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Hello, Reader.
There is a common pattern in new technology cycles, and it goes like this:
The innovation itself appears. Then, a bottleneck emerges. Next, capital floods in to solve the problem. Finally, the regime changes.
We saw this “regime change,” or complete reorganization of stock market winners and losers, in the dot-com bust phase.
Capital rotated out of the high-profile names and into a variety of other sectors, including base metals, precious metals, energy insurance, and utilities. Those sectors delivered solid double-digit or triple-digit returns over the early part of the 2000s, even while the Amazons, Intels, and Ciscos of the world fell 80% or more.
Another regime change is happening now.
Since the early AI revolution, the Magnificent Seven companies have been sat securely on the throne. The group includes Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Meta Platforms Inc. (META), Microsoft Corp. (MSFT), Nvidia Corp. (NVDA), and Tesla Inc. (TSLA).
But their seat is soon to be usurped. We are starting to see a rotation out of some of the highest profile, high beta tech stocks and into more real-world, asset-backed sectors.
This dynamic will only increase as we move forward. That means it’s important to own the companies that are providers or suppliers to this massive AI buildout, rather than the companies that are spending the money to build.
I’ll share one of my favorite stocks that is significantly outperforming the Mag 7 so far this year. But first, let’s take a look at what we covered at Smart Money last week.
Smart Money Roundup
October 15, 2026
The AI Bargain Hiding in Big Pharma
Investors may not be giving big pharma companies credit for the potential to turn AI-driven innovation into stronger growth and profits. Let’s discover this bargain hiding in plain sight…
October 17, 2026
Why Playing It “Safe” With U.S. Stocks Could Backfire
Overconfidence can lead investors to favor U.S. stocks even when foreign markets offer compelling alternatives. So, I’ll walk you through the hidden risks of sticking with the status quo, and point you toward several overseas opportunities I’m backing that most U.S. investors overlook.
October 18, 2026
The AI Selloff Is Sending Investors a Warning, and Here’s Where to Look
Back in August, my colleague Jonathan Rose warned about two AI favorites, CoreWeave, Inc. (CRWV) and Oracle Corp. (ORCL). Both stocks have since taken a beating. Here’s Jonathan with the story of what he saw coming – and what investors can learn from it.
Mag 7 Killer: A Prolific Energy Producer
One of my favorite Mag 7 killers is one of America’s most prolific energy producers, and it’s firmly positioned to fuel America’s AI buildout. Data center demand for natural gas could become especially acute in the Delaware Basin, with a new “Data Center Alley” potentially blossoming in the region.
As one of the leading producers in the Delaware Basin, Devon Energy Corp. (DVN) is well-positioned to benefit from structurally improving pricing trends in the region.
For the last few years, the Delaware Basin has been rapidly boosting its production of both oil and gas. Unfortunately, gas volumes have overtaken pipeline capacity. As a result, much of the gas from the Delaware Basin is “stranded” – the oil and gas industry’s polite way of saying “worthless unless you can move it.”
Producers flared it. Trucked it. Discounted it to oblivion. As such, the Delaware Basin has behaved for years like a brilliant student stuck in detention. It held enormous potential, but had no way to express it.
But detention is ending. Two major pipeline projects are improving the economics of the Delaware Basin, especially for Devon.
At the start of this year, Wall Street analysts expected Devon Energy to earn roughly $3.95 per share in 2026. Today, their consensus estimate is around $5.40 – an increase of nearly 37%. Devon shares have also climbed substantially this year, but earnings expectations have risen even faster.
Therefore, even though Devon shares have advanced 26% this year, the company’s expected earnings have increased even more.
Regards,
Eric Fry
