Editor’s Note: The rise of artificial intelligence isn’t just another tech boom. Rather, we’re confident that AI is the single most transformative force of this decade – perhaps of human history; an accelerant for innovation, disruption, and yes, generational wealth.
We’ve been closely tracking this revolution since the early sparks flew in 2022. Since then, we’ve mapped the terrain, vetted the players, and identified the biggest wealth-building trends hiding in plain sight. And we’re not alone in this pursuit.
Veteran analyst and my InvestorPlace colleague Eric Fry has been sounding the alarm for months. His message? Artificial General Intelligence isn’t a far-off fantasy. It’s accelerating fast, and its arrival could reshape everything from finance to geopolitics.
In this issue, Eric shares his latest insights and reveals how investors can prepare – not just to survive, but to thrive – as this future hurtles toward us faster than anyone expects.
Hello, Reader.
I once asked my dad why his father migrated from the Illinois farm country to Montana cattle country in the early 1900s.
“Henry Ford destroyed all the farm jobs,” he told me. “My dad couldn’t get work on the farms anymore, so he moved up to Boseman to work as a cowboy.”
Now, Henry Ford did not destroy farm jobs personally, of course… but his innovative tractor did. His “Fordson Model F” tractor went into production in 1917 and became an instant hit with farmers in the Midwest.
As the first mass-produced, inexpensive tractor, the Fordsons captured an overwhelming 70% share of the market by 1922, and their popularity grew rapidly. By 1928, 700,000 of them were rolling off the production line each year.
Artificial intelligence is not unlike Henry Ford’s novel tractor.
It is a new technology that will produce widespread efficiency gains, while also reducing or eliminating entire categories of employment.
Changes of that magnitude are difficult to imagine and, therefore, difficult to embrace seamlessly and profitably. That is why we must “future-proof” our lives to the furthest extent possible.
It is also why we must remain focused on the once-in-a-generation investment opportunities AI is producing.
Record-Breaker or Roadkill? Landing on the Right Side of the AGI Chasm
In effect, artificial intelligence is slashing the world of commerce into two distinct groups: the AI appliers and the AI victims.
The companies that hope to survive and thrive must adopt and integrate AI technologies as quickly as possible. Those that fail to do so will perish… and time is of the essence, especially as we get closer and closer to achieving artificial general intelligence (AGI).
I first sounded the alarm about the approach of AGI last August. At that time, I shared several companies that I believed to be both AI winners and losers to my subscribers at my elite trading service, The Speculator.
And it turns out, my calls were right on the money, literally.
So today, let’s take a deep dive on one AI success story to examine the traits that powered its market-beating results… and one a company in the crosshairs of AI that everyone should avoid.
Let’s take a look…
Worthy of a Toast
Since I profiled this AI winner last August, its stock has soared 80%.
This Boston-based firm provides AI-enabled solutions for virtually every facet of the restaurant biz – from online ordering fulfillment to reservations management to supply-chain control.
I’m talking about Toast Inc. (TOST).
Since 2011, Toast has been perfecting a platform that can come in and handle all of the tech that restaurants need, integrating online ordering, contactless payments, delivery services… and even bookkeeping.
The result is a software platform that almost all of us – or at least nearly everyone who orders takeout or delivery online (myself included) – have used at some point.
This technology has helped Toast achieve a remarkable 119% net revenue retention rate since 2015. This software-as-a-service (SaaS) metric calculates the percentage of revenue retained from an existing customer over a specific period of time.
In essence, Toast has become a database software company. The firm has one of the largest and most valuable datasets in the entire restaurant industry, enabling it to develop and perfect leading-edge AI tools for the industry.
Toast’s database software can help restaurants calculate their costs in real-time and understand when to offer specific food items and at what price. These real-time insights can mean the difference between success or failure in the cutthroat restaurant business.
The more data Toast gathers from its growing roster of clients, the better its AI becomes.
Toast’s operating margins have achieved a pivotal inflection point, from negative to positive. After running double-digit negative margins for several years, that metric inched into positive territory nine months ago and has continued moving higher. As a result, Toast’s gross profit (EBITDA) is also positive and moving higher.
Last week, the company reported record revenue and EBITDA for the first quarter, both of which topped analyst estimates by a wide margin. The stock celebrated the good news by jumping 10% on the day of the earnings release.
Toast is integrating AI technology into its market-leading platform as rapidly and comprehensively as possible, which is one big reason why I expect the company to thrive.
It’s the kind of company you may want to investigate further, as it should produce growing revenues and earnings over the coming years.
As AI technologies stretch the tentacles into every facet of our existence, the roster of successful “AI appliers” will grow by the day. But the roster of “AI victims” will grow even larger.
Here is one such stock to avoid…
There Can’t Be AI Winners Without Losers
The companies that fail to adopt AI technologies either lack the expertise to do so or have business models that are fundamentally incompatible with AI.
Either way, we do not want to be holding stocks that AI is threatening.
That’s why I continue to highlight at-risk companies from time to time, like I did last August when I identified Shutterstock Inc. (SSTK) as a company “sitting in the crosshairs of AI.”
As I explained at the time…
Once upon a time, Shutterstock was a cutting-edge graphics company with a massive, and valuable, library of proprietary images. Today, that library looks more like an anvil than a pair of wings.
Thanks to GenAI technologies like OpenArt, “proprietary graphics” are nearly a thing of the past…
Because of these competitive threats, subscriber “churn” is increasing at Shutterstock. As a result, gross margins and net income are both collapsing… These declining fortunes reflect declining demand for the company’s core content library.
Since issuing that warning, Shutterstock’s financial results have continued to deteriorate. The company posted EPS of just $1.01 last year, not the $1.90 analysts expected, while the consensus earnings estimate for this year has tumbled from $3 to $2.10. Not surprisingly, the stock is down more than 40% since my skeptical analysis.
Shutterstock is not an outlier. Therefore, we must examine every prospective investment through the lens of AI and be alert to both the opportunities and the hazards it will create.
That’s why I’ve just put the finishing touches on four new research reports focused on investing in AI before artificial general intelligence takes hold. Three of the reports highlight a stock to buy, while the fourth one warns about three stocks to sell.
You can learn how to access those reports by clicking here.
Like last August, I am once again hosting an event on AGI’s dangers – and opportunities.
The time to get ready before AGI appears is running out, which is why I am now issuing my “Final Warning.”
During that event, which you can watch right now here, I put forward a three-part blueprint, featuring…
- My thoughts on why precious metals, energy, real estate, and biotech sectors are where everyone should be looking right now…
- My No. 1 AGI-related stock pick that’s already showed a 46% gain while the S&P 500 index dropped 5%…
- And details on critical stocks to avoid or sell immediately before they collapse.
