Tom Yeung here with your Sunday Digest.
On Wednesday, OpenAI launched a new AI image generator for ChatGPT.
The system has noticeably few guardrails. Users can ask it to make photorealistic images of celebrities… edit existing images… even trick it into violating copyright laws. Social media feeds have become flooded with AI-generated memes in the style of Studio Ghibli, the popular Japanese animation studio behind films like Spirited Away.
OpenAI’s newfound “creative freedom,” as its CEO Sam Altman put it, is a response to growing competition from fast-moving AI outfits like Elon Musk’s Grok and China’s DeepSeek. These smaller firms care far less about ruffling feathers than getting ahead, forcing larger players to do the same.
Even Alphabet Inc. (GOOGL), a company known for its conservative approach to AI, has begun launching semi-complete products to keep up. (Google’s own AI image generator can be used to remove watermarks.)
This is obviously concerning for those worried about AI ethics and safety…
- Amazon.com Inc.’s (AMZN) Alexa+ AI devices will have control over smart home devices, including thermostats and cooking ranges.
- Alphabet’s Gemini AI will soon replace its traditional Google Assistant, giving AI virtually unfettered access to people’s private information.
- We’re even seeing the development of AI-powered weapons that can shoot drones out of the sky.
(Will road-raging self-driving cars be next?)
But the flip side of AI innovation is that it’s creating staggering amounts of new benefits for companies that use AI, their customers, and their investors.
- Dozens of AI-developed drugs are now in late-stage development.
- Students can get free homework help from AI chatbots.
- And hundreds of AI companies have turned thousands of investors into millionaires.
Shares of Nvidia Corp. (NVDA) have surged nearly 2,500% since May 2019 after InvestorPlace Senior Analyst Louis Navellier added the GPU maker to his Growth Investor Portfolio… saying “AI, is what has me really excited about NVIDIA right now.”
We’re only getting started.
In a new special VIP report, The Next 3 Big Winners in AI, Louis, along with fellow senior InvestorPlace analysts Eric Fry and Luke Lango, cover why we’re now moving from an “AI Builders” era to an “AI Appliers” era – and pinpoint three industries that are undergoing this groundbreaking change:
The first wave of the AI Revolution was focused on the “AI Builders” – the chips, servers, and infrastructure that make AI possible. But the companies that leverage AI to disrupt traditional industries will deliver the next generation of extraordinary returns. We call these companies the “AI Appliers.”
Our three top analysts put that VIP report out as part of their recent urgent Technochasm briefing. During that free broadcast, Eric, Luke, and Louis went deep on the emerging divide between the “haves” and “have nots” in the market – and in our society.
And on how artificial intelligence is pouring jet fuel on that divide.
During the event, they delivered a step-by-step playbook you need to follow to make the most of this opportunity.
Now, I’ve been given permission to share the three stocks in that VIP report.
These are firms that learned to harness the often uncontrollable power of AI. And as the tech world puts their collective foot on the R&D gas, we’re going to see these firms surge ahead.
Stock No. 1: Powering the AI Revolution
The first recommendation is a leader in power management chips – the devices that regulate the electricity fed into other integrated circuits.
It’s an essential task. Spikes in voltage or current can damage or destroy processors, and the risks only grow when more transistors are packed tightly into advanced chips.
That’s where Monolithic Power Systems Inc. (MPWR) comes in.
In the late-1990s, the Seattle-based company developed a single (i.e., monolithic) integrated power chip that combined analog, digital, and memory components onto a single device. This technology, known as bipolar-CMOS-DMOS (BCD), is now in its sixth generation and remains the core of Monolithic Power’s competitive edge.
Monolithic’s focus on BCD technology has worked. The company has grown into a $30 billion firm and is a leading supplier of power chips to data centers, particularly those focused on AI. MPWR also has a strong presence in autonomous vehicles and driver-assisted technologies, where reliability is key.
In fact, the company raised its guidance during its 2025 investor day on March 20. Management now expects $635 million in first-quarter revenues (up from $625 million) and for adjusted operating profits to come in roughly $10 million higher than previously expected.
Analysts expect growth to remain strong. Current Wall Street forecasts call for another round of 40% growth in revenues this year, and for full-year operating earnings to almost quadruple to $880 million. That’s because the company is at the forefront of both the data center and “physical AI” trends.
AI-powered devices like robots, self-driving cars, and security systems will become increasingly prevalent, and all these devices will need the type of power chips that Monolithic provides. So will the data centers that run these devices.
Of course, broader macroeconomic fears have affected MPWR stock. Shares of the firm have fallen 15% since February on growing concerns over U.S. tariffs on imported vehicles; MPWR generates roughly 20% of its revenues from the automotive sector. This comes on top of a 30% selloff last October after investment firm Edgewater Research warned that Monolithic’s allocation to Nvidia’s Blackwell chips might be affected by quality issues. (So far it has not.)
So, shares now trade at just 20X forward earnings – well below those of other chipmakers.
That makes Monolithic Power a rare combination in the AI world: a high-growth innovator trading at a value price.
Stock No. 2: The Human Factor
This company’s life began after database firm Oracle Corp. (ORCL) made a hostile takeover bid in 2003 for PeopleSoft, a human resource management system. After a two-year battle, the smaller firm eventually agreed to the takeover, and Oracle would go on to cut 5,000 of their 11,000 employees within a month of the early 2005 acquisition.
So began Workday Inc. (WDAY), a cloud-based human resource management company founded by jaded former PeopleSoft executives.
“We didn’t go overboard trying to be profitable,” former PeopleSoft CEO David Duffield later recalled in an interview with Bloomberg. “We earned our profitability from having our employees be happy working hard, loving what they do, and our customers loving what we did for them, and telling others about us.”
Duffield would become the founder and CEO of Workday.
The result was the first-ever cloud-native human capital management (HCM) platform. Users could log into Workday’s management system from any device, anywhere in the world, and access the same high-quality software as they would in the office. Workday customers do not have to worry about updates, security patches, hardware, or storage because everything is managed in the cloud.
That’s turned Workday into the largest HCM company in its class. The firm now serves more than 60% of Fortune 500 companies, and its flexible software allows it to cater to medium and small businesses as well.
That’s why rapid improvements in AI will have an outsized impact on Workday. The firm’s cloud-based approach means new AI products can be immediately rolled out to existing customers, and the required AI computing power can be offloaded to the cloud.
For instance…
- Recruiting. Workday has products that can assist in reducing manual tasks for recruiters, including automated screening large volumes of job applications and creating new job requisitions. The firm also offers Workday Skills Cloud, which uses AI and machine learning technology to suggest the right job skills for particular roles.
- Talent management. Workday Skills Cloud (the same one used for recruiting) can also be used to keep track of internal skills, which can be used to suggest individualized gigs, mentors and opportunities for internal mobility.
- AI assistant. Finally, the firm has developed products like Workday Assistant and Workday Peakon Employee Voice to help across routine HR and finance tasks. Users can ask questions using natural language and receive quick answers based on the context of their role, location, and needs.
The recent market selloff now provides an unusually attractive entry point for Workday. Shares trade at just 29 times forward earnings, compared to its five-year average of 47X. Much like Monolithic Power, Workday is a fast-growing AI applier trading at an excellent price.
Stock 3: The “Amazon” of Manufacturing
For years, 3D printing companies have struggled to turn a profit. There were too many firms (over 1,000 by one count), and they were stuck selling to a market that did not exist.
Large mass producers consume vast amounts of raw materials, so they cannot afford the high prices of the metal powders and specialty resins that 3D printing requires. Meanwhile, smaller players that produce custom parts often cannot afford the high upfront cost of 3D printers.
Xometry Inc. (XMTR) is beginning to solve that issue.
Rather than sell 3D printers, Xometry sells the service of 3D printing. Users can log onto the company’s website, upload designs, and receive instant quotes for the number of units they need produced. Xometry then handles the rest without its customers ever seeing a 3D printer.
At the core of this business is an AI-powered marketplace that matches buyers of custom-manufactured on-demand parts with sellers that can produce them.
For instance, if a buyer wants a new 3D-printed propeller for a flying drone, they can upload engineering schematics to Xometry’s website. The design is then automatically analyzed and matched with a producer willing and able to make the product. Price quotes happen instantaneously.
That’s turned Xometry into an incredible growth story. Revenues have surged from $80 million in 2019 to $545 million in 2024. It remains on track to reach $1 billion by 2028.
As for AI… several trends are converging to help Xometry continue its growth.
The first is the company’s AI-powered system itself. The company has continued to improve on its matching algorithms, which has helped push gross margins higher. The firm is increasingly able to pair buyers with lowest-cost producers, allowing it to take a larger cut in between.
The second is improvements in AI modeling. Generative AI can now improve age-old products like shock absorbers and bicycle pedals, and 3D printing is often required to bring these structures to life.
The final point is more long term. As Eric, Louis, and Luke explain in their special report, global manufacturing is shifting toward AI-driven, on-demand production, and Xometry is perfectly positioned to capture massive growth.
The AI Revolution Is Happening… Don’t Miss Out
In 2020, Eric, Louis, and Luke released a series of videos outlining a concept they called the “Technochasm.” This was a warning that technological progress would create an enormous divide across ordinary Americans.
On one side are the “haves,” or those who got in on the right side of history. These are the people who will benefit from innovations like AI, or invested early enough in these firms.
On the other side are the “have-nots,” or those on the wrong side of history. This unfortunate group will see their jobs replaced by AI… their portfolios crushed by firms like Nvidia… and end up getting left behind.
Fortunately, these three picks tell us that the AI Revolution is still only getting started. So, even you didn’t invest in Nvidia in 2019, there’s still time to make up lost ground. (And if you’re one of the lucky ones who did, then you know how important it is to keep staying ahead.)
That said, we all know that traders are now rotating into “safe haven” assets like gold, while turning their back on the high upside promise of the market’s best AI plays.
The upshot is that when markets bounce back, fundamentally superior AI stocks will mount an equally strong rise.
That’s exactly the sort of stocks that Eric, Luke, and Louis are talking about in their new Technochasm briefing.
So, if you missed out on the big gains from AI stocks since 2023, this is a rare “second chance” to get in on some of the most innovative companies in the world. In fact, their latest batch of picks has triple-digit upside in just a handful of months.
That’s why Eric, Luke, and Louis just teamed up to deliver their urgent AI broadcast.
In it, they reveal why nearly a trillion dollars of new investments could soon flood two little-known corners of the AI Revolution… how it could accelerate the lucrative AND destructive force behind the Technochasm… and what you need to do to prepare (and profit).
I urge you to check out their conversation before it’s too late.
Click here to watch their special free broadcast now.
And I’ll see you back here next Sunday.
Regards,
Tom Yeung
Markets Analyst, InvestorPlace
