Warren Buffett is buying “old school” stocks … or is he? … look for AI Survivors turning into AI Appliers … who wins in a battle of Walmart vs Big Tech?

On Friday, shares of Constellation Brands (STZ), owner of Corona, Modelo, and Robert Mondavi, popped more than 6% in after-hours trading.

Behind the surge was news that Warren Buffett had taken a sizeable stake in the company in the fourth quarter (more than 5.6 million shares).

Now, Constellation is a strong company with some beloved brands, but it’s not exactly a poster child for today’s hottest investment theme – artificial intelligence.

Perhaps the Berkshire Hathaway filing included additional news of Buffett piling into, say, Palantir?

Nope.

The 13F filing did reveal, however, that Buffett increased his stakes in two other “not-so-much-AI” companies: Domino’s Pizza and Pool Corp., a distributor of swimming pool supplies.

It’s hard to challenge Buffett’s market choices. After all, his multi-decade return speaks for itself (and he does own established “AI” companies such as Amazon). But still – aren’t we supposed to be loading up on AI plays today?

Yes – but not exclusively.

Global macro expert Eric Fry explained why in his latest issue of Investment Report, out last Friday:

Artificial intelligence has divided the investment world into three main categories: AI Creators, AI Appliers, and AI Survivors.

All three of these categories deserve a place in your investment portfolio.

It turns out that most investors are loading up on just one…maybe two categories.

Our love affair with tech

Retail investors love AI/tech – and rightfully so.

Top-tier tech/AI plays are likely where we’ll see the biggest gains in the quarters/years to come.

But the level of tech concentration in many portfolios creates some risk.

Here’s Reuters following the DeepSeek-induced mini-crash a few weeks ago:

Retail investors poured one out of every three dollars of their investments into Nvidia shares in the first days of this week when the AI chipmaker suffered a record one-day loss in market value…

Retail investors were [also] eager purchasers of Tesla, Broadcom and Apple.

Investors also snapped up tech-focused exchange-traded funds like the Invesco QQQ Trust and a leveraged ETF offering three times the daily return of the Nasdaq 100 Index.

You’ll be shocked, but I couldn’t find any headlines announcing retail investors “buying the dip” in Pool Corp.

Of course, this focus on AI isn’t unjustified. In fact, in the Digest this past Saturday and yesterday, we featured a Louis Navellier takeover that provided yet another reason to invest in tech today – AI’s Crossover Moment. This when AI breaks out of the digital world and into the real one, running self-driving cars, automating factories, and even building “digital twins” of entire cities. If you missed Louis’ free broadcast on it, click here to watch it for free.

We can think of Louis’ Crossover Moment stocks as the more visible AI plays taking the baton from the AI Creators and transforming our world with their practical applications of AI-infused products/services.

We want to own this type of stock, but investors who focus exclusively on them could be short-changing themselves…but perhaps not for the reason you think.

Don’t forget the AI Survivors

Let’s return to Eric:

“AI Survivors” is the category that many investors tend to overlook. That could be a mistake…

The AI Survivors are what I call “future-proof” companies. These are the enterprises that produce physical products or services that AI cannot replace.

Agriculture companies would be one example. No matter how sophisticated AI becomes, humans will want to eat avocados and bananas. 

Similarly, companies that produce natural resource products like copper, aluminum, or timber should be able to survive the growth of AI technologies… at least for a long time.

Diving deeper into the topic, Eric makes an important point – today’s AI Survivor could easily become tomorrow’s AI Applier.

For example, Eric holds mining giant Freeport-McMoRan (FCX) in his Investment Report portfolio, up 219% since he first recommended it.

Freeport seem like an AI Survivor on the surface, but it is actively using AI to optimize its mining operations, particularly in areas like data analysis and process optimization. The goal is to increase copper production by utilizing AI-powered insights from data collected through sensors on their mining equipment.

Back to Eric:

Survivors are easy to overlook, mostly because they tend to operate in “old school” industries that seem unglamorous on the surface.

But perhaps this “Applier in Survivor’s clothing” is a good thing. A fantastic thing, in fact.

For investors who can envision how AI might transform an “old school” business model, this moment offers an abundance of opportunities

We’re able to buy “tomorrow’s leading AI appliers” at a “yesterday’s business model with its ancient technology” prices.

Back to Eric:

These [Survivor] industries could become increasingly glamorous as AI fans out across the global economy and starts claiming victims in hundreds of industries that are not future proof.

This certainly paints Buffett’s stakes in Domino’s Pizza and Pool Corp. in a different light.

In fact, Domino’s is already in full-blown “AI Applier” mode upon closer investigation.

Here are just some of the ways it’s applying AI today:

• Using a voice recognition app to take phone orders
• Predicting when orders will be ready, leading to faster service and improved customer satisfaction
• Saving time on tasks like inventory management, ingredient ordering, and staff scheduling
• Streamlining pizza preparation and quality control
• Personalizing the customer experience

So, too, is Pool Corp.

From the trade website, Modern Supplier:

Artificial Intelligence (AI) has emerged as a pivotal element in Pool Corp’s strategy to enhance contractor sales and streamline supply chain operations.

The company has begun to implement AI-driven forecasting tools that predict demand trends based on historical data and market analysis.

This proactive approach allows Pool Corp to optimize inventory levels, reducing the risk of stockouts and ensuring that contractors have access to the products they need when they need them.

Maybe Buffett is a hardcore technology investor after all.

You can keep buying the obvious tech/AI plays, but…

Please be aware of the nosebleed valuations of many popular tech stocks. With so many investors wanting exposure to AI, some of the obvious names have already been bid up to lofty prices.

In contrast, many of these under-the-radar AI Survivors-into-Appliers could provide a bigger bang for your buck.

To illustrate, I’ll end with this…

Who has treated investors better over the last two years?

AI Survivor-turned-Applier Walmart?

Or AI mega-leaders Microsoft and Apple?

Walmart…by a margin of about 2-to-1…

As you can see below, Walmart is up 115% while Microsoft and Apple have returned about 65% each.

(Full disclosure: I own these stocks.)

Here’s Eric:

Future-proof companies not only possess the potential to survive the onslaught of AI, but to thrive from it.

To learn more about which Survivor/Applier stocks Eric is recommending in Investment Report, click here.

And again, to catch Louis’ free broadcast that dives into seven such Appliers (the Crossover Moment stocks), click here.

Bottom line: Don’t settle for just the obvious AI plays. There are some amazing opportunities lurking out there.

Have a good evening,

Jeff Remsburg