns 

Some readers will see the 15% upside in Kimberly’s shares and say, “Yes, please.” Corporate bonds are only returning 5% annually, and KMB’s upside represents three years of potential returns. 

Others will consider a 15% upside a rounding error. After all, firms like Eversource and AbbVie offer far greater potential. And high-growth startups can offer 1,000% upside or more. 

That’s why my colleague Eric’s got a different strategy to make even more money on stocks on the verge of the breakout (especially if they’re out of favor). 

He uses this strategy to turn small moves in stocks over a year or two into huge gains. 

For example…  

• The gold ETF GLD recommended by Eric went up 9%… but by using this strategy, his members saw their stake in GLD go up 117%.  
• Shares of the bond ETF TLT ETF rose 18%, but Eric’s play went up 107%.   
• And his recommendation of Vipshop Holdings Ltd. (VIPS) went up 22% for the stock… but Eric’s strategy soared 252%!  

That’s why you should consider the power of Eric’s LEAPS strategy applied to some of these – and other – cyclical stocks… during their up-cycles. 

The stocks I just shared all have double-digit potential in the near future. But with a LEAPS position… bought at today’s prices… with the economic benefit of leverage that long-term options give you… triple-digit returns are definitely in play.  

And quadruple-digit returns like Eric saw from FCX are possible. 

For a deeper dive into how Eric’s strategy works, here’s that link again to check out his latest free research video. 

I’ll see you back here next Sunday. 

Regards, 

Thomas Yeung 

ÃÛÌÒ´«Ã½s Analyst, InvestorPlace 

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.

The post 3 (More) Top Cyclical Stocks to Buy for 2025 Gains  appeared first on InvestorPlace.

When it comes to the stock market, it can be a bit like a hurricane at sea: powerful, unpredictable, and capable of turning calm waters into chaos in an instant.

Sure, stocks have been faring well for a while now. The S&P 500 jumped more than 20% in both 2023 and ‘24. It is up here in the early weeks of 2025, too. 

But while the market waters have been quite calm lately, that certainly isn’t always the case.

You see; historically speaking, the stock market averages about one bear market every five or six years. But in the past six years, we’ve had not one… not two… but three different bear markets. 

There was the flash crash of late 2018, which saw stocks briefly fall into a bear market right before the holidays. There was also the COVID crash of 2020, wherein stocks plunged in the fastest market crash in history. And then there was the inflation crash of 2022, when tech stocks were obliterated by sky-high interest rates. 

Three unforeseen bear markets in the past six years – that is wild. 

But, of course, on the other hand, we’ve also seen some huge stock market successes, too.

Navigating Both Flash Crashes & Fast Recoveries

On average, the stock market rises about 10% per year. But in 2024, stocks climbed 23%. They rose around 27% in 2021. And in 2019, stocks rallied about 29%.

In other words, over the past six years, the S&P 500 has achieved three different years with nearly 30% returns. As a matter of fact, of the stock market’s 10 best years since 1950, three have occurred since 2018. 

Three different bear markets and three of the best years ever for stocks – all within the past six years.

So, if the stock market has felt wild to you lately, that’s because it has been. 

But this wildness could be the new norm for Wall Street going forward. 

We can thank technology for that – at least, that’s my opinion. 

Why? Because algorithms run the market now. 

These days, algorithmic trading accounts for approximately 60- to 75% of total trading volume in the U.S. stock market. That means most trades are automatic, executed by bots adhering to pre-set parameters. 

And, unlike humans, robots don’t really ask why. They just do what they are programmed to. 

So, when something bad happens, all the algorithmic-driven systems rush toward an exit. And when something good happens, they race to get involved. That’s why, in my view, algorithmic trading creates crowding. 

As a result, we get wild swings in the market – both up and down. The algorithms drive momentum one way or the other, and the market follows. 

We get flash crashes and fast recoveries; big bear markets and massive bull runs; major meltdowns and momentous melt-ups. 

We get stock market volatility.

The Final Word on Stock ÃÛÌÒ´«Ã½ Volatility

Such unpredictability can be scary. But since that turbulence drives stocks both ways, you can’t really afford to be crippled by fear, sitting on the sidelines. You need to be in the game. 

But to play well, you also need to craft an investment strategy that can handle the volatility – one that can mitigate the downside while also maximizing the upside. 

And we think we’ve created a strategy that could help you do just that. 

That is, we’ve developed a stock screening system – dubbed Auspex – that leverages fundamental, technical, and sentimental data to find the strongest stocks in the market at any given time.

The strategy therein? Use this tool to find the best stocks in a given month. Buy and hold those stocks, then cash out at month’s end. Lather, rinse, repeat.

We’ve been executing this strategy internally, with great success, for the past several months.

Just a few weeks ago, for example, we had Auspex scan the market to find the best stocks to buy for the month of January. And of about 14,000 stocks, it only found two that met all its strict criteria. As of now, both stocks are up about 17%… in less than a month. 

Learn how Auspex can help take the guesswork out of investing, replacing uncertainty and volatility with certainty and stability.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post How to Find Success Despite Wild Stock ÃÛÌÒ´«Ã½ Volatility appeared first on InvestorPlace.

Hello, Reader.

Amid the blitz of Donald Trump’s new executive orders this week, two in particular have the potential to turn the best trade of early 2025 into the best trade of maybe the next few years.

Let me explain…

Since the start of the year, we’ve seen La Niña conditions officially develop, and those typically bring frigid winters to North America.

That’s certainly true this year.

On Monday, Washington saw its coldest Inauguration Day since 1985. And Southern American cities from Houston to New Orleans to Jacksonville are still digging out of the region’s heaviest snowfall since accurate records began in the early 1900s.

And – good news for my subscribers –my Fry’s Investment Report oil and gas recommendations are surging. Plus, my Forecast #4 for 2025 – that natural gas will outperform the S&P 500 – is off to a strong start.

Let’s take a look at some numbers…

• SPDR S&P Oil & Gas Exploration & Production (XOP): +6.8% YTD
• Valero Energy Corp. (VLO): +13.6% YTD
• S&P 500 Index: +3.0% YTD

Clearly, those who speculated on energy in late 2024 are feeling mighty smug right now… and may even be considering cashing out to take some gains.

But I think they may want to hold on a while longer.

Better yet, they should consider making a small, simple change to their investment approach… one that can transform double-digit winners into triple-digit windfalls. (I dive into many more details in a free research video on the strategy that my team just put together, which you can check out here.)

Trump’s ‘Drill, Baby, Drill’ Executive Orders

Here’s the thing: Trump is going to ratchet up domestic energy production like we’ve never seen before. And he’s doing that with via two executive orders he signed this week:

• “Unleashing American Energy”
• “Unleashing Alaska’s Extraordinary Resource Potential.”

You can think of these as the “Drill, Baby, Drill” executive orders

The first order encourages “energy exploration and production on Federal lands and waters… in order to meet the needs of our citizens and solidify the United States as a global energy leader long into the future.”

The second order lifts restrictions on oil, gas, and mineral production in Alaska by maximizing “the development and production of the natural resources located on both Federal and State lands within Alaska” and prioritizing “the development of Alaska’s LNG potential.”

This includes the sale and transportation of Alaskan liquefied natural gas (LNG) across the United States and the Pacific region.

The goal here is to revive the LNG industry, which produces and transports natural gas in liquid form – historically a cost-effective way to move gas long distances and to locations where pipelines aren’t feasible.

Why Natural Gas Location Matters

Now, not all natural gas is created equal. You can’t just pick a natural gas stock at random. You see, the gas’s location greatly affects its value.

For example, natural gas fetches $4.43 per million British thermal units (MMBtu) at the Henry Hub pipeline convergence point in Louisiana. But gas at the Waha Hub trading outpost near the Delaware Basin in West Texas “sells” for minus $1.06/MMBTU.

In other words, producers near the Waha Hub literally pay companies to truck away natural gas. The Delaware region’s natural gas is geographically undesirable.

However, the economics of producing natural gas in the Delaware Basin may be on the verge of a major transformation – one that will flip today’s negative gas pricing into solidly positive pricing.

And I’ve found two ways to take advantage of the opportunity.

The first is a stock.

The second is that simple twist in your investment strategy that I mentioned earlier… the one that can turn 2X winners into 5X winners – and beyond.

Let’s take a look…

The “Pipeline” to Achieving Long-term Gains

Investment in natural gas transport and processing facilities has recently ramped up in the Delaware Basin.

One of those facilities is a new pipeline that transports up to 2.5 billion cubic feet per day of natural gas from the Waha Hub to the Katy area just west of Houston. This pipeline opened in the fall of 2024.

And another pipeline is expected to begin operating in 2026. This one will transport gas from West Texas to the Agua Dulce Hub in South Texas, near Corpus Christi.

Now, one particular natural gas producer has contracted for significant offtake capacity on both pipelines. It is planning to ramp up its natural gas production from the Delaware Basin over the next few years… and to take advantage of the LNG pricing improvement as these projects get built out.

I first spotted the opportunity that is company is offering back in November. That is when I recommended it to my Leverage subscribers.

How LEAPS Options Can Deliver Triple-Digit Returns

Now, one way of investing in this natural gas opportunity would be to buy and hold a stock. But at Leverage, we do something a little different. We use the power of options.

To refresh folks new to options, they are side bets on a stock’s price that allow investors to make enormous payoffs if they get things right. The math might be complicated, but the outcome is straightforward.

Plainly put, an option is a security that confers the right (but not the obligation) to buy or sell a specific security at an agreed price within a set period of time.

Every option is identified with a specific stock. So, whenever you place an options trade, the movement of the underlying stock will affect the success or failure of your investment.

The Power of Time

Now, all options have expiration dates. It’s usually a matter of weeks or months.

These are the short-term options that you often hear about making their owners triple-digit gains in a week or two – or even just a day. Just as often, you hear about them wiping out traders’ portfolios overnight.

I avoid them.

The sort of options I use at Leverage are long-dated options whose expiration dates are one to three years away. And when it comes to making gains of 100%, 200%, 1,000%, and more, I typically prefer these LEAPS options. (That stands for “Long-Term Equity Anticipation Security.”)

I prefer LEAPS for a variety of reasons, including:

• The “price of admission” to a particular trade is lower. For example, buying call options on 1,000 shares of a stock costs much less than buying 1,000 shares of that stock outright
• You benefit from leverage (hence, the name of my service). You put down a small investment to control a large amount of stock.
• You have much smaller downside risk, compared to a stock. For example, the buyer of a call option can’t lose more than the cost of the option, no matter how far the underlying stock might fall.

There’s also the added benefit of having more time for your investment thesis to play out.

In fact, just this week my Leverage subscribers booked partial gains of more than 550% on a dynamic LEAPS call option I recommended just a year ago on an AI-focused high-tech materials firm. We’ve still got a quarter position open on that trade – and thanks to taking profits along the way, we’re guaranteed a total gain of at least 230% on this trade, even if the stock goes to zero from here.

The underlying stock is up about 80% over the past year. Now you can see why these LEAPS trades are so powerful.

You can use this strategy to turn small moves in stocks over a year or two into huge gains.

For example…

• The gold ETF GLD I recommended up 9%… but by using this strategy, my members saw their stake in GLD go up 117%.
• Shares of the bond ETF TLT ETF rose 18%, but my play went up 107%.
• And my recommendation of Vipshop Holdings Ltd. (VIPS) went up 22% for the stock… but my LEAPS strategy soared 252%.

That’s why I recommended the natural gas producer in the Delaware Basin as a LEAPS call option.

Thanks to Trump’s “Drill, Baby, Drill” executive orders, the LNG stock I recommended to my members – and others like it – have double-digit potential in the near future. But with a LEAPS position… bought at today’s prices… with the economic benefit of leverage that long-term options give you… triple-digit returns are definitely in play.

And quadruple-digit returns are possible.

For a deeper dive into how my strategy works, here’s that link again to check out my latest free research video.

When used selectively, like we do at Leverage, options can impart powerful benefits to an investment portfolio, turning ordinary stock moves into large profits.

Regards,

Eric Fry

The post 2 Best Ways to Trade “Drill, Baby, Drill” in 2025 appeared first on InvestorPlace.

Ever since it became clear that Donald Trump won the U.S. presidential election back in November, the stock market has been ripping higher. Now everyone wants to know what the next four years will look like for stocks in the “Trump 2.0” era. Will this exciting price action last?

Well, I have six words of wisdom to offer: Embrace the boom; beware the bust. 

Thanks in large part to the AI investment megatrend and long-awaited rate cuts from the Federal Reserve, the U.S. stock market has been booming for the past two years. 

That is, the craze around artificial intelligence has sparked an exceptional surge in investment. Companies have been racing to create the infrastructure necessary to support next-gen AI. Indeed, Meta (META), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL) – pretty much all the world’s major tech companies continue to spend billions upon billions of dollars to build new AI data centers, create new applications, hire more engineers, etc. And all that investment has created a major economic boom.

Meanwhile, throughout 2022 – after embarking on the most aggressive rate-hiking cycle in nearly 50 years – the Federal Reserve finally slowed its pace of hikes. And in 2024, the central bank actually started to cut rates. This has provided much-needed relief to consumers looking to finance big purchases and businesses looking to make new investments. This relief has also helped support the present economic boom. 

This optimal setup has helped stocks to really soar.

Embrace the Boom; Beware the Bust 

Since hitting its lows in October 2022 – just over two years ago – the S&P 500 has surged 70% higher. It is now on track to notch its second consecutive year of 20%-plus gains. 

The S&P rose 24% in 2023. It popped another 23% in ’24. That is just the fourth time since the Great Depression – nearly 100 years ago – that the S&P 500 rallied more than 20% in back-to-back years. 

We are unequivocally in a stock market boom. 

And in our view, this boom is about to get even ‘boomier.’ 

Thanks to Donald Trump’s victory and Republicans’ newfound control of Congress, a wave of deregulation, pro-business policies, and tax cuts are likely to sweep the nation over the next few years. Those dynamics will only add to the current economic boom. 

Indeed, this is already happening. In his first few days in office, Trump has already signed executive orders to deregulate the energy industry, announced big new growth initiatives like Stargate (which will pour $500 billion into AI infrastructure over the next four years), and talked about enacting more tax cuts.

Sounds great, doesn’t it?

Sure does – so long as you remember that all market booms inevitably end with busts. It is not a question of “if.” It is simply a question of “when.” 

As we mentioned before, the stock market just notched back-to-back years of 20%-plus gains. It has only done that three times before: in 1935/36, 1954/55, and 1995/96. 

After the two boom years in 1935 and ‘36, stocks immediately crashed about 40% in 1937. That boom turned into a bust almost immediately. 

Following the market boom in 1954 and ‘55, stocks went flat in ‘56, then dropped 15% in 1957. The boom turned into a bust after about a year. 

Similarly, post-1995/96, stocks kept partying throughout 1997, ‘98, and ‘99 – only to crash about 50% throughout 2000, ‘01, and ‘02. After about three years, that era’s big boom turned into a big bust as well.

All booms of this nature turn into busts. It’s just a matter of timing. 

Does that mean you should dump your stocks while you still can and head for the hills to avoid this inescapable bust? 

Absolutely not.

The Final Word on Conquering an Ever-Changing Stock ÃÛÌÒ´«Ã½

Usually, the last 30 minutes of a movie is the best part of the film. The last episode of a TV show is almost always the best one, just as the last few minutes of a ballgame are normally the most exciting. 

Similarly, the last few years of a stock market boom can often be the most profitable. 

Just consider the Dot Com Boom of the 1990s.

Tech stocks had some amazing years therein. The Nasdaq Composite rallied 40% in 1995, about 20% in ‘96, another 20% in ‘97, and then 40% again in ‘98. But tech stocks saved their best for last, with the Nasdaq soaring almost 90% for its best year ever in 1999. 

Then the bust started in 2000. 

Point being: The best year for tech stocks in the ‘90s was the final year of the Dot Com Boom. 

That’s why you don’t want to leave a stock market party early. But you also don’t want to leave too late. 

So, what’s an investor to do? 

Embrace the boom. Beware the bust. Ride stocks higher, then head for the exits when the warning signs appear. 

Of course, that’s much easier said than done, I know. 

For this reason, I created Auspex: a stock screener that scans about ~14,000 stocks every time we run the model. It’s designed to help us uncover the stocks most likely to rise over the next 30 days. And typically, only a few make each final cut. 

In our most recent scan, the screener highlighted just two trades for the month of January. As of now, both are up about 17% for us… in less than a month.

With Auspex, you can gain a critical edge, identifying stocks poised for success while saving your valuable time.

And, in fact, in just a few days, we are going to run our February scan to help us find the best stocks to buy for next month.

The next market winner is waiting. Let Auspex help you find it before it takes off.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post An Outperforming Investment Tool to Help You Game the ÃÛÌÒ´«Ã½ appeared first on InvestorPlace.

And he believes that a couple of the executive orders that Donald Trump signed this week just created a profit opportunity that’s ideal for this strategy. Eric just released a free video strategy session where he goes in-depth on this strategy. You can check that out here. He recorded that broadcast before Inauguration Day, however, so I invited Eric here today to explain the opportunity President Trump just set up for us.

****

Hello, Reader.

Amid the blitz of executive orders signed by Donald Trump this week, two in in particular have the potential to turn the best trade of early 2025 into the best trade of maybe the next few years.

Let me explain…

Since the start of the year, we’ve seen La Niña conditions officially develop, and those typically bring frigid winters to North America.

That’s certainly true this year.

On Monday, Washington saw its coldest Inauguration Day since 1985. And Southern American cities from Houston to New Orleans to Jacksonville are still digging out of the region’s heaviest snowfall since accurate records began in the early 1900s.

And – good news for my subscribers –my Fry’s Investment Report oil and gas recommendations are surging. Plus, my Forecast #4 for 2025 – that natural gas will outperform the S&P 500 – is off to a strong start.

Let’s take a look at some numbers…

• SPDR S&P Oil & Gas Exploration & Production (XOP): +6.8% YTD
• Valero Energy Corp. (VLO): +13.6% YTD
• S&P 500 Index: +3.0% YTD

Clearly, those who speculated on energy in late 2024 are feeling mighty smug right now… and may even be considering cashing out to take some gains.

But I think they may want to hold on a while longer.

Better yet, they should consider making a small, simple change to their investment approach… one that can transform double-digit winners into triple-digit windfalls. (I dive into many more details in a free research video on the strategy that my team just put together, which you can check out here.)

Here’s the thing: Trump is going to ratchet up domestic energy production like we’ve never seen before. And he’s doing that with via two executive orders he signed this week:

“Unleashing American Energy” and “Unleashing Alaska’s Extraordinary Resource Potential.”

You can think of these as the “Drill, Baby, Drill” executive orders.

The first order encourages “energy exploration and production on Federal lands and waters… in order to meet the needs of our citizens and solidify the United States as a global energy leader long into the future.”

The second order lifts restrictions on oil, gas, and mineral production in Alaska by maximizing “the development and production of the natural resources located on both Federal and State lands within Alaska” and prioritizing “the development of Alaska’s LNG potential.”

This includes the sale and transportation of Alaskan LNG across the United States and the Pacific region.

The goal here is to revive the LNG industry, which produces and transports natural gas in liquid form. It is historically a cost-effective way to transport natural gas over long distances and to places where pipelines are not feasible.

Now, not all natural gas is created equal. You can’t just pick a natural gas stock at random. You see, the gas’s location greatly affects its value.

For example, natural gas fetches $4.43 per million British thermal units (MMBtu) at the Henry Hub pipeline convergence point in Louisiana. But gas at the Waha Hub trading outpost near the Delaware Basin in West Texas “sells” for minus $1.06/MMBTU.

In other words, producers near the Waha Hub literally pay companies to truck away natural gas. The Delaware region’s natural gas is geographically undesirable.

But the economics of producing natural gas in the Delaware Basin may be on the verge of a major transformation – one that will flip today’s negative gas pricing into solidly positive pricing.

And I’ve found two ways to take advantage of the opportunity.

The first is a stock.

The second is that simple twist in your investment strategy that I mentioned earlier… the one that can turn 2X winners into 5X winners – and beyond.

Let’s take a look…

The “Pipeline” to Achieving Long-term Gains

Investment in natural gas transport and processing facilities has recently ramped up in the Delaware Basin.

One of those facilities is a new pipeline that transports up to 2.5 billion cubic feet per day of natural gas from the Waha Hub to the Katy area just west of Houston. This pipeline opened in the fall of 2024.

And anotherpipeline is expected to begin operating in 2026. This one will transport gas from West Texas to the Agua Dulce Hub in South Texas, near Corpus Christi.

Now, one particular natural gas producer has contracted for significant offtake capacity on both pipelines. It is planning to ramp up its natural gas production from the Delaware Basin over the next few years… and to take advantage of the LNG pricing improvement as these projects get built out.

I first spotted the opportunity that is company is offering back in November. That is when I recommended it to my Leverage subscribers.

Now, one way of investing in this natural gas opportunity would be to buy and hold a stock. But at Leverage, we do something a little different. We use the power of options.

To refresh folks new to options, they are side bets on a stock’s price that allow investors to make enormouspayoffs if they get things right. The math might be complicated, but the outcome is straightforward.

Plainly put, an option is a security that confers the right (but not the obligation) to buy or sell a specific security at an agreed price within a set period of time.

Every option is identified with a specific stock. So, whenever you place an options trade, the movement of the underlying stock will affect the success or failure of your investment.

The Power of Time

Now, all options have expiration dates. It’s usually a matter of weeks or months.

These are the short-term options that you often hear about making their owners triple-digit gains in a week or two – or even just a day. Just as often, you hear about them wiping out traders’ portfolios overnight.

I avoid them.

The sort of options I use at Leverage are long-dated options whose expiration dates are one to three years away. And when it comes to making gains of 100%, 200%, 1,000%, and more, I typically prefer these LEAPS options. (That stands for “Long-Term Equity Anticipation Security.”)

I prefer LEAPS for a variety of reasons, including:

• The “price of admission” to a particular trade is lower. For example, buying call options on 1,000 shares of a stock costs much less than buying 1,000 shares of that stock outright
• You benefit from leverage (hence, the name of my service). You put down a small investment to control a large amount of stock.
• You have much smaller downside risk, compared to a stock. For example, the buyer of a call option can’t lose more than the cost of the option, no matter how far the underlying stock might fall.

There’s also the added benefit of having more time for your investment thesis to play out.

In fact, just this week my Leverage subscribers booked partial gains of more than 550% on a dynamic LEAPS call option I recommended just a year ago on an AI-focused high-tech materials firm. We’ve still got a quarter position open on that trade – and thanks to taking profits along the way, we’re guaranteed a total gain of at least 230% on this trade, even if the stock goes to zero from here.

The underlying stock is up about 80% over the past year. Now you can see why these LEAPS trades are so powerful.

You can use this strategy to turn small moves in stocks over a year or two into huge gains.

For example…

• The gold ETF GLD I recommended is up 9%… but by using this strategy, my members saw their stake in GLD go up 117%.
• Shares of the 20-year Treasury bond ETF (TLT) rose 18%, but my play went up 107%.
• And my recommendation of Vipshop Holdings Ltd. (VIPS) went up 22% for the stock… but my LEAPS strategy soared 252%.

It’s why, to return back to the natural gas producer in the Delaware Basin, I recommended the trade as a LEAPS call option.

Thanks to Trump’s “Drill, Baby, Drill” executive orders, the LNG stock I recommended to my members – and others like it – have double-digit potential in the near future. But with a LEAPS position… bought at today’s prices… with the economic benefit of leverage that long-term options give you… triple-digit returns are definitely in play.

And quadruple-digit returns are possible.

For a deeper dive into how my strategy works, here’s that link again to check out my latest free research video.

When used selectively, like we do at Leverage, options can impart powerful benefits to an investment portfolio, turning ordinary stock moves into large profits.

Regards,

Eric Fry

Editor, Smart Money

The post The Two Best Ways to Trade “Drill, Baby, Drill” appeared first on InvestorPlace.

No, I’m not talking about the recent snowstorms we’ve had across much of the U.S.

According to one definition in the Collins Dictionary, “A perfect storm is an unusual combination of events or things that produce an unusually bad or powerful result.”

This is the type of perfect storm I’m talking about.

The reality is we’re facing a perfect storm for small-cap stocks. And I want my readers to be prepared to profit from what’s coming.

So, in today’s ÃÛÌÒ´«Ã½ 360, I’ll give three reasons why a perfect storm is brewing for this group of stocks in 2025. I’ll also share how you can find small-cap stocks with superior fundamentals so you can stay on the right path to profits this year.

What’s a Small-Cap Stock?

Before we get into it, I want to first explain what a small cap is.

Small-cap companies are companies whose total market value, or market capitalization, ranges from about $300 million to $2 billion. Large-cap stocks, in comparison, have a market value of $10 billion or higher.

The appeal of small-cap stocks is simple. Because they’re small, there is greater potential for big gains. After all, who hasn’t dreamed of owning the next Apple Inc. (AAPL) or Amazon.com, Inc. (AMZN)?

But the reality is that with greater growth comes greater risk and volatility. If you pick the wrong small-cap stock, you could do some serious damage to your portfolio.

On the flip side, if you pick the right small-cap stock, you could find yourself with a big winner.

With that said, let’s dive into why I think small caps are set to thrive in 2025…

Reason 1: The U.S. is an oasis

The first reason is that the U.S. is an oasis in a world of chaos.

I won’t get into what’s going on in Ukraine or in the Middle East. But even aside from wars and conflict, the truth of the matter is that much of the world is in a recession or on the verge of a recession. And a lot of these economic woes are due to leadership crises and political unrest.

This has been particularly apparent from our neighbor to the north.

On January 6, Canada’s Prime Minister Justin Trudeau bowed to pressure and resigned amid mounting crises and threats of tariffs from President Donald Trump.

Canada, though, is far from the only country facing political chaos right now. In Europe, Germany and France are experiencing some of their own chaos.

Germany has elections scheduled for February, and many anticipate that the Alternative for Germany (AfD) party will win the election. The AfD is pushing for stricter immigration policies, restarting shuttered nuclear plants and cutting oppressive taxes.

Meanwhile in France, French President Emmanuel Macron’s party has a minority in Parliament. Marine Le Pen’s National Rally Party holds the majority of seats in Parliament and continues to undermine Macron’s authority, especially when it comes to spending. If the National Rally Party’s budget demands are not accepted, it could topple Macron’s fragile ruling coalition.

The good news is that we don’t have as significant levels of political chaos or recession fears in the U.S. – and as a result, I suspect the U.S. will remain the economic growth engine of the world.

In fact, if Trump 2.0 is successful at ending the manufacturing recession and the senseless wars overseas, then the U.S. economy could very well grow between 4% and 5% in 2025. Additionally, if President Trump makes the government more efficient, we may briefly hit 6%.

We’ve never experienced that kind of growth before – and it could be especially good news for small caps.

Reason 2: A strong U.S. dollar benefits small caps

The second reason is that the U.S. dollar is incredibly strong right now, as you can see in the chart below.

This benefits small caps significantly.

The reality is, with a strong dollar, everything we’re importing is getting cheaper. This means consumers have more purchasing power, which means they are likely to spend money domestically, too – which helps some small-cap companies.

It also helps small-cap companies that rely on imported raw materials or goods to make their products, since these inputs will be cheaper.

On the other hand, countries with weaker currencies are experiencing inflation. The Brazilian real was down 21% against the dollar last year, and the Mexican peso was down 19%. Europe is also experiencing this, and the British pound is struggling as well.

In fact, I would not be surprised if the U.S. dollar continues to strengthen against its peers. Parities with the euro and the British pound are a very real possibility in 2025.

All of this is important because a strong U.S. dollar impedes the sales of the larger, multinational stocks in the S&P 500 simply because approximately half of their sales come from outside of the U.S.

As a result, domestic stocks tend to prosper when the U.S. dollar is strong and small- and mid-cap stocks are more domestic in nature.

Reason 3: Rates should continue declining

Now, the third reason is something that I have consistently argued. It’s that the Fed will continue cutting rates this year – perhaps as many as four times. And this is very good news for small caps.

Here’s why…

Inflation is cooling and should continue to do so. You may recall that the Consumer Price Index (CPI) did increase 0.4% on a monthly basis in December. But the core CPI, which excludes food and energy, only rose 0.2%. That was a deceleration from a 0.3% increase in November. Also, on an annual basis, core prices increased by 3.2%. That was the first time since July that year-over-year core CPI growth slowed. (You can read more about the latest inflation reports here.)

Given the cool inflation reports, Treasury yields have pulled back from their recent highs on the rising hope that the Fed will continue to cut key interest rates this year.

I should also add that when global central banks start to cut rates even more in order to stimulate their struggling economies, this will increase pressure on the Fed. That’s because global bond investors will seek a better rate of return by purchasing U.S. treasuries. This will push our market rates down. And since the Fed doesn’t like to fight the bond market, they will likely cut rates in response.

Bottom line, I expect to see worldwide rates collapse this year. Our rates will come down as a result, and our Fed will probably end up cutting at least four times this year.

This is all good news for small caps.

They are some of the biggest beneficiaries of lower interest rates. Smaller companies tend to have bigger debt loads than larger companies, and when interest rates decline, they benefit handsomely.

For example, loan payments are easier to pay off and can use more capital toward growth initiatives. This helps small caps grow faster than their large-cap peers.

How to Stay on the Path to Profits in 2025

Add it all up, and it’s clear to me that a perfect small-cap storm is on the horizon in 2025. But in order to ensure you’re best positioned to profit, you’ll want to make sure you have a proven, powerful system at your back.

That’s why I’ve relied on Stock Grader (subscription required), which I’ve perfected over the past four decades, to help me identify market-beating picks year after year. 

In fact, my system gave a “buy” rating to all of the top 30 performing stocks of Trump’s first term. So, chances are good that we’ll find more than our fair share of winners during Trump 2.0. 

And as the backbone of my Accelerated Profits service, Stock Grader can help ensure we’re on the right side of history – and make quick gains as a result. 

Using Stock Grader, I’ve found five stocks that are likely to benefit from the Trump 2.0 agenda. Four out of the five picks are either small-cap or mid-cap stocks, so there is plenty of room to run…

And not only do they boast strong underlying fundamentals – but they are also experiencing strong buying pressure – meaning they’re likely to deliver some fast, powerful gains to investors who act quickly. 

Click here to learn more now.

(Already an Accelerated Profits subscriber? Click here to log in to the members-only website.)

Sincerely,

Louis Navellier

Editor, ÃÛÌÒ´«Ã½ 360

The post A Small-Cap Storm Is Brewing for 2025 appeared first on InvestorPlace.

When it comes to making money in the stock market, I’ve found that one of the best approaches is to invest in problem-solving businesses. After all, companies that figure out how to solve a widespread problem can generate sustainable demand, revenues, and profits. And that should all lead to higher stock prices. 

By that logic, it may be time to check out energy stocks. 

As recent years have made clear, electric grids across the world are already being strained by increasing energy demands. And thanks to the rise of AI, the world may soon face a massive energy crisis. 

That’s because AI applications require far more energy than traditional incumbents. For example, a typical ChatGPT search uses 10X more power than a traditional Google search. 

So, as the world shifts from legacy to AI computer applications across all sectors and industries, the world’s energy demands will increase dramatically. 

Indeed, Goldman Sachs estimates that, thanks to AI, data center power demand will grow 160% by 2030. Morgan Stanley is calling for a near 5X increase in generative AI power demand over the next three years. And Wells Fargo projects AI power demand will surge 8,050% between 2024 and 2030. 

Energy demand is likely to skyrocket over the coming years.

That’s a huge problem because the global energy supply is already limited. Therefore, whoever provides a solution – and produces the energy necessary to power the AI Boom – could generate huge demand, revenues, and profits in the coming years. 

Such problem-solving companies could be the next batch of AI stock winners. 

And in that world, I like nuclear energy stocks the best. 

Follow me here… 

Nuclear Energy: A Surprisingly Safe Power Source

Once upon a time, nuclear energy was hailed as the best power source in the world. 

That was years ago, before a few headline disasters – like that of Fukushima in 2011, Chernobyl in 1986, and Three Mile Island in 1979 – reminded the world that nuclear power plants can, indeed, be very dangerous. 

But that was then… and this is now. 

The Fukushima meltdown happened almost 15 years ago. Chernobyl’s disaster took place about 40 years ago. And the Three Mile Island accident was almost 50 years ago now. 

Believe it or not, a lot has changed in all that time. 

Nuclear power technology has improved dramatically over the last few decades. The industry has developed new fuels more resistant to radiation, corrosion, and higher temperatures as well as advanced instrumentation to monitor every system and process. 

This sector’s technology has meaningfully improved. 

In fact, recent studies show that, based on real-world usage data, nuclear power plants are significantly safer than traditional fossil fuel plants, like coal, oil, and natural gas. 

When it comes to coal, the death rate from both accidents and air pollution is about 24.6 deaths per terawatt-hour of electricity produced. (For reference, 1 terawatt-hour is the annual electricity consumption of about 150,000 people.) 

The death rate for oil is about 18.4 deaths per terawatt-hour. Natural gas – about 2.8 deaths. 

And nuclear power is responsible for just 0.03 deaths. 

So, it seems the predispositions people have about nuclear energy actually run entirely counter to the hard data that engineers have collected on this matter. 

Nuclear energy is objectively safer than most other energy sources. That’s just what the numbers say. After all, there is a reason that it used to be hailed as the best energy source in the world.

The Cheapest, Cleanest, and Most Efficient Energy By Far

You can quantify how good an energy source is by its so-called “capacity” or “efficiency factor.”

Specifically, what percentage of the time is a certain type of power plant actually producing maximum power? That’s what the capacity factor for any energy source is. 

As it happens, nuclear energy’s capacity factor is 93%. That means nuclear plants produce maximum power about 93% of the time. 

You know what the capacity factor of a natural gas plant is? Less than 60%. 

Nuclear power plants are more than 50% more efficient than natural gas power plants at actually producing power. And that’s pretty much the closest competition nuclear power plants have… 

Because the capacity factor for a coal plant is about 40%. For a wind farm, it’s about 35%. And for a solar array, it’s about 25%. 

Nuclear is, by far, the most efficient energy source in the world. 

It’s also the cheapest. 

It costs an estimated $71 to generate one megawatt-hour of nuclear energy. Coal costs about $93 per megawatt-hour, or about 30% more. Natural gas will run you over $100 per megawatt-hour, about 50% more than nuclear. Wind and solar cost about double that of nuclear power.

So… nuclear offers one of the safest, most efficient, and cheapest energy sources in the world… 

Oh, and it’s really clean, too. 

It’s estimated that nuclear energy emits less than 200 tons of carbon dioxide per gigawatt-hour of production. That is, of course, far less than coal (over 800 tons), oil (over 500 tons), and natural gas (over 300 tons). 

In our view, nuclear power is like the Michael Jordan of energy. It has it all. The coach just has to put it in the game and let it play. 

That, my friends, is finally happening.

Big Money Is Betting on Nuclear Energy

Microsoft (MSFT) – one of the world’s largest and most important companies – has tapped utility provider Constellation Energy (CEG) to restart the dormant Three Mile Island nuclear plant in Pennsylvania.

As part of the deal, the two will restart the plant. And for the next 20 years, Microsoft will buy all the plant’s energy to help power its AI data centers. 

Clearly, not only does Microsoft fundamentally believe nuclear energy is safe, it also believes nuclear energy production is critical to help support the AI Boom. 

It’s put nuclear energy “in the game,” so to speak. 

And it’s not alone.

Alphabet (GOOGL) has announced intentions to start buying nuclear energy to power its AI data centers. Same with Amazon (AMZN) and Meta (META). 

Meanwhile, 14 major Wall Street banks – including Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC) – recently announced that they would collectively support an effort to triple the world’s nuclear energy capacity by 2050. 

The Final Word

This isn’t just a Wall Street phenomenon, either. Governments around the globe are also heavily investing in a nuclear-powered future.

The U.S. government has made a $1.5 billion conditional loan commitment to help restart the 800-MW Palisades nuclear plant in Michigan.

Japan – home to the most recent major nuclear disaster at Fukushima – is restarting its nuclear reactors after shunning them just a decade ago. 

India is seeking nearly $30 billion in private funding to expand nuclear energy production and wants to build 20 new reactors by 2032. 

Sweden aims to spend about $40 billion to create two nuclear reactors by 2035. 

France is prioritizing nuclear energy in its new energy initiatives and wants to build six new reactors there. 

The same thing is happening in the United Kingdom, where it hopes to build as many as eight nuclear reactors to boost nuclear energy production to 25% of total energy production by 2050 (from 15% today).

Hungary and the Czech Republic are both currently building a pair of new nuclear reactors. And, better late than never, Poland is building its first-ever nuclear power plant at this very moment, too. 

Clearly, the Nuclear Energy Renaissance is on!

This is a huge investment theme that could produce a lot of big-time stock market winners. Indeed, several nuclear energy stocks have already rallied more than 100% since early September. 

We don’t think they’re done yet. Instead, it feels like this “nuclear party” is just getting started. 

That’s why we are hyperfocused on this sector in our research services. 

This energy boom should help advance AI on its path. And that could be particularly helpful for Elon Musk – the world’s richest man – and his big venture, xAI.

While that startup isn’t yet a publicly traded company, we’ve found a promising ‘backdoor’ way to invest in it today.

Learn more about how to play Musk’s startup right now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post Nuclear Energy Stocks Could Be the Smartest AI Play for 2025 appeared first on InvestorPlace.

After that issue of ÃÛÌÒ´«Ã½ 360 went out, I went to Mar-a-Lago later that night. It was the weekend before the Trump team would travel to Washington D.C. for the inauguration.

Now, every time I have been to Mar-a-Lago, Donald Trump has been a gracious host to my family, and we have wonderful memories of our times there.

But this time was different. The excitement was palpable. You could tell that some big things were in store.

One thing I’ve been excited about was what a Trump presidency would mean for artificial intelligence. For the past few weeks, I’ve stated that one of the top priorities for Trump 2.0 will be to light a fire under the AI Boom by slashing regulations and dismantling roadblocks to development. I said we should expect to see a massive buildout of data centers, electrical infrastructure, nuclear facilities, natural gas plants and more.

In fact, the day before he took office, Trump said as much. As Bloomberg reports:

On the eve of taking office, Trump said that he would pave the way for “people with a lot of money” to invest in so-called “AI plants” to power data centers for artificial intelligence.

So, it should come as no surprise that Trump 2.0 just delivered a whopper of an announcement on the AI buildout this week. I’ll share the details, what it means for the AI Boom – and how you can profit from Trump 2.0 – in today’s ÃÛÌÒ´«Ã½ 360.

The Largest AI Investment in History

On Tuesday, the White House announced a new joint private-sector investment to build AI infrastructure across the United States. Called “The Stargate Project,” it will take place over the next four years and is headlined by OpenAI, SoftBank, Oracle Corporation (ORCL), and MGX (a tech-focused investment group established by the government of Abu Dhabi).

The price tag? $500 billion. That makes it the largest private investment in AI we’ve seen so far.

Now, the first $100 billion is being put to work right away by building the first data center in Abilene, Texas, with the rest to follow soon.

For its part, Oracle will help build and operate the data centers. OpenAI will handle the AI side of things, while Softbank will act as a primary financier. The data centers will run on NVIDIA Corporation’s (NVDA) chips – no surprise there. Microsoft Corporation (MSFT) and Arm Holdings plc (ARM) are also involved in the project.

At the announcement, President Trump was joined by OpenAI’s Sam Altman, along with Oracle founder Larry Ellison and Softbank’s Masayoshi Son.

I don’t think I can overstate how big a deal this is, folks.

Son may have put it best when he called the venture “the beginning of a golden age.”

According to Reuters, these tech visionaries gave Trump credit for the news. “We wouldn’t have decided to do this, unless you won,” Son said.

In his comments, Altman referenced the race to artificial general intelligence (AGI) – or the ability of AI to understand or learn any task better than a human. He mentioned the critical nature of this partnership and Trump’s involvement in making it happen.

Trump may not know all the ins and outs of tech, but he knows we need to win the race to AGI. And he wants to beat the Chinese – or anyone else – to the punch.

The bottom line is that the AI buildout is the Manhattan Project and Space Race of our time. So, we can expect to see more announcements of ambitious projects in the weeks and months ahead.

What to Expect From Trump 2.0

Naturally, stocks like NVIDIA jumped about 5% on the news. Arm, which designs chips, leaped about 15%. But other companies that will benefit were up on the news, too. In fact, one of our Growth Investor Buy List stocks that’s crucial to the construction of these data centers has climbed roughly 15%.

I have been telling my Growth Investor subscribers for months to prepare for Trump 2.0. I’ve said that as soon as Trump takes office, the U.S. economy will begin to hit the overdrive button, leading the entire world on a new trajectory of growth. (But of course, America will benefit the most.)

 In fact, I have gone on record saying that…

• If Trump can get manufacturing going, we are at 4% GDP growth…
• If he gets a “peace dividend” by ending the conflicts in the Middle East and between Russia and Ukraine, we are at 5% GDP growth…
• And if he can make the government more efficient, then we may even briefly hit 6% GDP growth.

So, if Son is right, and we are about to enter a “golden age,” then we need to gear up to profit. But time is running out…

The last time Trump was President, my Stock Grader tool (subscription required) gave a buy rating to all of the top 30 outperformers of Trump’s first term. And I’ve used it to identify a handful of picks that I expect to prosper.

I’ve prepared everything you need to know in a new special presentation.

In it, you’ll learn about…

• My top pick for a manufacturing renaissance under Trump 2.0.
• A little-known company that’s helping build the data centers that will develop the next generation of AI.
• A separate energy play for “drill baby drill” that could help power this entire AI revolution.
• And I’ll explain how Trump’s pro-Bitcoin policies could send an under-the-radar stock higher than anyone can imagine.

Click here for all the details now.

Sincerely,

Louis Navellier

Editor, ÃÛÌÒ´«Ã½ 360

The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA)

The post Trump 2.0 Kicks Off With a $500 Billion AI Investment appeared first on InvestorPlace.

When it comes to artificial intelligence, we knew President Trump was going to go big (it’s the only way he goes, after all).

But I don’t think anyone could have predicted he would go this big… this soon.

On Tuesday, Trump announced a joint venture – called Stargate Project – that will fund American AI infrastructure development over the next four years to the tune of $500 billion.

This JV is ChatGPT creator OpenAI, Japan’s SoftBank Group Corp. (SFTBY), and a key technology partner (more on them in a minute). And the companies’ executives have committed to investing an initial $100 billion.

The rollout has already begun, with the project building multiple new AI datacenters in Texas. Ten data centers, each 500,000 square feet, are already being built in Abilene, Texas. The construction of 10 more is also in the works.

“I think it’s going to be something that’s very special,” Trump said. “It’ll lead to something that could be the biggest of all.”

Additionally, OpenAI posted on X that “This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world.”

Now, the third partner that I mentioned above not only one of the initial equity investors in Stargate. This company also will help build and operate the computing system… and almost certainly make sure it gets paid for that work.

And so, it is poised to reap the benefits of this AI infrastructure investment.

It’s also one of the holdings in my paid Fry’s Investment Report service. Already, it has seen consistent gains since I recommended it to my subscribers in September of last year. (You can learn more about become a Fry’s Investment Report member by clicking here.)

So, in today’s Smart Money, let’s take a look what this company is all about… and where I expect it to go.

I’ll also offer up an idea on how to play it… a strategy that can turn small gains into triple-digit ones, with little risk.

Let’s take a look…

A Legendary “Old-Timer”

Now, this company not an up-and-coming tech newbie. Rather, it is one of the bluest of blue-chip stocks in the technology sector.

While it may be a legendary tech sector “old-timer,” thanks to savvy, forward-looking strategic planning, it has become a dynamic AI play for the 202. For starters, it provides industry-leading cloud infrastructure solutions.

I’m talking about Oracle Corp. (ORCL).

Since getting started in 1977 – the CIA was its first customer – Oracle has become an increasingly dominant database and cloud company.

Roughly 98% of all  Fortune 100 companies  now use Oracle as their primary database.

The company has also benefited from its early strategic decision to adopt both on-premise and cloud products. On-premise servers are charged licensing fees to use Oracle’s products, while its cloud services are provided as infrastructure-as-a-service (i.e., for a regular fee). The two offerings generate roughly equal dollar-amount sales. 

Oracle operates the industry standard for relational databases – a structured method of data storage that tracks where each piece of information is kept. It’s a system that’s used by everyone from financial institutions to generative AI companies.

These customers are now employing more data and processing power than ever before. 

The main services Oracle Cloud Infrastructure (OCI) provides are…

• Infrastructure as a service (IaaS), which enables customers to build, deploy, and maintain secure, scalable environments.
• Software as a service (SaaS), which enables customers to build, deploy, integrate, and extend applications in the cloud.
• Oracle Autonomous Database, which provides workload-optimized cloud services for data warehousing and transaction processing.

Because OCI provides such a comprehensive suite of cloud solutions, the exponential growth of AI technologies will supercharge demand for those solutions

For example, each new generation of large language models (LLMs) is using more parameters, more training data, and more “tokens.” That will directly benefit Oracle, which charges customers based on database and computational usage.

So, even if we don’t know which LLM will come out ahead, it’s clear that Oracle will benefit.

But thanks to Stargate, we now know that Oracle has other roads to AI profits as well…

Using Leverage to Find Winners

Oracle is going to be a major player in the continued buildout of AI infrastructure… and in the technology’s future.

Oracle jumped 10% after the market closed on Tuesday following Trump’s Stargate announcement. (It also surged 6% on Tuesday after Trump signed an executive order to delay the U.S. TikTok ban by 75 days and shield the video-sharing app’s service providers from potential fines. Oracle is TikTok’s primary U.S. cloud computing host.)

Throughout 2024, shares of the company soared 58% – their best performance since 1999 – and have risen nearly 15% in the four months since I recommended it to my Fry’s Investment Report members.

Buying and holding winning stocks like Oracle is, of course, one way to generate serious gains. After all, that’s what we do, successfully, in my Fry’s Investment Report service. (Learn how to become a member.)

However, tomorrow I will be releasing a free broadcast where I’ll lay out a different investment strategy.

In this strategy, I use the power of leverage.

Leverage is crudely defined as “using a little money to make a lot.” But I’ll use a more conventional definition: “Putting down a small investment to control a large amount of stock.”

Using leverage to turn a small investment into a huge return is a tactic many successful investors have mastered. In fact, most people don’t realize that leverage played a pivotal role in the fortunes of great tech entrepreneurs like Musk, Bill Gates, and Jeff Bezos. 

I harness the power of leverage through long-term stocks options. These unique options are called “in-the-money” LEAPS.

I will share how you can learn more about my leverage strategy – and access my special presentation – in your next Smart Money.

So, stay tuned… and be sure to keep an eye out on your inbox.

Regards,

Eric Fry

Editor, Smart Money

The post The Best Stock to Buy for Trump’s Stargate Project (and the Best Way to Play It) appeared first on InvestorPlace.

We think that will continue – and that the rally on Wall Street will keep roaring.  

Why? Well, investors like a lot of things about Trump’s economic agenda. They like the deregulation and the tax cuts. They like the pro-growth initiatives such as the newly announced Stargate project – a $500 billion investment into building advanced AI infrastructure in the U.S. 

Wall Street likes all those things. But it does not like tariffs. 

That’s the one part of Trump’s economic agenda that worries investors. They don’t want tariffs because they could lead to higher inflation, higher interest rates… and lower stock prices.

Higher inflation may mean no more rate cuts (or, even worse, more hikes) at a time when interest rates are already sky-high and consumers are heavily burdened by them. 

As such, stocks stumbled in November and December any time that Trump pounded the table on tariffs.

But Trump has been back in the White House for several days now. And despite acting on a lot of his other key political initiatives like energy deregulation, immigration reform, and federal spending, he has yet to take any action on tariffs. 

Tariffs So Far: All Talk, No Walk

Sure, President Trump has talked about them. On Inauguration Day, he said that he may consider imposing tariffs on Canada and Mexico in February. He followed that up on Tuesday with similar threats against the EU and China as well. 

But so far, the tariff talk has been just that – talk. 

And that’s comforting Wall Street because that talk was supposed to turn into walk by now. 

Trump had said that he planned to introduce tariffs on Day One… not February.

Wall Street is interpreting the lack of action as a sign that maybe Trump will go ‘light’ with tariffs in his second term. 

We think that’s the correct interpretation. And if so, it means stocks should keep rocketing higher.  

Two plain truths are that: 1) Trump loves the stock market, and 2) The stock market doesn’t love tariffs. 

Given those realities, we think Trump is purposely delaying action here to see if he can use the threat of tariffs to accomplish his goals – tighter border security, better trade deals, etc. – without actually enforcing them. If successful, he would achieve a win-win situation: delivering on campaign promises and sending stocks higher. 

We think that’s what Trump wants to do. Therefore, we expect the ‘tariff talk’ will remain just that for the foreseeable future. And stocks should push higher on pro-growth optimism.

The Final Word

Indeed, the market’s fundamental and technical setups are very bullish right now. 

After last week’s soft inflation reports – and oil prices retreating significantly over the past few days – real-time inflation pressures appear to be easing. We’ve also entered the fourth-quarter earnings season. And thus far, the results have been stellar, headlined by robust results from Netflix (NFLX), Seagate Technologies (STX), Bank of America (BAC), and more. Plus, there’s now even more optimism surrounding the AI Boom following the newly announced $500 billion Stargate initiative. 

Technically speaking, things look just as good. The S&P 500 just bounced off major support levels at its 100-day moving average and the bottom side of its 2024 uptrend trading channel. The bounce has been strong enough to trigger a bullish crossover on the moving average convergence/divergence (MACD) line. Meanwhile, the relative strength index (RSI) is shooting up toward 70. 

The fundamentals and technicals underpinning the stock market right now are incredibly bullish. As such, so long as tariff talk remains talk, stocks should continue to rise over the coming weeks. 

And to help us find some of the best stocks to buy for this ongoing rally and beyond, we’re looking to Elon Musk – the world’s richest man – and his big AI venture, xAI. 

We’re confident that firm has the opportunity to become a major winner in this next phase of the AI Boom.

And while it’s not yet publicly traded, we’ve found a promising ‘backdoor’ way to invest in the company. 

Learn more about xAI and its portfolio-boosting potential now.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post The Simple Reason Why Stocks Are Soaring Right Now appeared first on InvestorPlace.

Stargate is a joint venture between the White House, OpenAI (the world’s largest AI startup), Oracle (ORCL) (one of the world’s largest AI data center operators), and SoftBank (SFTBY) (the world’s largest tech investment firm). The goal? To solidify the U.S. as the unrivaled AI capital of the world. 

Collectively, the four entities plan to invest up to $500 billion over the next four years to develop advanced AI infrastructure in the United States. This includes the construction of data centers and energy systems to support the development of advanced AI models, with the ultimate hope of achieving Artificial General Intelligence (AGI) – AI’s “holy grail.” If successful, we will unlock the level of artificial intelligence that, broadly speaking, is better than human beings at nearly everything.

Needless to say, this is a big deal. It could easily transform the U.S. tech industry over the coming years… and send certain AI stocks soaring over the next 12 months!

Stargate: The 21st Century’s Own Manhattan Project

Just this morning, I was texting a friend about this recently announced AI initiative. He called it a new Manhattan Project; and I couldn’t agree more with that sentiment. 

For those unfamiliar, the Manhattan Project was a World War II-era effort “to translate the vast energy released by atomic fission into a weapon of unprecedented power,” as noted by the National Archives. 

In other words, it was all about dedicating an enormous amount of resources to harness the most powerful form of energy of the time – nuclear fission. Similarly, present-day’s Stargate is all about dedicating an enormous amount of resources to harnessing the most powerful technological breakthrough of our time – AI. 

With the world’s first atomic bomb in its possession, the Manhattan Project cemented the U.S. as an indomitable global superpower. 

We think Stargate could do the same. 

Of course, one could argue that the biggest obstacle to developing advanced AI has been a supply shortage. That’s because, put simply, AI models require a ton of energy and computing capacity. And we currently don’t have enough of either to truly advance the tech to its highest potential.

But… if we develop the foundational support necessary, we would theoretically give developers the resources they need to create the next generation of AI products and services. 

That is exactly what Stargate aims to do.

Next-Gen AI Is Already on the Way

By funneling $500 billion into the industry, America’s leading tech companies – like OpenAI – can create the next generation of super-powered AI models. 

If successful, that would change the global economy forever. It would truly usher us into the Age of AI, with America leading the charge. 

But this is more than just a proposition. Trump’s Stargate project is already underway. 

Indeed, the first phase of development is already in motion. The group announced that it will begin deploying the project’s first $100 billion immediately. It appears the first step involves Oracle leasing a 200-megawatt data center in the central-Texas town of Abilene. That is expected to be the first of multiple new Texas-based data centers to come online quickly over the next several months. 

In other words, the 21st Century’s own Manhattan Project is already underway – and you need to start investing in it now. 

What’s the best way to do that?

AI Builder stocks. 

The Final Word on the Stargate Initiative

We like to segment AI stocks into two categories: ‘Builders’ and ‘Appliers.’ 

As you might infer, the Builders develop the foundations necessary to create advanced AI. Think things like data centers, chip fabs, and energy infrastructure. Then the Appliers use that new infrastructure to create advanced AI models. 

Stargate’s first phase is centered on the Builders. It’s all about pumping tens of billions of dollars into creating new AI data centers, chip fabs, and energy infrastructure. It should provide direct and significant tailwinds for AI Builder stocks.

That’s why after Stargate was announced, AI Builder stocks began to soar. The very next day, AI chipmaker Nvidia (NVDA) jumped about 5%, while AI chip designer Arm (ARM) popped about 15%. Other AI Builder stocks – like cooling equipment provider Vertiv (VRT), chip design firm Lam Research (LRCX), and semiconductor manufacturing equipment provider Applied Materials (AMAT) – also rallied on the news. 

We think AI Builder stocks like those are set to keep rallying for the foreseeable future. With Stargate officially underway, most of these stocks should do really well in 2025. 

We also think that, despite his initial reaction, Stargate should benefit Elon Musk and his AI startup, xAI. Thanks to the increased computing power we’re likely soon to see, xAI should be able to develop more advanced AI models. 

Not to mention, xAI seems set to benefit strongly this year thanks to Musk’s close proximity to President Trump. 

That’s why we’ve dug in to find some great “backdoor” ways to invest in the startup. 

Learn more about that lesser-known investment opportunity now, before the surge begins.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

The post How Trump’s Stargate Could Send AI Stocks to New Heights appeared first on InvestorPlace.

Donald Trump has officially returned to the White House as the 47^th President of the United States.

While that may give you déjà vu, the technology landscape has changed dramatically since his first term.

For the first time in history, an administration will govern through four years of significant artificial intelligence progress – and the implications could be revolutionary.

This isn’t just another political shift. Trump’s pro-innovation mentality signals a fundamental shift in how the U.S. will approach AI development and regulation. This, in turn, will impact what technological developments – and, of course, investment opportunities – will arise.

To better navigate this changing landscape, I want to first take look back at AI’s boom over the last four years under Biden’s presidency.

Then, I’ll share what Trump’s deregulation stance means for the industry… and how you can position yourself to profit from AI’s next phase – artificial general intelligence, or AGI.

Biden’s Approach to AI

During his presidency, Joe Biden took a regulatory approach to AI expansion. He emphasized safety and security, while maintaining America’s competitiveness.

Throughout 2023, Biden met with tech leaders from industry giants, including Anthropic, OpenAI, Inflection, Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), Meta Platforms Inc. (META), and Microsoft Corp. (MSFT), to discuss AI’s future.

After these meetings, the companies voluntarily committed to pursue “safe, secure, and transparent development of AI technology,” an initiative followed by the White House of Science and Technology Policy’s Blueprint for an AI Bill of Rights.

The Blueprint created a comprehensive structure for AI governance, outlining five principles for protecting the American public…

• Safe and Effective Systems
• Algorithmic Discrimination Protections
• Data Privacy
• Notice and Explanation
• Human Alternatives, Consideration, and Fallback

The National Science Foundation then reinforced the Biden administration’s stance on AI safe leadership when it announced $140 million in funding to establish seven additional National AI Research Institutes. This brought the total to 25 institutes and created a nationwide network of organizations that spans almost every state.

Additionally, last week the Biden administration signed an executive order to accelerate AI infrastructure development while integrating clean energy.

The order allows the U.S. Department of Defense and Department of Energy to lease federal sites to build AI data centers powered by sustainable energy resources, demonstrating Biden’s commitment to both technological and environmental progress.

“We will not let America be out-built when it comes to the technology that will define the future,” Biden said during a recent briefing. “Nor should we sacrifice critical environmental standards and our shared efforts to protect clean air and clean water.”

With the Biden administration now in our rearview mirror, the questions are: What can we expect from President Trump? Will he follow his predecessor’s groundwork?

Trump’s AI Agenda

Put simply, it’s already looking like he won’t.

Trump’s return will largely shift the U.S. AI strategy. His well-documented stance on deregulation – backed up by several executive orders signed on Monday, including “Declaring a National Energy Emergency” and “Unleashing American Energy” – combined with his criticism of Biden’s executive orders signals the end of cautious oversight. This “energy first” approach is significant for AI development, as the industry’s massive computing needs depend heavily on reliable and abundant energy.

Following this pattern, one of Trump’s first priorities includes the dismantling of the energy-efficient AI Bill of Rights, a move he’s previously suggested implementing immediately after taking office. This means he’ll also likely reduce requirements for developers to share information with the federal government before releasing advanced AI models.

His incoming administration is also focused on preventing China from surpassing American AI capabilities by removing what they view as unnecessary barriers. This push for technological independence may lead the U.S. to chart its own course, separate from global regulatory initiatives like those led by the European Union.

This aggressive pro-innovation stance suggests an unprecedented era of technological experimentation – creating both challenges and opportunities.

Trump’s presidency is poised to fast-track AI development, and tech leaders like OpenAI have taken notice.

In fact, the ChatGPT creator recently released its economic blueprint for “AI in America” last week. The blueprint suggests ways for policymakers to advance AI development in the U.S., minimize technology risks, and preserve a lead over China.

And on January 30, OpenAI CEO Sam Altman – who had a front row seat at Monday’s inauguration –  is set to discuss the future of AI with Trump administration officials at an event in Washington. The event aims to initiate discussions and provide an overview of the current state of AI development. Altman is also expected to showcase a new OpenAI technology that he believes will prove the economic power of AI.

While we do not yet know what this technology is, we do know that OpenAI has already been a game-changer in the AI space. 

The company, of course, is the creator of ChatGPT, the AI chatbot the took the world by storm and launched the AI Revolution into hyperdrive.

Then, on September 12, 2024, the company unveiled an AI breakthrough that could dramatically accelerate our path to artificial general intelligence, or AGI.

These new series of AI models don’t just recognize patterns, like current AI models. Instead, they reason through problems step by step, just like we humans do.

That is why, since then, I’ve started my 1,000-day countdown to AGI.

OpenAI’s technological leap forward – combined with Trump’s incoming deregulation policies – could significantly accelerate our path to AGI.

Those who embrace these changes could witness – and profit from – one of the greatest technological and economic transformations in human history.

To learn how you can position yourself ahead of this historic shift – and discover several under-the-radar stocks poised to benefit – click here to access my free 1,000 Days to AGI broadcast now.

Regards,

Eric Fry

Editor, Smart Money

The post Trump’s Second Inauguration Marks a New Era for AI – Here’s How to Profit appeared first on InvestorPlace.

It all had to do with uncertainty, because investors weren’t sure what would happen under a second Trump presidency. But what if you could turn this kind of uncertainty into profits within Trump’s first 100 days of his presidency?

My colleague, Jeff Clark, will be hosting The Most Profitable 100 Days of Your Life event tomorrow at 1 p.m. Eastern Time. He’ll talk about how the volatility of Trump’s first 100 days could mean money in your pocket. Click here to sign up for your spot now.

I’ll let Jeff take it from here.

In the immediate wake of Donald Trump’s victory on November 4 – thankfully free from mass protests and lawsuits – markets celebrated with a rally.

Traders were buoyant about Trump’s promises about deregulation, more energy independence with “drill, baby, drill,” and a new administration focused on business concerns.

Headwinds from the Biden administration would be tailwinds under Trump.

But in the two months since, the market gave up all those gains.

Check out this chart of the S&P 500 (SPX) that shows the performance from election day to Friday, January 17.

So, what happened?

The answer can be found in an old saying familiar to investors of every type: “The market hates uncertainty.”

Now that we stand on the starting line for Trump 2.0, what’s actually going to happen?

Some of the burning questions include:

• Will tariffs reignite inflation?
• How will the Federal Reserve respond?
• Can Trump get more tax cuts?
• Can Trump lead the charge to beat the rest of the world in AI, electric vehicles, and crypto?
• How will the world respond to the huge change in America’s global politics?
• Can Elon Musk and the Department of Government Efficiency (DOGE) really reduce the size of the federal government by $2 trillion? What will be the effects of that?
• What fights are going to happen in Congress? Remember, Trump was impeached twice in his first term.

There are a lot of unknowns, and political turmoil can create a roller coaster in the markets.

And during Trump’s first 100 days, when he has promised massive overhauls to the federal government and the economy, investors are likely to feel whiplash from the market volatility.

But for those who know how to play it, those same 100 days could be the most profitable of your life.

It’s all about knowing how to trade volatility.

And it’s not as difficult as you might think.

Let me tell you why this volatility has me so excited for the next 100 days (and honestly, the next four years)…

Volatility Is Just Profit Opportunities – If You’re a Savvy Trader

Trading volatility can be a challenge – for the emotional investor.

But for 42 years, I’ve built and created strategies for market environments like this.

For example, I called the 2008 financial crisis before it happened. And during that time, I helped my readers make triple-digit gains 25 times between 2007-2009.

The same story happened during the 2020 pandemic meltdown and the 2022 tech wreck. I’m on record warning my subscribers about what would happen next… helping them preserve gains … and then recommending dozens of profitable trades.

Seeing volatile times as sources of profits are how I’ve made over 1,000 winning trade recommendations over my career, helping regular folks take advantage of opportunities that most miss.

So, why do so many people miss the opportunities?

Volatility breeds elation and fear – two emotions that shouldn’t be part of investing decisions.

When people get emotional about their investing, they make mistakes, and it often costs them money.

For example, many investors jump into and out of trades based on headlines in The Wall Street Journal or an interview they see on CNBC.

A great example comes from Trump’s first 100 days in 2017.

In January 2017, Trump signed an executive order stating any U.S. pipeline work had to use American-made steel.

Traders piled into a steel rally and pushed the price of United States Steel (X) up almost 30% in less than a month. But beneath the surface, the company wasn’t in good shape. And the executive order took longer to implement than people thought.

U.S. Steel’s price collapsed just three months after that executive order.

But veteran investors like me stuck to proven strategies and patterns. We didn’t jump into the latest hot trend based on headlines.

Using my system, traders could’ve executed a bullish trade on January 25 – the day after the executive order was signed – and tripled their money.

Then, using my system to find bearish patterns, traders could’ve tripled their money again on the downside move.

Here’s How You, Too, Can Multiply Your Money…

Just like eight years ago, markets will likely be chaotic and volatile during Trump’s first 100 days.

Many investors react emotionally to headlines or surface-level trends, and that’s a terrible way to invest.

Savvy traders will see these swings for what they really are – opportunities to profit.

Love him or hate him, I can’t tell you how excited I am about the profit opportunities that Trump’s next term is going to give traders.

In fact, I’m so excited about it, I’m going live on Wednesday, January 22, at 1 p.m. ET to share how I’m setting myself and my readers up for The Most Profitable 100 Days of Your Life.

I urge you to join me. I’m talking weekly opportunities to multiply your money. That’s life-changing for most folks.

So be sure to reserve your spot right here.

Best regards and good trading,

Jeff Clark

Editor, ÃÛÌÒ´«Ã½ Minute

P.S. I’ve traded through 11 presidential inaugurations – and what I can tell you is this…

We haven’t seen an opportunity like this in our lifetimes. The last time was in 1933, when FDR took office.

So please, sign up here so you can hear what I have to say. Your portfolio and retirement will thank you.

Plus, if you sign up for VIP text alerts, you’ll get my exclusive report Trump Surge Stocks: Three Hot Tickers to Put on Your Watchlist Today absolutely free. It’s yours to keep whether you join me on Wednesday, January 22, at 1 p.m. ET or not.

The post How to Profit From Volatility During Trump’s First 100 Days appeared first on InvestorPlace.

This Week’s Ratings Changes:

Upgraded: Buy to Strong Buy

Downgraded: Strong Buy to Buy

Upgraded: Hold to Buy

Downgraded: Buy to Hold

Upgraded: Sell to Hold

Downgraded: Hold to Sell

Upgraded: Strong Sell to Sell

Downgraded: Sell to Strong Sell

To stay on top of my latest stock ratings, plug your holdings into Stock Grader, my proprietary stock screening tool. But, you must be a subscriber to one of my premium services. Or, if you are a member of one of my premium services, you can go here to get started.

Sincerely,

Louis Navellier

The post Weekly Stock Grader Analysis: Upgrades & Downgrades on Top Blue-Chip Stocks appeared first on InvestorPlace.

As one of the most accomplished traders of our time, my colleague Jeff Clark has spent the past 40 years successfully using chaos and volatility to his advantage. And for the first time ever, Jeff is pulling back the curtain to reveal a trading strategy tailored to harness the chaos and opportunities Trump’s first 100 are sure to bring.

It all happens tomorrow, Wednesday, January 22 at 1 p.m. Eastern Time. That’s when Jeff will be hosting The Most Profitable 100 Days of Your Life event. You can click here to reserve your spot now.

Today, Jeff is joining us to discuss how you can use his strategy to successfully trade within Trump’s first 100 days. Take it away…

Inauguration day tends to mark changes – politically, socially, and economically.

But few moments in modern history have the kind of transformational opportunity that I expect to see over the next 100 days.

As President Donald Trump begins his second term, I believe we’re going to experience massive volatility.

And to me, dramatic volatility equals extraordinary opportunity… if approached strategically…

We Haven’t Seen an Opportunity Like This in Nearly 100 Years

The last time there was an opportunity like this was 92 years ago, when Franklin D. Roosevelt took office.

During FDR’s tenure, huge, sweeping reforms reshaped the U.S. economy, pulling it out of the Great Depression.

In those first weeks, he signed 76 bills that reshaped the economy – and the Dow surged 75% in just over three months.

Similarly, Trump’s aggressive policies – including massive deregulation, tax reforms, and energy initiatives – will create ripples across key sectors, from banking to oil services to gold.

Trump’s second term is set to be the most volatile time we’ve seen in nearly 100 years.

I believe we’ll see at least one opportunity to double our money every week.

My Divergence Strategy

I’ve been trading for 42 years – and it’s how I’ve made my living for the last 20 years.

During that time, I’ve been honing my divergence strategy. I don’t want to get too much into the weeds, but it allows me to track when stocks and sectors are on the verge of switching trends.

Capitalizing on those moves – whether up or down – is how we make profits that far outstrip traditional buy and hold investing.

What’s more, through all those decades, I’ve successfully traded through 11 presidential inaugurations.

For example, during Biden’s first 100 days, I used my divergence strategy to make my readers an average return of over 31% per trade across 18 recommendations. (Five of them doubled readers’ money in 15 days.)

Meanwhile, the S&P 500 gained just 11%.

I believe Trump’s second term will dwarf that because greater volatility means more opportunity to profit.

In fact, I’m so confident in this upcoming trading environment that I’m going live on Wednesday, January 22, at 1 p.m. ET to share how I’m setting myself and my readers up for The Most Profitable 100 Days of Your Life. (You can reserve your spot right here.)

During my briefing, I’ll share how my divergence strategy works, what sectors I believe will be most likely to benefit and how to use options for maximum gains… while taking on minimum risk.

Because there’s one thing I’m sure of: In this upcoming volatile market environment, traditional buy-and-hold strategies will fall short.

Options allow traders to profit from both upward and downward price movements, making them the right vehicle for turbulent periods. (Or if you’re me… any period in the market…)

A Transformative Opportunity

The next 100 days are more than just a trading window… they’re a chance to rewrite your financial future.

With market volatility at unprecedented levels, people who can successfully – and smartly – use strategies like my divergence pattern can take advantage of opportunities that everyone else will miss.

And I’m ready to guide you every step of the way. Whether it’s exploiting rapid swings in oil services, banking, or gold, or harnessing the potential of Bitcoin ETFs, the profit potential is endless.

The time to act is now – because the most profitable 100 days of your life are about to begin. So be sure to reserve your spot right here to join me on Wednesday, January 22 at 1 p.m. ET.

I’ll share the strategies I’ve honed over more than 40 years just for this occasion.

Best regards and good trading,

Jeff Clark

Editor, ÃÛÌÒ´«Ã½ Minute  

The post The Most Profitable 100 Days of Your Life Are About to Begin appeared first on InvestorPlace.

Today, I want to introduce you to Jeff Clark. As one of the most accomplished traders of our time, Jeff has spent the past 40 years successfully using chaos and volatility to his advantage. And for the first time ever, Jeff is pulling back the curtain to reveal a trading strategy tailored to harness the chaos and opportunities Trump’s first 100 are sure to bring.

It all happens on Wednesday, January 22 at 1 p.m. Eastern Time. That’s when Jeff will be hosting The Most Profitable 100 Days of Your Life event.

I should warn you, though. This approach isn’t like anything you’ve probably seen before. But Jeff has spent months preparing this, and I can’t wait to check it out. This strategy is a perfect complement to my own research, which is why I want to share how it can help you too…

Click here to reserve your spot now.

Now, I’ll let Jeff take over from here. He’ll explain the four “Ts” that break down Trump’s agenda and why they could be profit opportunities for you.

Picture this: It was 1933, and the United States was in the middle of the Great Depression. Between 1930 and 1932, the market lost 89% of its value. ÃÛÌÒ´«Ã½s were dismal.

The unemployment rate reached a peak of 25%. People were tired.

And in March, Franklin Delano Roosevelt was sworn into office. His first 100 days as president became the stuff of legends.

In those first weeks, he passed 76 bills that reshaped the economy.

It was a whirlwind of action, volatility, and unprecedented change, causing the stock market to rise 75% in that window. 

But here’s the thing… nothing like that has happened since… until now.

Trump’s First 100 Days

When Donald Trump’s second term gets underway, we’re going to enter a period of massive change and volatility.

Love him or hate him, I can’t tell you how excited I am about the profit opportunities this is going to give traders.

In fact, I’m going live on Wednesday, January 22, at 1 p.m. ET to share how I’m setting myself and my readers up for The Most Profitable 100 Days of Your Life. (You can reserve your spot right here.)

Think about it… Trump’s leadership is characterized by bold, decisive, and aggressive action… which creates huge ripple effects across industries. Last time, Trump moved markets with just a few words posted on X (then Twitter).

And this time, he’s got four forces defining his agenda…

Technology, Taxes, Takeovers, and Trade

I call them “the Four Ts.” And they’re going to drive massive market opportunities for smart traders.

Again – love him or hate him, Trump’s first moves are going to include massive deregulation, especially in the technology markets. With tech billionaire Elon Musk by his side, this is all but inevitable.

Think about the profit potential that will come with cutting red tape on emerging tech like AI… crypto… and autonomous vehicles.

Trump has already come out in full support of building a strategic bitcoin reserve, which helped drive bitcoin to unprecedented levels… and gave my own readers a 42% gain on one of my favorite ways to play bitcoin… in just two trading days.

What’s more, think about how loosening restrictions on AI companies could accelerate the development of AGI (artificial general intelligence) and spark an “arms race” in tech innovation.

This will have wide-reaching implications… volatility… and, of course, profits for traders.

2025 will not be a buy-and-hold environment.

His Next Move: Taxes

Next, Trump has promised to cut corporate and personal taxes, like in his first term. Lower taxes can boost corporate earnings, drive consumer spending, and fuel market growth.

Sectors such as banking, retail, and real estate could see the most immediate impact.

And with this growth comes volatility, which, again, is our bread-and-butter trading environment.

When I say I think we’ll see at least one opportunity to double our money each week during Trump’s first 100 days… I mean it.

After That: Takeovers

Trump – whether intentionally or not – is constantly throwing global powers for a loop.

His focus on “America First,” of course, lends itself to big investments in defense… energy… and infrastructure.

And with just a few words, he throws world governments into chaos, like his proposal to acquire Greenland.

Or first backing a ban on TikTok… and now asking the Supreme Court to hold off until after he takes office.

All of these unpredictable business moves equal, you guessed it, volatility. Which, again, is a savvy trader’s best friend.

Finally: Trade

Trump has always been vocal about unfair trading deals, especially with China. His first term, he was hell-bent on renegotiating trade deals and imposing tariffs, particularly with China.

This seems to be set to continue… and will impact manufacturing, agriculture, and export-driven industries.

That’s why traders should home in on the volatility this will bring.

I know I’ll be watching commodities-driven sectors and international companies for opportunities because trade wars will bring volatility… creating sharp movements that we can profit from.

What to Do Now

Trump’s first 100 days in office are going to be marked by market volatility.

But I want you to start replacing the word “volatility” with “profit opportunities” in your head.

This is how I’ve thought about volatility over my 42-year trading career. It’s how in 2007-2009, I had 25-plus triple-digit winners for my subscribers – some in as little as one day – when everyone else was losing their shirts.

With the Four Ts driving Trump’s administration… the backing of billionaires… his business mindset… and his “no holds barred” mentality that throws world markets into a loop on a dime… you can see how this is setting up to be the most volatile period in our lifetimes.

But again… most volatile, to me, means most profitable.

As long as you have the right strategy and mentality.

And I’ve been working for more than 40 years to develop the strategies that I’ll share with you on Wednesday, January 22, at 1 p.m. ET. So be sure to reserve your spot for The Most Profitable 100 Days of Your Life right here.

Best regards and good trading,

Jeff Clark

Editor, ÃÛÌÒ´«Ã½ Minute

P.S. The Four Ts are the foundation of my strategy for Trump’s first 100 days – and I’ll show you how to use them to your advantage during my upcoming live event, The Most Profitable 100 Days of Your Life.

Reserve your spot right here.

I also encourage you to sign up for VIP text alerts – you’ll get a free report detailing three hot stocks in sectors set to boom in the first 100 days, as well as reminders about the event and important training videos.

The post The Four Ts That Will Define Trump’s First 100 Days – and Your Financial Future appeared first on InvestorPlace.

In 2022, commodity stocks were in trouble.  

The U.S. had just posted two quarterly GDP declines — a first since the COVID-19 recession — and people were forecasting even more trouble. Shares of economically sensitive companies like copper miner Freeport–McMoRan Inc. (FCX) fell as much as 50%. 

Yet, InvestorPlace Senior Analyst Eric Fry – our global macro specialist –saw things differently.  

After all, economic cycles are like watching the tide come in and out. Good times are followed by bad, and bad times eventually cycle back to good. The only thing more predictable than market cycles is people forgetting about market cycles (and neglecting to bring in beach chairs for high tides). 

In addition, demand for commodities like copper was surprisingly stable thanks to rising electric vehicle demand in China. Each EV uses around 130 pounds of copper, more than twice what a traditional vehicle consumes.  

Here’s what Eric wrote in Leverage that year (subscription required): 

Yes, demand is falling for many goods and services, and will continue to fall for many of them, but not all of them. Copper demand, for example, has been flat-lining for the last few months, but it is certainly not imploding… 

Copper-intensive green industries like EVs, solar power, and energy storage haven’t taken a break. Despite sluggish economic conditions, global demand for green technologies and products continues to power ahead. 

The trend is undeniable… and it points quite clearly to booming demand for battery metals like copper. 

To ride this wave, Eric recommended investors double down on their FCX shares in Fry’s Investment Report (subscription required). And indeed, shares of the world’s lowest-cost copper miner have risen 50% since he made that call. 

But Eric also made a second investment in FCX that did even better. That’s because cyclical firms like Freeport usually trade in a predetermined range (much like high and low tides at a beach). And his way to turn these 50% gains into even more significant profits was to use a little bit of leverage. 

In Eric’s case, he recommended his Leverage members buy long-dated options, namely calls expiring nearly two years later.  

Eric took profits along the way to those FCX calls’ expiration date when copper prices were high. Between August and December of 2023, Eric sold off a few positions at an average price of $12.93, a 119% return on his members’ initial $6.10 investment! 

Of course, not every investor wants to wait 12 months or more for options to mature… even when 100%-plus returns are on the table. That’s because improvements in quant-focused tools are now helping investors predict each wave in a rising tide.  

That’s created a bonanza in shorter-term options. These volatile assets can see prices move tenfold or more a single trading day. 

That’s why I think it’s essential that you make time for Jeff Clark’s special webinar next Wednesday, January 22, at 1 p.m. Eastern. (You can save your spot now by going here.) 

For 42 years, master trader Jeff Clark has helped folks turn volatility into profits. 

First as money manager in Silicon Valley… then as one of the country’s most widely followed trading experts. 

For example, he warned of the 2008 financial crisis before it happened.  

And between 2007 and 2009, while buy-and-hold investors lost their shirts, he gave his newsletter subscribers the chance to make triple-digit gains 25 times. 

Now, in his new presentation, this short-term options guru – who recently became an InvestorPlace corporate partner – talks about how investors can use short-term trades to turn small sums into 100%… 200%… even 500% returns. He focuses on getting into a position one day, and getting out with big gains a few weeks later.  

You can reserve a seat for Jeff’s broadcast here. 

Now, that level of risk might not be for everyone. Higher potential returns do come with larger risks.  

So, in the meantime, I’ve assembled a list of five cyclical stocks to buy that look much like Freeport-McMoRan in 2022. 

These are five firms with significant upside now… and the potential for even greater gains with the leverage of options. 

Let’s take a look… 

5 Top Cyclical Stocks to Buy 

To find these high-quality cyclical firms, I applied four criteria: 

As I did my analysis, it became clear that companies in two very different industries emerge as potential winners.  

Trading Firms 

The first of these companies involve trading firms recently selling off from the post-election drop in market volatility. I see these firms surging back with a vengeance once Donald Trump is back in the White House. 

1. CME Group Inc. (CME). This A-rated financial exchange has historically performed best during rising markets and periods of high volatility. Shares cyclically peaked in 2007, 2019, and 2022. Given the unpredictability of an incoming Trump administration, 2025 will likely be another banner year. 

In addition, CME has an incredibly wide moat thanks to its leading position in U.S. futures contracts. The Chicago-based exchange has exclusive licenses to issue futures contracts on the S&P 500, Russell 2000, and Nasdaq indexes, and more than 95% of all U.S. interest-rate futures trade on CME’s exchange. 

It’s also important to note that the firm is also a leader in retail-focused equity derivative products. CME’s “micro E-mini” S&P 500 contracts are wildly popular among retail investors for their lower entry price. 

A recent selloff in December now puts shares within 20% of CME’s 52-week low. 

2. Cboe Global ÃÛÌÒ´«Ã½s Inc. (CBOE). This B-rated commodities exchange has also sold off in recent months. Shares trade within 16% of their 52-week low. 

That could quickly change with a new administration. Cboe is particularly strong in options, and has proprietary ownership over options on the S&P 500 Index (SPX) and the Cboe Volatility Index (VIX). That means Donald Trump’s second term in office could send shares to new heights. 

There is precedent for this bullishness. Trump’s first term in office propelled CBOE to a 90% gain within 12 months, thanks to record trading in SPX and VIX options. Shares also performed well during the 2013 “taper tantrum,” the 2021 “everything bubble,” and the 2023 pivot from rising interest rates to flatlining ones. That’s why investors should see the company’s recent selloff as an opportunity to buy CBOE cheaply.  

Power Generation Firms 

My other three cyclical stocks to buy involve power production – a typically cyclical business despite their natural monopolies.  

Rate increases are negotiated annually with regulators, and worse-than-expected contracts can result in millions of lost dollars. Some of this volatility is hedged through buying energy futures, but 100% of costs can’t be absorbed this way. (No energy company wants to over-hedge their positions if energy demand suddenly drops.) 

We’re beginning to see a new upcycle in the industry. Some power generation regions, like Texas and the Mid-Atlantic, have already seen a resurgence in energy prices thanks to AI data centers. These cloud computing sites require enormous amounts of energy, and contract prices in some areas like Pennsylvania, New Jersey, and Maryland (PJM) have seen wholesale energy prices rise ninefold since 2023. 

This cyclical improvement will almost certainly expand across America. Cloud computing firms continue to spend billions of dollars on new AI-focused data centers, and analysts expect these power-hungry installations to consume up to 8% of U.S. power by 2030. 

In addition, the U.S. began facing La Niña conditions this month, which typically bring colder-than-average winters to North America and much of Western Europe. This increases energy demand, providing windfalls for power generation companies that have locked in costs.  

Companies like Vistra Corp. (VST), which serves the Texas market, have seen shares double since September, leaving far less upside on the table. 

Fortunately for us, three of Stock Grader’s highly rated firms have yet to break out of their cyclical lower-band. 

3. DTE Energy Co. (DTE). The B-rated Michigan-based power generation company is expected to see profit margins rise from the 7% range to 11% over the next several years. Michigan’s aging utility infrastructure needs investment, and analysts expect this to allow DTE to negotiate better rates. Additionally, DTE is replacing its older coal-fired power plants with newer gas and renewable-powered ones. Over the long run, this will help reduce fuel, operation, and maintenance costs. 

These efforts will drive significant increases in earnings per share – a historical sign of future gains. Analysts expect EPS to surge 17.5% this year and maintain a 7% growth rate after that. Louis’s proprietary system awards DTE Energy “A” grade on operating margins growth and earnings growth. 

Finally, DTE trades within 20% of its 52-week low after a selloff in October, giving it upside within its trading band. 

4. Duke Energy Corp. (DUK). B-rated Duke Energy is one of America’s largest regulated utilities. The firm generates most of its profits in Florida, and the outlook in its largest service territory, North Carolina, has improved significantly. As analysts at Morningstar recently noted: 

Duke recently received constructive outcomes at both its Carolina utilities, which included increases in allowed returns on equity and thicker equity layers. State legislation also allows for performance incentive mechanisms, usage-decoupled rates for residential customers, and supports utilities’ investment to meet the state’s clean energy targets. 

Duke Energy is also fortunate to serve some of America’s fastest-growing regions. The Florida Chamber of Commerce believes its state population will surge to 27 million by 2030, up from 22.6 million. North Carolina is projected to become the seventh most populous state in the coming decade thanks to a surge in urban migration (it’s now in the No. 9 slot). 

That suggests Duke’s projections for a 1.5% to 2% annual growth forecasts are far too low. In fact, analysts expect data center demand alone to make up 10% of the company’s commercial load by 2028, up from 3% today – figures that suggest closer to a 3% to 4% long term growth rate. Shares additionally trade within 20% of their 52-week low. 

5. Dominion Energy Inc. (D). Finally, B-rated Dominion Energy has some of the industry’s best exposure to AI data centers. The firm is the largest electricity provider in Virginia, whose D.C. exurbs have become a hub for AI-related data centers thanks to the region’s fiber optic network infrastructure. Smaller data center providers have also moved to Northern Virginia for faster connections to larger cloud computing centers. The Department of Energy estimates that the amount of power consumed by data centers could quadruple by 2030, leading them to consume as much as 50% of Virginia’s electricity. 

That gives Dominion an unusually high growth rate, even compared to DTE and Duke. Analysts expect earnings per share to rise 17% over the next three years – faster than what many tech companies see. And thanks to Dominion’s long history of bouncing back from cyclical lows, we believe the recent 10% selloff provides an opportunity to buy shares at a discount. 

Using Leverage Wisely 

Now that we’ve talked about these five high-quality picks, I’ll now reveal a small secret about the group: 

There were actually five criteria involved in picking them. 

The final benchmark I used was Implied Volatility, a measure of a stock’s options prices. The lower the number, the cheaper the options are (and the better their upside). All these firms have figures below “30.” For comparison, Nvidia Corp.’s (NVDA) figure is 40.0. 

In other words, these five companies are much like Freeport-McMoRan regarding options too. ÃÛÌÒ´«Ã½s are so downbeat about these cyclical firms recovering that even long-dated options are at a discount. 

But before I go any further, I know that the world of options can seem overwhelming.  

There are strike prices… expiration dates… gamma… theta decay… not to mention the possibility of an options contract blowing up a portfolio.  

But much like kitchen knives or chainsaws, options are handy tools if used correctly (i.e., never sell an option unless you’ve hedged your exposure). These contracts can turn a low-return investment that should be ignored into a high-return one. 

To help you learn what to do (and the risky strategies to 100% avoid), I urge you to save your spot for Jeff Clark’s presentation on Wednesday, where he reveals his methods for finding upside while limiting the downside. 

Jeff has made more than 1,000 winning trade recommendations by trading market volatility. 

He’s also traded through 11 presidential inaugurations. 

So, I can’t think of a better person to help us figure out how to profit from Trump’s first 100 days than Jeff. 

Jeff is hosting a special webinar all about it on Wednesday, January 22, at 1 p.m. ET… so be sure to reserve your spot for his The Most Profitable 100 Days of Your Life event right here. 

And I’ll see you back here next Sunday. 

Regards, 

Thomas Yeung 

ÃÛÌÒ´«Ã½s Analyst, InvestorPlace 

Thomas Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad.

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Tomorrow, on Monday, Jan. 20, 2025, Donald J. Trump will be inaugurated as the 47^th President of the United States. And, of course, that has huge implications for the economy, the markets, and your money. But when it comes to looking for the best stocks to buy now that Trump is returning to the White House, I have a simple idea: Follow Elon Musk. 

That’s because the world’s richest man has allied himself very closely with the president-elect. As a result, he has been named the head of the soon-to-be Department of Government Efficiency. He’s also been spending a lot of time down at Mar-a-Lago. And some are even jokingly calling him President Musk. 

It seems his sphere of influence, if you will, is likely to grow significantly, arguably to unprecedented levels, in 2025.

What will he do with that authority?

Probably a lot. But among some of the things he’s likely to do is support the industries in which he does a lot of business. 

Indeed, this appears to already be happening with Tesla (TSLA), his biggest company.

With the reveal of its Cybercab and Cybervan – the firm’s two self-driving models – Tesla has recently pivoted toward becoming an autonomous vehicle company. Now Musk’s big vision is for Tesla to operate its own fleet of robotaxis to autonomously transport folks all over the place. 

And just this past weekend, reports leaked that the Trump administration is considering easing regulations on self-driving cars to make it easier for companies like Tesla to roll out such self-driving fleets. 

Of course, if those regulations are reduced, we’ll see rapid growth across the whole autonomous vehicle industry, including at Tesla, Musk’s crown jewel. 

And we think that is merely a microcosm of what could happen in 2025 and ‘26.

The Elon Musk Playbook for 2025

Here’s what we anticipate as Musk assumes a position of power within the next administration. 

He’ll likely exert his sphere of influence to help pass legislation that benefits the various industries in which he does business. Those industries will experience rapid growth, and many of the businesses therein will see enormous success. 

So… maybe the best investment strategy for 2025 is to just follow Elon Musk. 

What does that strategy involve?

I like to call it the “BRAIN” plan, named after the five big industries Musk is heavily involved in:

• Biotech
• Robotics
• Autonomous Vehicles
• Interplanetary Travel
• Nuclear

Biotech

Musk’s Neuralink represents his hat in the biotech ring, if you will. The neurotechnology startup is working to create implantable devices that connect the human brain directly to computers or other external devices, enabling communication between the nervous system and digital systems. 

Now, obviously, the entire biotech industry is heavily regulated, which can often stall technical progress. In 2022, for example, Musk’s Neuralink applied to begin human trials and was rejected by regulators. 

But considering his closeness to President-elect Trump, it’s possible Elon Musk can exert his influence to help reduce the regulatory hurdles in the biotech world. That could very well speed the progress of industry breakthroughs – and potentially serve as a huge tailwind for biotech stocks. 

That’s one reason why, among many others, we like biotech stocks for 2025. 

One potential pick in that space: Tempus AI (TEM). It’s a cutting-edge company applying AI to healthcare to create a new era of personalized wellness. We think it holds a lot of potential. And if the biotech industry does catch fire in 2025, we expect TEM stock to lead the way. 

Robotics

Recently, Musk has also leaned heavily into the robotics world. 

I’m sure you’re aware of Optimus, Tesla’s own humanoid robot. It stole the show at the We, Robot event earlier this year. And of course, while there are certainly kinks to iron out, Musk has said that he believes Optimus will one day become the biggest part of Tesla’s business. 

As of right now, robotics are still in their infancy. And one can only imagine that the deployment of a humanoid robot will face massive regulatory hurdles. 

But perhaps Musk will exert his influence to reduce those barriers. If so, that could clear a path for mass robotics adoption, driving more talent and money into the industry, speeding up technical progress, and ultimately serving as a tailwind for robotics stocks. 

That’s why we’re bullish on robotics stocks as well. 

A high-potential pick in that space is Symbotic (SYM). The firm makes robotic systems to automate fulfillment in warehouses. And already, it’s working to automate nearly all of Walmart’s regional distribution centers in the U.S. As such, we think that stock has a bright future. 

Autonomous Vehicles

We’ve already talked a bit about Musk’s involvement in the autonomous vehicle space. He is essentially betting Tesla’s whole future on autonomy. Therefore, it seems the billionaire has a huge financial incentive to help make self-driving cars a widespread reality across America. 

Tesla stock is an attractive option in this space. But our favorite pick may be Aurora (AUR), an autonomous trucking startup set to launch America’s first completely self-driving truck in just a few months. Plus, just this past week, the company announced a big partnership with Nvidia (NVDA) to help accelerate its autonomous ambitions. Very promising developments there!

Interplanetary Travel

And then there’s interplanetary travel – or, more broadly, the space economy. Of course, considering SpaceX is his second-largest company, Elon Musk is very much involved in this sector as well.

We think it’s entirely possible that over the next few years, we see a push to increasingly privatize space travel and exploration. In turn, that could lead to an increasing number of space business contracts for companies like SpaceX, Rocket Lab (RKLB), Planet Labs (PL), AST SpaceMobile (ASTS), and more. 

Those space stocks could see huge success in 2025.

Nuclear

Last but certainly not least on this list is nuclear power. It has emerged as a favorite energy source among Big Tech firms to fuel their energy-intensive AI data centers. 

Now, Elon Musk is not directly involved with any nuclear energy company. But he is involved with creating massive AI data centers, which require a ton of energy to run. Not to mention, he has previously said that shutting down nuclear plants is “total madness” and that modern nuclear power plants are “extremely safe.” He has also claimed that he is a “believer in nuclear fission.” 

So, from the looks of it, Musk is pro-nuclear. Nuclear energy, of course, is subject to massive regulations. For example, just a few months ago, the Federal Energy Regulatory Commission rejected a proposal from Amazon (AMZN) to secure more power for one of its major data centers from a nearby nuclear energy plant. 

Collectively, Musk and Trump could reduce those regulations, allowing for more nuclear energy plant construction and power generation. That would, obviously, provide a huge boost to nuclear energy stocks like Constellation Energy (CEG) and Vistra (VST).

The Final Word on BRAIN: the Musk Method

There are many ways to score big in the stock market, especially during an era of technological progress, like the one we find ourselves in today. 

But considering Elon Musk’s ties to the incoming administration, perhaps the best investment strategy for 2025 is to just follow the BRAIN. Invest in biotech, robotics, autonomous vehicles, interplanetary travel, and nuclear energy – the five industries providing Musk the most incentive to boost through political means. 

Though, potentially the best way to invest in Elon’s BRAIN this year is to invest in xAI, his own AI startup. 

That firm appears to be gaining a lot of traction right now. And we think it has a lot of potential – especially now that Musk is honorary “First Buddy.” 

Now, it isn’t yet a publicly traded stock. But we’ve found a promising ‘backdoor’ way to invest in this probable winner.

Learn all about this lesser-known investment opportunity.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.

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If you’re interested in investing, you’re likely familiar with Warren Buffet’s famous quote from his 1986 Chairman’s letter: “Be fearful when others are greedy and greedy when others are fearful.”

But there is another quote from the 94-year-old “Oracle of Omaha” that many people forget … and this second quote seems to fit today’s business/investment climate.

A shareholder asked Buffett: “If you had three great companies, wonderful businesses…is it better to wait a year or two to see if the company stumbles?”

Buffett responded that waiting to buy a quality company was usually a mistake.

“To sit there and hope that you buy them in the throes of some panic, that you would take the attitude of a mortician waiting for a flu epidemic, I’m not sure that will be a great technique,” he said.

The market has been “stumbling” the last two months. As of a few days ago, the market had given up all the gains that investors enjoyed after the election. The S&P chart below shows that clearly.

Behind this market reversal were a few factors…

Bond yields were rising, expectations of more interest rate cuts from the Federal Reserve had been slashed, and reinflation was creeping back into the market narrative for 2025.

That investors might be feeling more cautious makes sense. After all, consecutive years of 20%+ returns is great, but it’s also rare. Many folks are ready to believe the market wave is on the verge of crashing.

Then this week we got two soft inflation reports and that changed the story.

In response, the market had its best single day since November. Traders that were anticipating no interest rate cuts in 2025 now have priced in at least one and maybe two.

The VIX, often called the markets “fear indicator,” started the week at 20 yet dropped to below 16 as I write Friday morning.

The inauguration of Donald Trump on Monday is setting up to be another huge bullish catalyst for investors. His focus on deregulation, winning the tech race, “drill, baby, drill” and other pro-business ideas are likely to provide more fuel for market gains.

So, what’s coming next? Where should investors be putting money now? Tying back to Buffett, which specific stocks of “wonderful companies” should we feel confident in buying today instead of waiting for a crash that might not materialize?

Our analysts have some specific ideas for you to consider.

Louis Navellier’s Next Big Call

Louis Navellier predicted Trump’s win in the spring of 2024 long before many others. He’s been getting his Growth Investor subscribers positioned for the spate of executive orders and policy changes that will boost select stocks in the first 100 days of Trump 2.0.

Here is how he summarized the big picture in the latest Growth Investor issue.

The simple fact is that when the U.S. economy is performing well, folks are in a more positive mood and likely to spend more – which in turn, also boosts business activity. In other words, corporate earnings are also anticipated to increase.

Interestingly, the earnings environment has already improved dramatically. The S&P 500 is now forecast to achieve more than 10% average annual earnings growth for the next three quarters. FactSet currently projects 12.1% average earnings growth in the fourth quarter, 12.7% in the first quarter of 2025 and 12.0% in the second quarter of 2025.

Regular Digest readers know that the emphasis on earnings is Louis’ bread and butter. We already saw this play out firsthand in the past week with Cal-Maine Foods, Inc. (CALM). Here is Louis’ summary of its recent performance.

The leading producer and distributor of shell eggs in the U.S. benefited from an uptick in dozens of eggs sold and rising egg prices in the most recent quarter. As a result, earnings surged 1,188% year-over-year and sales jumped 82% year-over-year. Earnings per share also topped analysts’ expectations, and the stock rallied nicely higher on Wednesday.

I anticipate this will be par for the course as earnings season heats up for us.

The reality is earnings momentum hit the gas in the fourth quarter – and it’s set to accelerate in every quarter of 2025. FactSet expects the S&P 500 will achieve 11.9% average earnings growth and 4.6% average revenue growth for the fourth quarter.

CALM is up 17% since he picked it in November.

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Luke Lango Nailed the CPI Forecast too

Hypergrowth analyst Luke Lango was clear on Monday that there was every reason to expect soft inflation reports. Here is what he wrote to Innovation Investor subscribers:

This week’s inflation reports will likely be soft.

Although the stock market is worried about reinflation pressures at the current moment, we are positive on current inflation trends. That’s because – based on real-time estimates – inflation appears to be turning a corner.

That is, throughout late 2024, both headline and core inflation rates were reinflating. But headline inflation rates are now starting to flatline, while core inflation rates are falling. That is, the trends in both headline and core inflation velocity are improving.

We like those trends and believe they bode well going into this week’s inflation reports.

And that’s exactly what happened. After the inflation reports came in as soft as Luke expected, here is what he thinks will happen next:

We think this is the start of a big, multi-week march higher in stocks.

Fundamentally, inflation fears should ebb over the next few weeks while economic growth hopes take center stage. We’re going into earnings season – the meat of it is the last week of January and the first week of February – and we think the earnings season will be good.

Plus, we have Trump’s inauguration next week and we expect a flurry of pro-growth policies to be announced in his first few weeks back at the White House.

The combination of those pro-growth policies and strong earnings should keep economic growth hopes front-and-center in the market, which should help propel stocks higher into February.

One of Luke’s recent Innovation Investor picks leveraging the AI megatrend is CyberArk Software (CYBR).

CyberArk is a cybersecurity company that specializes in identity security and privileged access management software. As we go deeper into the age of AI, the risks of AI-powered hacks only grows. The demand for cybersecurity solutions will only become more acute.

The stock is up more than 32% since Luke picked it in September.

Investing can be difficult. We’re only human and we’re bound to react emotionally to something we see or hear.

But don’t let your fears drive your investing. It’s too easy to let talk of a correction or a downturn keep you from potential profits. The key, however, is the quality of the stocks you choose.

Bottom line: When you invest in quality companies at reasonable prices that are set up for success, you put the odds in your corner, even if the market is “stumbling.”

But don’t take it from me. Here’s “Uncle Warren”:

Time is the friend of the wonderful company, the enemy of the mediocre.

Enjoy your weekend,

Luis Hernandez

Editor in Chief, InvestorPlace

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