Tom Yeung here with today’s Smart Money.

In 1967, then-governor of California, Ronald Reagan made a joke about his early days in office. It went like this:  

One day when things looked pretty dark up there… one of the staff said to me well cheer up, things could be worse. 

And so, I cheered up. And sure enough they got worse. 

Almost sixty years later, the AI Revolution is having its own “it could be worse” problem. 

Since peaking in July, the AI trade has broken down. Major AI indices like the Global X Robotics & Artificial Intelligence ETF (BOTZ) and iShares Semiconductor ETF (SOXX) have fallen more than 20% from their highs. Even blue-chip names like Intel Corp. (INTC) and SanDisk Corp. (SNDK) have dropped 50% or more. 

It’s been a disaster for latecomers to the AI Revolution. 

So, where does that leave investors to put their money? 

Oil offers one way out. Energy prices are still almost 60% higher than they were at the start of the year. And healthcare is another bright spot. This segment is historically noncyclical, because diseases and skiing accidents don’t care how the economy is doing. 

But there’s one area we don’t talk about as often.

So, in today’s Smart Money, I’d like visit one of the most powerful investment themes of the past century: The Great American Consumer. 

Then, I’ll reveal a way to put the American consumer to work in your portfolio.

America’s Spending Machine Keeps Running

The strength of the U.S. consumer has long defied expectations. In 1945, many economists feared that the end of World War II would send America into another depression. But years of rationing had left households with large savings and a long shopping list. A baby boom and postwar spending followed. 

Similar fears resurfaced during the stock market corrections of the 1970s, the late 1980s, and early 2000s. American consumers shrugged off these concerns. Consumption only dipped slightly during the two oil shocks (less than 1% in real terms) and actually went up during the mild 2001 recession.  

Then, during COVID-19, Americans surprised forecasters once more by continuing to spend online from home. As shown in the graph below, inflation-adjusted consumer spending has proved one of the most enduring trends of the American economy. 

Much of that strength comes from America’s productive economy, which supports well-paying jobs and gives households the means to consume. Their spending encourages businesses to hire and invest, creating a self-reinforcing cycle that has set America apart from other developed economies. 

There’s also a cultural factor. Some historians point to the late 1940s as the beginning of the Consumer’s Republic – a set of ideals to dramatize the superiority of capitalism over communism.

In plainer English: We like to keep up with the Joneses. 

Finally, there’s personal wealth – something helped along by America’s relatively high homeownership rate and participation in the stock market. That creates what economists call the “wealth effect.” When asset values go up, households feel richer and spend more, even if their paychecks haven’t changed. 

These factors have allowed the consumption engine to keep humming along. For example, in the third quarter, U.S. consumer spending grew at a 3.8% annualized rate, beating analyst forecasts of 3.5%. And we expect October’s figures to show spending holding up; Visa Inc. (V) reported that U.S. card payments volume rose 10% from a year earlier during the first three weeks of October, an encouraging sign heading into the holiday season. 

To play this trend, Eric has several consumer picks. Let’s take a look at one below…

This Old-School Brand Deserves a Second Look

A shoemaker that has been in continuous operation since 1774 should, by rights, be the last stock anyone associates with modern investing themes. And yet Birkenstock Holding plc (BIRK) may be one of the clearest examples of a durable, old-economy business thriving in an AI-obsessed market.

The company’s competitive moat is not a patent or a software platform. It is 250 years of accumulated craft, a manufacturing process that remains more than 95% European, and a brand identity so strong that the same cork-soled sandal has survived the transition from “hippie” icon to luxury fashion statement without losing a step.

CEO Oliver Reichert’s description of Birkenstock’s addressable market is not an overstatement: “Every human being that walks on two feet.” The most recent quarter validated that ambition. Fiscal third-quarter revenue grew 15% in constant currency (13% as reported), despite geopolitical uncertainty and pressure on consumers. The company also raised its full-year revenue growth guidance to 15% in constant currency.

I should also note that Birkenstocks have become popular among Gen Z thanks to viral video moments (they were featured in the Barbie movie) and favor among stars like Charli XCX and Gigi Hadid. Imagine if Marilyn Monroe endorsed a shoe brand!

But strong results have not always translated into a higher stock price. After its second-quarter results, shares fell more than 14% as investors reacted to the company’s outlook and other concerns.

Meanwhile, the underlying business keeps compounding. In the third quarter, revenue in the Asia-Pacific region grew 23% in constant currency, while direct-to-consumer revenue climbed 16%. The company added 13 stores during the quarter, bringing its total to 124 company-owned retail locations.

To prepare for additional demand growth, Birkenstock continues investing in production capacity. Its fiscal 2026 capital expenditure outlook is €110 million to €130 million, funding manufacturing expansion and retail operations.

The “Boston Clog,” which is celebrating its 50th birthday this year, remains one of the hottest products in global footwear. Closed-toe styles continue gaining ground, accounting for 38% of revenue, up from 33% a year earlier. That shift is extending Birkenstock’s reach into all-weather, year-round occasions.

Birkenstock’s latest results show that investors don’t need to chase the latest AI stock to find a growing business. A 250-year-old footwear brand is still finding new customers, expanding internationally and investing to meet demand.

And that’s the kind of opportunity worth watching.

Birkenstock is just one example of the opportunities investors can find beyond the AI frenzy. At Fry’s Investment Report, Eric looks beyond the market’s hottest trends to find businesses with the staying power to thrive through whatever comes next.

Click here to learn more.

Until next time, 

Thomas Yeung, CFA 

Market Analyst, InvestorPlace 

P.S. Louis Navellier has spent nearly five decades studying what separates the stock market’s biggest winners from the rest. Now he’s putting that experience to work in a new way. He’s personally selected 25 of his highest-conviction stock recommendations for a new model portfolio, which he’ll review and update every month. And he believes this approach could be especially important as Wall Street heads into 2027. Louis will explain why — and introduce his new service — during a special presentation on November 12. Reserve your spot here.

The post The Unlikely Stock That Could “Cushion” an AI Selloff appeared first on InvestorPlace.

It’s often called “the most dangerous phrase in business.”

We’ve always done it this way.

It’s considered dangerous because too many organizations, even very successful ones, can grow complacent. Once a team achieves success, they can’t imagine doing anything differently.

It’s easy to understand why this happens. Changing means taking risks.

In 2007, Netflix (NFLX) had built a thriving operation around a simple idea: Instead of asking customers to drive to a brick-and-mortar store, they could deliver DVDs directly to mailboxes.

Americans loved it.

Netflix had more than 6 million subscribers. Its familiar red envelopes were arriving in mailboxes across the country. And the company was steadily taking customers away from traditional brick-and-mortar video rental stores.

But Netflix’s leadership could see that the world was changing.

In 2007, the company introduced a new service that allowed subscribers to watch movies and television shows over the internet.

Today, that’s commonplace. But remember what the world looked like in 2007.

Apple had only just introduced the first iPhone. The iPad was still three years away. There was no 5G. Broadband was becoming more common, but millions of Americans were still relying on internet connections that were so slow, you could achieve a half dozen household chores before a movie was ready to watch.

Moving toward streaming meant investing in a technology that wasn’t quite ready for prime time – and potentially undermining the business operations that had made Netflix successful.

It was an enormous gamble. But Netflix saw something its competitors didn’t appreciate.

The biggest threat to past success isn’t always the competition, but the temptation to keep doing what made you successful in the first place.

And that lesson is just as important for investors today.

The Same Old Portfolio?

How many of the stocks in your portfolio are there because they were great investments five or 10 years ago?

If you were building your portfolio from scratch today, would you buy those same stocks again?

Those are two very different questions.

Because just like the business world, the stock market never stands still.

Interest rates change. Consumer preferences change. New technologies emerge. And the market leaders one day can find themselves struggling to keep up the next day.

That doesn’t mean you should abandon a successful strategy.

It means you need to recognize when the investments themselves should change.

After all, there’s a big difference between buy and hold… and buy and forget.

That’s where Louis Navellier’s Stock Grader has served him so well.

Louis’ system is engineered to find fundamentally superior stocks with significant buying pressure. When those things start to improve, its grade improves.

Below is a screenshot from Louis’ Stock Grader for Micron Technology (MU) over the last two years. It’s easy to see that the system gives it an overall A grade today.

Underneath the stock price chart, you can see the grade history, with an A at the top (in blue) and an F at the bottom (in dark red).

You can see Micron wasn’t always an A. In May 2025, the stock was a solid D.

You can also see that as the grade improved, the stock’s performance did too. By the summer of 2025, MU had a C-grade, and by November 2025, it moved from a B to an A. As the stock grade climbed, the stock’s price did too!

Louis recommended the stock to his Growth Investor subscribers on Jan. 30, 2026. The stock skyrocketed over the summer, up close to 180%. Since then, the stock has suffered the same sell-off as the rest of the AI trade. Even so, the stock is still up more than 70%.

Buying good stocks is easy but knowing when to change your strategy is more difficult. Louis uses his Stock Grader tool to help him determine when the timing is right.

A Dangerous Market for Complacent Investors

Right now, the danger of standing still may be greater than many investors realize.

You see, the stock market has suffered a brutal sell-off in recent weeks, with some of the biggest losses hitting the very AI stocks that had been leading the market higher.

And while the rebound that’s taking place as I write on Friday is welcome, it doesn’t erase the damage.

In fact, according to Louis’ research, more than half of S&P 500 stocks have declined by 20% or more from their highs.

Think about that.

While investors focus on new market highs, many individual stocks have already experienced their own bear markets.

And that’s not the only danger.

Interest rates remain a concern. The bond market is sending warning signals. And the companies that led the last great rally may not be the ones best positioned to lead in 2027.

That’s a dangerous situation for investors who assume their existing portfolios will continue delivering the same results.

But here’s the good news.

A changing market doesn’t just create new risks. It creates new opportunities.

And few people understand how to identify those opportunities better than Louis.

For decades, Louis has used his proprietary Stock Grader system to evaluate thousands of publicly traded companies, searching for those with the strongest combination of earnings growth, financial fundamentals, and buying pressure.

His goal isn’t to find stocks that were once great investments.

It’s to identify the companies with the strongest potential to outperform over the coming period, just like he did with Micron.

And now, Louis is preparing to take that approach in an entirely new direction.

A New Solution for a Changing Market

On Thursday, November 12, at 2 p.m. ET, Louis will unveil a brand-new investment strategy designed to address the challenges and opportunities he sees emerging in 2027.

It’s built around a simple but powerful idea:

What if your portfolio could evolve as the market changes?

Rather than relying on yesterday’s winners, Louis has developed a way to focus on the companies that earn the highest marks from his stock-selection system – and reassess those opportunities as conditions evolve.

And during this special presentation, he’ll explain why he believes the old rules of investing may leave some investors dangerously exposed.

He’ll also reveal:

• Why the next phase of the market could look very different from the last.
• The warning signs he’s watching as we head into 2027.
• How his new approach is designed to help investors adapt rather than fall behind.
• And one stock he believes investors should consider buying now – along with another he thinks they should avoid.

Click here to reserve your free spot for Louis Navellier’s November 12 presentation.

Everyone wants to avoid making the wrong decision.

But it’s just as dangerous to assume the right decision you made years ago is still the right one today.

Remember to sign up to attend the free presentation at 2 p.m. Eastern time on November 12 to get all the info.

In 2007, Netflix was willing to change to stay ahead of the competition. Make sure your portfolio shows the same flexibility to stay ahead of the market.

Enjoy your weekend,

Luis Hernandez

Editor in Chief, InvestorPlace

The post Your 2026 Winners Could Be Your 2027 Losers appeared first on InvestorPlace.

They had two future Hall of Fame quarterbacks on their roster.

Joe Montana, who had led the team to four Super Bowl victories, and Steve Young, a rising star who was ready to take over.

Eventually, the 49ers handed the offense to Young. And in January 1995, he led San Francisco to another Super Bowl victory.

Now, there’s a valuable investing lesson in that story.

You see, I’ve always believed that managing a stock portfolio is a lot like managing a championship football team. You want the best players on the field. And sometimes, that means replacing a proven winner with someone who has even greater potential going forward.

Well, the same thing happens on Wall Street.

A stock that delivered tremendous gains over the past few years might still have room to run. But if its sales and earnings are slowing, while another company’s business is taking off, you’d better pay attention.

After all, the goal is to build a portfolio that can keep winning, even as market leadership changes.

That’s why I’ve spent nearly 50 years developing and refining a stock-picking system designed to help me find Wall Street’s strongest opportunities.

And believe it or not, it all started with a college assignment that I technically failed.

So, in today’s Market 360, I’ll explain how that discovery changed my approach to investing and why my system is particularly valuable in today’s changing market.

I’ll also tell you about a special presentation I’m hosting on Thursday, November 12, at 2 p.m. Eastern, where I’ll reveal what I believe the Fed’s next moves could mean for your investments in 2027 – and how I’m preparing to take advantage of the opportunities ahead. (Reserve your spot for this free event here.)

The Secret Was in the Stocks

It all started when I was studying finance at Cal State Hayward in the late 1970s.

One of my professors assigned me to build a stock selection model that would mirror the performance of the S&P 500. Thanks to that professor, I had access to Wells Fargo’s mainframe computers. Remember, this was back when computers took up entire rooms.

After countless hours studying market data and building my model, I finally ran the numbers.

And to my surprise, my model didn’t just match the S&P 500 – it beat it!

Now, here’s why that discovery ended up changing my life.

Princeton economist Burton Malkiel had famously argued that a blindfolded monkey throwing darts at a newspaper’s stock listings could pick investments just as well as the professionals on Wall Street.

But my model was telling me something very different.

A relatively small group of stocks was responsible for much of my portfolio’s outperformance. Better yet, these companies had something in common.

Their sales and earnings were growing. Their operating margins were expanding. And they consistently delivered positive earnings surprises.

In fact, I eventually identified eight fundamental factors that helped me pinpoint companies with the potential to outperform the broader market.

But I also learned that strong fundamentals were only part of the equation. Even a great company can be a disappointing investment if the big institutional investors aren’t buying its shares.

That’s why I added a second measure to my research: institutional buying pressure.

Together, those two measures became the foundation of my proprietary Stock Grader system.

Today, Stock Grader analyzes more than 6,000 stocks, assigning each a grade from A to F based on its Fundamental and Quantitative Grades.

And here’s the beauty of this system, folks. It doesn’t care about old market trends or yesterday’s headlines. It follows the fundamentals and institutional buying pressure, wherever they lead.

That’s especially valuable when market leadership starts to change.

Knowing When to Change the Lineup

If you’ve followed my recommendations over the years, you’ve probably noticed that the stocks I favor today look different from the ones I recommended a year or two ago.

Back then, we owned a lot of gold mining stocks as prices were hitting record high after record high. AI stocks were prominent in our portfolios, too, of course.

That’s no accident. That’s Stock Grader doing exactly what it’s designed to do.

But lately, my system has been pointing me toward some compelling opportunities in energy and shipping. That’s because the war with Iran has disrupted global energy markets, creating new challenges for some companies and opportunities for others.

And by following the fundamentals, I’ve been able to recommend several stocks that have delivered impressive gains. For example:

• International Seaways, Inc. (INSW), an oil tanker operator I recommended on March 6, has climbed 54%.
• Okeanis Eco Tankers Corp. (ECO), another tanker company I recommended on June 22, has gained 61%.
• HF Sinclair Corporation (DINO), an oil refiner I recommended on June 23, has surged 50%.

Those are remarkable gains, especially considering the uncertainty surrounding the energy markets.

And they illustrate an important point: While investors are focused on the latest headlines, my system is searching for companies with the strongest numbers.

Now, don’t get me wrong. I’m still very bullish on artificial intelligence. In fact, some of my favorite stocks remain tied to the massive buildout of AI infrastructure.

But I’m not going to ignore opportunities in other industries simply because they aren’t grabbing the headlines. When the numbers point me toward stronger opportunities, I’m prepared to act.

Sometimes, that means selling a good stock to buy a better one.

Building a Championship Portfolio

And that brings me back to the San Francisco 49ers.

A championship coach knows that the lineup that won last year’s Super Bowl might need to change to win the next one.

The same is true of investing. I want to let my winners run as long as their fundamentals remain strong. But I also want to be ready when new opportunities emerge.

I believe that approach will be more important than ever as we head into 2027.

You see, the Federal Reserve’s next moves could have a major impact on the stock market. With interest rates and market leadership shifting, investors need to be especially careful about where they put their money.

That’s why I’m preparing to unveil an entirely new way of putting my stock-picking research to work.

On Thursday, November 12, at 2 p.m. Eastern, I’m going to reveal what I’ve been working on during a special presentation.

Click here to reserve your spot now.

During this event, I’ll explain what I expect from the Fed in the months ahead and what its next moves could mean for your investments in 2027.

I’ll also share a Wall Street indicator with a remarkable historical track record of predicting the market’s next moves, and explain why I believe investors need to prepare now rather than wait until next year.

Most importantly, I’ll reveal a brand-new way I’m putting Stock Grader to work to identify what I believe could be the market’s next big winners.

Plus, you’ll receive two free stock recommendations:

• One stock I believe could be among 2027’s biggest winners.
• One popular stock I believe investors should avoid.

I’ll give you the names and ticker symbols of both stocks absolutely free.

Click here now to register for my November 12 presentation now.

Sincerely,

Louis Navellier

Editor, Market 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:

HF Sinclair Corporation (DINO), International Seaways, Inc. (INSW) and Okeanis Eco Tankers Corp. (ECO)

The post The Secret to Building a Championship Portfolio appeared first on InvestorPlace.

Of course, not every stock will be a winner. And Louis believes knowing which companies to own will become increasingly important heading into 2027.

In today’s guest essay, he’ll take a look at the market ahead and how investors can prepare. He’ll also tell you about a special free event on November 12, where he’ll reveal one stock to buy, another to avoid, and a new way to put his Stock Grader system to work. You can sign up for that event here.

Back in 2000, American wrestler Rulon Gardner faced one of the most feared athletes in Olympic history.

His opponent was Aleksandr Karelin, a Russian heavyweight who had won three Olympic gold medals and hadn’t lost an international match in 13 years.

Gardner was a dairy farmer’s son from Wyoming. 

Not surprisingly, he was a massive underdog. But he wasn’t going down without a fight.

For much of the match, the two heavyweights were locked in a clinch, neither able to gain an advantage.

Finally, Karelin broke his grip.

That single mistake cost him the match. Gardner won 1-0, pulling off one of the greatest upsets in Olympic history.

Folks, that’s a pretty good picture of what we’re about to see in Washington.

What the Midterm Elections Changed for Investors 

With the midterm elections now behind us, Democrats have taken control of Congress, setting up a showdown with President Trump.

Both parties will be fighting for control. Both will be determined to get their way. But with power divided, neither side will be able to push through its agenda without the other getting in the way.

In other words, we are headed for a period of political gridlock.

And you know what? I think that’s great news for Wall Street.

You see, a divided government has historically created some interesting opportunities for investors. And with November already one of the strongest months of the year for stocks, I believe we could be setting up for a powerful rally that carries into 2027.

But there’s a catch.

Even if the broader market takes off, that doesn’t mean every stock will come along for the ride.

So, let’s look at why the post-midterm period has historically been so favorable for investors, what’s fueling my optimism right now… and how you can position yourself to take advantage of the opportunities I see ahead. 

I’ll also share details about a special event I’m hosting, where I’ll reveal a new way to put my strongest stock recommendations to work for you as we head into 2027.

What History Says About Stocks After Midterm Elections

If you think political gridlock is bad news for investors, consider what happened in 1994.

That November, Republicans swept into power in Congress, taking control of both the House and Senate for the first time in 40 years.

President Bill Clinton suddenly found himself facing an emboldened Republican opposition led by Newt Gingrich. Political pundits were bracing for bitter partisan fights and an uncertain future for President Clinton’s economic agenda.

And Wall Street had plenty of worries of its own.

In fact, on November 7, 1994, just one day before the election, the Los Angeles Times published an article with an ominous headline:

“One Last Gasp for the Bull Market?”

The article raised the possibility that stocks could enjoy one final rally before slipping into a bear market.

Well, that certainly didn’t happen.

In 1995, the S&P 500 surged more than 34%. And that was just the beginning of a powerful technology-led bull market.

The internet was just beginning to transform the economy, and Netscape’s blockbuster 1995 IPO helped launch the dot-com boom. And all that innovation continued despite the political battles in Washington.

I believe we’re going to see a similar boom – thanks to artificial intelligence.

AI is transforming the economy much like the internet did three decades ago. Companies are pouring hundreds of billions into data centers, computer chips, and power infrastructure.

Now, I realize some investors are worried that Democrats could throw up roadblocks to the AI boom, particularly when it comes to building new data centers.

And I wouldn’t be surprised if we see some reforms as politicians look to protect consumers from higher electricity bills. That could slow construction in some areas or shift new projects to other states.

But, folks, this train has already left the station. The demand for AI computing power is enormous, and companies have years of orders in their backlogs. Plus, data centers bring jobs and tax revenue to the communities where they’re built. That’s a powerful incentive for lawmakers on both sides of the aisle to keep these projects moving.

There may be a few bumps along the way, but I don’t see political gridlock derailing the AI boom.

Strong Earnings Add Another Tailwind to the Post-Midterm Setup

Of course, there are other reasons to be optimistic – specifically seasonality and earnings.

Since 1942, the S&P 500 has risen between November of a midterm election year and the following June 21 out of 21 times, with an average gain of about 16%.

We’re also entering what has historically been the strongest six-month stretch of the year for stocks.

According to the Stock Trader’s Almanac, since 1945, the S&P 500 has gained an average of about 7% between November and April, compared with about 2% between May and October.

Now, history doesn’t guarantee that we’ll see the same results this time around. We still have challenges to navigate, including inflation and interest rates.

But when favorable seasonal trends line up with stunning corporate earnings like we’re seeing right now, that’s when I really start to get excited.

According to the latest data from FactSet, the S&P 500 is on track for 30.2% earnings growth in the third quarter, with 82% of companies reporting so far topping analysts’ earnings estimates.

Even better, all 11 sectors are reporting year-over-year earnings growth, led by energy, technology and materials.

And the outlook remains strong.

Analysts are forecasting another 28.4% jump in S&P 500 earnings in the fourth quarter. In fact, they’ve been raising their estimates when they would normally be cutting them.

Folks, that’s the kind of earnings momentum I love to see.

Of course, that doesn’t mean every stock is going to be a winner. As we’ve seen in the days following the election, Wall Street is still sorting out which companies deserve investors’ money.

And that’s where being selective becomes so important.

Why 2027 Could Become a Stock-Picker’s Market

I know the market has been confusing since the election. Some stocks with weaker fundamentals have enjoyed a nice bounce, while others with spectacular earnings have been hit by profit-taking.

Simply put, we’re in the middle of another market rotation. Much of the initial post-election rally was driven by short covering, while some of the strongest AI stocks were left behind.

But I’ve seen this movie before. Back in July, some of my best AI stocks got hammered during the first two weeks of the month. Then they came roaring back, and we ended up finishing July in positive territory.

Wall Street has a habit of reacting first and thinking later. Eventually, though, earnings and fundamentals tend to win out. 

Of course, different sectors can take turns leading the market. For example, while AI stocks have been hit by profit-taking, energy stocks have benefited from tight diesel supplies and strong refining margins.

The key is to recognize what’s working and be ready to adjust when leadership changes.

The Bigger Challenge in 2027 Will Be Separating Winners From Losers

As I like to say, bad stocks bounce like rocks, but good stocks bounce like fresh tennis balls. And as we head into 2027, I think knowing the difference will be more important than ever.

You see, the market has become increasingly narrow. The days when you could buy almost any AI stock and watch it soar are fading. Investors are becoming more selective, and with a new Congress potentially adding more uncertainty to the AI buildout, the list of winners could get even smaller.

But, folks, that’s exactly the kind of market where my Stock Grader system shines.

I’ve spent nearly five decades studying what separates the strongest stocks from the rest. And when Wall Street starts picking winners and losers more carefully, I believe that research becomes even more valuable.

That’s why I’ve been working on something special to help investors navigate the market ahead.

I’m preparing to reveal where I believe the next big opportunities will emerge, which stocks are best positioned to benefit, and how I’m adapting my strategy as market leadership changes.

And on Thursday, November 12, at 2 p.m. Eastern, I’m hosting a special online event to show you exactly how it works.

During the presentation, I’ll reveal two special stock recommendations: one I believe you should consider buying and another I think you should avoid.

If you register for my special event you’ll gain access to exclusive content I’ve prepared for the event. (Click here to reserve your spot now.) 

You’ll also get a chance to test-drive my proprietary Stock Grader system.

Normally, this kind of access is reserved for my paid subscribers. But for this event, you’ll be able to enter stock symbols yourself and see how my system grades them. 

You can reserve your free spot for Thursday, November 12, at 2 p.m. Eastern by clicking here.

The post A Historically Strong Post-Midterm Market Could Make 2027 a Stock-Picker’s Year appeared first on InvestorPlace.

Legendary investor Louis Navellier thinks investors should be very careful.

In today’s Friday Digest takeover, Louis explains why he’s excited about the upcoming IPO of the company behind Claude – yet has no intention of chasing its shares when trading begins.

It’s not that Louis doubts Anthropic’s potential. But after nearly five decades of investing, he’s learned that a great business and a great investment aren’t necessarily the same thing.

Today, he walks through three reasons for his caution, and he explains why the recent selling pressure across AI stocks may have created more attractive opportunities in established companies already delivering impressive profits.

Louis will expand on that thinking during a special free presentation on Thursday, November 12, at 2 p.m. Eastern, where he’ll reveal two specific recommendations for 2027: one stock he believes investors should buy and another he thinks they should avoid. You can reserve your free spot right here.

Wall Street loves an exciting new story. Louis would rather follow the earnings.

I’ll let him take it from here.

Have a good evening,

Jeff Remsburg

Folks, I have to tell you, I’m looking forward to the Anthropic IPO.

The company behind the Claude artificial intelligence platform has been growing at an incredible pace. Its revenue surged more than 1,200% in the first nine months of 2026.

That’s phenomenal growth.

Anthropic’s arrival on Wall Street could give the entire AI sector another shot in the arm.

Remember, I’ve been telling you for months that the AI boom isn’t slowing down. The order backlogs are enormous. The companies supplying chips, servers, storage, and cooling equipment to the hyperscalers are reporting spectacular earnings.

But there’s something I want to make very clear: I’m not recommending that you rush out and buy Anthropic stock when it begins trading.

I’ve been investing for 47 years, and I’ve learned that there’s a big difference between an exciting company and a stock that deserves a place in your portfolio.

So, let me give you three reasons why I’m not chasing Anthropic’s IPO… and where investors should be putting their money instead.

Reason No. 1: IPOs Can Be Awfully Expensive

Anthropic got started in 2021. Just five years later, it’s preparing for what could be one of the largest initial public offerings in history.

Its net revenue retention rate is approximately 900%. In plain English, customers that were already using Anthropic’s services a year ago are now spending roughly nine times as much.

But here’s the problem.

Everybody knows Anthropic is growing rapidly. Wall Street knows it. Institutional investors know it.

So, how much are they willing to pay?

As I write this, Anthropic hasn’t announced its final offering price. And even when it does, there’s no guarantee that ordinary investors will be able to buy shares at that price.

If demand is overwhelming, the stock could open substantially higher.

We’ve seen this movie before.

When SpaceX Technologies Corp. (SPCX) went public in June, its shares surged roughly 40% in the first two trading days.

Then the stock tumbled from those early highs. Investors who chased the excitement paid the price.

The same thing could happen with Anthropic.

There’s also an unusual provision in Anthropic’s offering that could allow certain insiders to sell shares immediately, rather than waiting through the traditional lockup period. That creates another potential source of selling pressure.

I’m not predicting that Anthropic will collapse after its IPO. It could certainly go higher.

But I don’t like guessing about what a stock will do when everybody is chasing it.

I prefer to let the excitement settle down.

Reason No. 2: I Want to See the Earnings

I am obsessed with fundamentals.

I want strong sales growth. I want even stronger earnings growth. I want positive earnings surprises. And I especially want to see analysts revising their earnings estimates higher.

Anthropic certainly has the sales growth.

And its operating results are improving dramatically. During the first nine months of 2026, its operating loss narrowed to approximately $1.3 billion, compared with $5.2 billion during the same period last year.

That’s very encouraging, but the company still has a lot to prove.

Anthropic has disclosed nearly $900 billion in future spending commitments, primarily associated with computing power and infrastructure. That’s an enormous amount of money.

But there’s a difference between spending money and making money. So, I want to see how Anthropic converts its extraordinary revenue growth into sustainable earnings.

That’s why I generally wait at least a year before considering a newly public company.

My Stock Grader system evaluates thousands of publicly traded stocks using a combination of fundamental and quantitative factors.

The fundamental side looks at sales growth, earnings growth, operating margins, earnings surprises and analyst revisions. The quantitative side helps me identify stocks attracting buying pressure relative to their volatility.

And the results speak for themselves.

Every single year since 2020, Stock Grader has issued a Buy or Strong Buy rating for at least 23 of the 25 top-performing stocks in the market.

That’s what happens when you focus on the numbers instead of Wall Street’s latest excitement.

Of course, those numbers have to exist before I can evaluate them.

I need a meaningful trading history and several quarters of public financial results to evaluate those things properly.

With Anthropic, we’re just getting started.

So, I’ll watch its earnings reports. I’ll watch its margins. I’ll watch whether analysts become more or less optimistic. And eventually, if the numbers justify it, Anthropic might earn a place on my buy list.

But I’m not going to abandon a system that’s served me well for nearly five decades just because Wall Street has a shiny new stock to sell.

Reason No. 3: There Are Already Better Opportunities

While everybody is talking about Anthropic, some of the companies already making money from the AI boom have been getting knocked around.

And frankly, I think it’s ridiculous.

Look at Micron Technology Inc. (MU).

The company is benefiting from extraordinary demand for memory chips used in AI systems. Yet its shares recently traded at less than four times forecasted 2027 earnings.

Or look at Super Micro Computer Inc. (SMCI).

Its latest quarterly sales surged nearly 300%, while earnings increased more than 570%. Yet the stock was trading at only roughly five times forecasted earnings.

Folks, I’ve rarely seen an environment where companies are growing this quickly while trading at such low earnings multiples.

But markets react. They don’t think.

Sometimes investors sell excellent companies because they’re worried about interest rates, politics, or whatever the latest Wall Street narrative happens to be.

I look at the earnings. Are sales still growing? Are operating margins holding up? Are analysts cutting their estimates, or are they raising them?

If the fundamentals remain strong, I’m inclined to hold on.

Good stocks bounce like fresh tennis balls. Bad stocks bounce like rocks.

So, why would I chase Anthropic at an unknown valuation when I can already identify companies with proven earnings, established trading histories and attractive prices?

And it’s not just AI.

We’re also finding extraordinary earnings opportunities in energy, refining, shipping, and other industries.

I want to own the best stocks I can find, wherever they happen to be.

The Stocks to Buy and Avoid for 2027

Finding a good stock is only the first decision. You also have to decide whether it’s better than the stocks you already own.

I might like a company. I might think its business is phenomenal. But if I already own another company with stronger earnings growth, better analyst revisions, and less volatility, why would I replace it?

And the opposite is just as important. If a stock’s fundamentals deteriorate, I don’t want to hang on to it simply because it used to be a winner.

That’s why I’m constantly evaluating thousands of stocks, looking for opportunities to replace good companies with even better ones.

And as we head into 2027, I think the difference between the winners and losers could become even more pronounced.

Some companies are delivering spectacular earnings growth, expanding their profit margins, and attracting institutional buying. Others are struggling, and I expect some of them to struggle a whole lot more.

That’s why I’ve put together a special presentation to show you where I believe the biggest opportunities and dangers lie as we head into 2027. We’re doing it at 2 p.m. Eastern this coming Thursday, November 12 (reserve your spot here).

And I’m going to give you two specific stock recommendations, absolutely free.

First, I’ll reveal an A+ stock that I believe could be among the market’s top performers in 2027 and explain why I think it’s an exceptional opportunity to buy now.

And I’ll also show you one stock I believe you should sell or avoid immediately. It could become one of the market’s worst performers in 2027.

Click here to reserve your seat for my special free presentation, where you’ll get both free stock recommendations.

Now, I hope Anthropic has a spectacular IPO. I hope its business continues growing, and I hope its success helps lift the entire AI sector.

But I’m not going to chase it.

Wall Street will always have another exciting story to sell you. My job isn’t to buy every story.

It’s to find the fundamentally superior stocks, avoid the fundamentally inferior ones, and let earnings do the heavy lifting.

Sincerely,

Louis Navellier

Senior Investment Analyst, InvestorPlace

P.S. Louis has been at this a long time, and one thing I’ve always appreciated about him is that he doesn’t get distracted by Wall Street’s latest obsession. He follows the earnings, the numbers, and his own research. And right now, he’s seeing some remarkable opportunities — along with some stocks he’d steer clear of. At his free presentation Thursday, November 12, at 2 p.m. Eastern, he’ll reveal one stock to buy and one to avoid for 2027. Reserve your seat 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:

Micron Technology Inc. (MU) and Super Micro Computer Inc. (SMCI)

The post Anthropic’s IPO Is Coming. Where Are the Best Opportunities? appeared first on InvestorPlace.

His opponent was Aleksandr Karelin, a Russian heavyweight who had won three Olympic gold medals and hadn’t lost an international match in 13 years.

Gardner was a dairy farmer’s son from Wyoming.

Not surprisingly, he was a massive underdog. But he wasn’t going down without a fight.

For much of the match, the two heavyweights were locked in a clinch, neither able to gain an advantage.

Finally, Karelin broke his grip.

That single mistake cost him the match. Gardner won 1-0, pulling off one of the greatest upsets in Olympic history.

Folks, that’s a pretty good picture of what we’re about to see in Washington.

With the midterm elections now behind us, Democrats have taken control of Congress, setting up a showdown with President Trump.

Both parties will be fighting for control. Both will be determined to get their way. But with power divided, neither side will be able to push through its agenda without the other getting in the way.

In other words, we are headed for a period of political gridlock.

And you know what? I think that’s great news for Wall Street.

You see, divided government has historically created some interesting opportunities for investors. And with November already one of the strongest months of the year for stocks, I believe we could be setting up for a powerful rally that carries into 2027.

But there’s a catch.

Even if the broader market takes off, that doesn’t mean every stock will come along for the ride.

So, let’s look at why the post-midterm period has historically been so favorable for investors, what’s fueling my optimism right now… and how you can position yourself to take advantage of the opportunities I see ahead.

I’ll also share details about a special event I’m hosting, where I’ll reveal a new way to put my strongest stock recommendations to work for you as we head into 2027.

Why Gridlock Could Be Good for Stocks

If you think political gridlock is bad news for investors, consider what happened in 1994.

That November, Republicans swept into power in Congress, taking control of both the House and Senate for the first time in 40 years.

President Bill Clinton suddenly found himself facing an emboldened Republican opposition led by Newt Gingrich. Political pundits were bracing for bitter partisan fights and an uncertain future for President Clinton’s economic agenda.

And Wall Street had plenty of worries of its own.

In fact, on November 7, 1994, just one day before the election, the Los Angeles Times published an article with an ominous headline:

“One Last Gasp for the Bull Market?”

The article raised the possibility that stocks could enjoy one final rally before slipping into a bear market.

Well, that certainly didn’t happen.

In 1995, the S&P 500 surged more than 34%. And that was just the beginning of a powerful technology-led bull market.

The internet was just beginning to transform the economy, and Netscape’s blockbuster 1995 IPO helped launch the dot-com boom. And all that innovation continued despite the political battles in Washington.

I believe we’re going to see a similar boom – thanks to artificial intelligence.

AI is transforming the economy much like the internet did three decades ago. Companies are pouring hundreds of billions into data centers, computer chips, and power infrastructure.

Now, I realize some investors are worried that Democrats could throw up roadblocks to the AI boom, particularly when it comes to building new data centers.

And I wouldn’t be surprised if we see some reforms as politicians look to protect consumers from higher electricity bills. That could slow construction in some areas or shift new projects to other states.

But, folks, this train has already left the station. The demand for AI computing power is enormous, and companies have years of orders in their backlogs. Plus, data centers bring jobs and tax revenue to the communities where they’re built. That’s a powerful incentive for lawmakers on both sides of the aisle to keep these projects moving.

There may be a few bumps along the way, but I don’t see political gridlock derailing the AI boom.

Why the Stars Are Aligning for a Year-End Rally

Of course, there are other reasons to be optimistic – specifically seasonality and earnings.

Since 1942, the S&P 500 has risen between November of a midterm election year and the following June 21 out of 21 times, with an average gain of about 16%.

We’re also entering what has historically been the strongest six-month stretch of the year for stocks.

According to the Stock Trader’s Almanac, since 1945, the S&P 500 has gained an average of about 7% between November and April, compared with about 2% between May and October.

Now, history doesn’t guarantee that we’ll see the same results this time around. We still have challenges to navigate, including inflation and interest rates.

But when favorable seasonal trends line up with stunning corporate earnings like we’re seeing right now, that’s when I really start to get excited.

According to the latest data from FactSet, the S&P 500 is on track for 30.2% earnings growth in the third quarter, with 82% of companies reporting so far topping analysts’ earnings estimates.

Even better, all 11 sectors are reporting year-over-year earnings growth, led by energy, technology and materials.

And the outlook remains strong.

Analysts are forecasting another 28.4% jump in S&P 500 earnings in the fourth quarter. In fact, they’ve been raising their estimates when they would normally be cutting them.

Folks, that’s the kind of earnings momentum I love to see.

Of course, that doesn’t mean every stock is going to be a winner. As we’ve seen in the days following the election, Wall Street is still sorting out which companies deserve investors’ money.

And that’s where being selective becomes so important.

How to Position Yourself for a Big 2027

I know the market has been confusing since the election. Some stocks with weaker fundamentals have enjoyed a nice bounce, while others with spectacular earnings have been hit by profit-taking.

Simply put, we’re in the middle of another market rotation. Much of the initial post-election rally was driven by short covering, while some of the strongest AI stocks were left behind.

But I’ve seen this movie before. Back in July, some of my best AI stocks got hammered during the first two weeks of the month. Then they came roaring back, and we ended up finishing July in positive territory.

Wall Street has a habit of reacting first and thinking later. Eventually, though, earnings and fundamentals tend to win out.

Of course, different sectors can take turns leading the market. For example, while AI stocks have been hit by profit-taking, energy stocks have benefited from tight diesel supplies and strong refining margins.

The key is to recognize what’s working and be ready to adjust when leadership changes.

As I like to say, bad stocks bounce like rocks, but good stocks bounce like fresh tennis balls. And as we head into 2027, I think knowing the difference will be more important than ever.

You see, the market has become increasingly narrow. The days when you could buy almost any AI stock and watch it soar are fading. Investors are becoming more selective, and with a new Congress potentially adding more uncertainty to the AI buildout, the list of winners could get even smaller.

But, folks, that’s exactly the kind of market where my Stock Grader system shines.

I’ve spent nearly five decades studying what separates the strongest stocks from the rest. And when Wall Street starts picking winners and losers more carefully, I believe that research becomes even more valuable.

That’s why I’ve been working on something special to help investors navigate the market ahead.

I’m preparing to reveal where I believe the next big opportunities will emerge, which stocks are best positioned to benefit, and how I’m adapting my strategy as market leadership changes.

And on Thursday, November 12, at 2 p.m. Eastern, I’m hosting a special online event to show you exactly how it works.

During the presentation, I’ll reveal two special stock recommendations: one I believe you should consider buying and another I think you should avoid.

If you register for my special event you’ll gain access to exclusive content I’ve prepared for the event. (Click here to reserve your spot now.)

You’ll also get a chance to test-drive my proprietary Stock Grader system.

Normally, this kind of access is reserved for my paid subscribers. But for this event, you’ll be able to enter stock symbols yourself and see how my system grades them.

You can reserve your free spot for Thursday, November 12, at 2 p.m. Eastern by clicking here.

Sincerely,

Louis Navellier

Editor, Market 360

The post The Election Is Over. Now Comes the Race for 2027’s Biggest Winners appeared first on InvestorPlace.

As I write on Thursday morning, the AI unwind that started quietly yesterday has turned into a full-blown rout.

All three major indexes are down sharply, with the Nasdaq leading the way lower, off more than 5%.

Yesterday, much of the damage was hidden beneath a rising market. The broad indexes climbed as Wall Street cheered the end of election uncertainty, but the companies building America’s AI data centers were getting crushed.

For example, Comfort Systems USA, Inc. (FIX) fell 15%, while Modine Manufacturing Co. (MOD) and Sterling Infrastructure, Inc. (STRL) each plunged 21%. Meanwhile, the Philadelphia Semiconductor Index (SOX) dropped to a six-month low.

Today, there’s no hiding it. Those same builders are bleeding again, but this time, the selling has spilled into the broader market.

The catalyst, of course, is Tuesday’s election. For months, we’ve flagged legislative risk as the most likely threat to the AI trade – we just expected it to show up in 2028, not here in 2026.

But is that characterization fair? Is the AI trade now over?

Let’s turn to the analyst who’s been at the forefront of it since ChatGPT launched in November 2022: our technology expert Luke Lango, editor of Innovation Investor.

His bottom line is that the AI trade isn’t ending; it’s just changed dramatically.

The closer to the job site, the worse the day

Democrats didn’t just win both chambers of Congress. They also flipped governorships in Texas, Georgia and Ohio, three states that, by Luke’s rough count, hold nearly half of the planned U.S. data-center pipeline. All three incoming governors have promised some form of data center regulation.

Luke’s conclusion is that the buildout slows from here. In his base case, new U.S. data center capacity comes in about 3% to 5% below plan in 2027 and about 15% below plan in 2028.

But slower doesn’t mean stalled. Even in that base case, U.S. capacity still grows about 45% in 2028, and most of the delayed capacity simply shifts into 2029 rather than disappearing.

What’s most useful for your portfolio is how yesterday’s selling broke down by layer of the AI stack. Now, we’ll need to update this after today’s dust settles, but this will give you an idea of where the pain is concentrated.

As you can see, the damage maps almost perfectly onto distance from the construction site.

The hyperscalers were the only layer in the green, up 5.2% on what Luke calls the “capex cover” trade, the bet that Washington just gave Big Tech an excuse to rein in its massive spending.

That cushion didn’t last. Today’s Nasdaq 100 slide shows the selling has now caught up with the megacaps, too.

Chips (down 2.9%) and chip equipment (down 3.5%) held up best within the supply chain because they can ship to whichever site is ready, anywhere in the world. Meanwhile, the contractors who pour the concrete fell 14.5%. That pain is back this morning, only worse.

Here’s Luke on why he thought the selling had gone too far – and that was before this morning’s bloodbath:

Compare that with our estimates of the 2028 earnings hit: about 6%–12% for contractors and only 2%–4% for chipmakers.

In both cases, the market has already moved to price in more than our base case, which is why we think the selling is overdone, especially for the layers furthest from the job site.

If your AI holdings lean toward builders, power, and cooling, that’s likely where you felt the most pain yesterday – and again today – and where a portfolio review makes the most sense.

Why a slower buildout may be a better one

Now, Luke is very clear about a critical point – demand hasn’t changed.

Capacity is sold out, cloud growth is surging, and the big four hyperscalers are still expected to spend more than $1 trillion next year. So, with demand still strong, Luke sees a silver lining to the political brakes that the market may be missing:

A slower build-out may be a longer one.

The biggest fear hanging over this trade has been overbuilding into a 2028 peak; a political speed limit makes that outcome less likely and keeps capacity tight for longer.

Luke adds that a more measured pace could also ease shortages and reduce pressure on these companies to borrow heavily, helping the expansion last longer. As he puts it, “a more measured buildout is a more sustainable buildout.”

So, Luke’s AI bull thesis is “bent, not broken.” Still, the SOX semiconductor index broke below the key support level Luke had flagged, so he’s tightening up per his game plan. That means trimming buildout exposure, concentrating on his highest-conviction names, and upgrading away from companies that depend on outside funding.

Luke is releasing a detailed roadmap of these action steps, including which AI positions he’s trimming and where he’s doubling down. If you’re an Innovation Investor subscriber, click here to log in and see Luke’s full game plan. If you’d like to learn more about joining Luke in Innovation Investor to access this roadmap and Luke’s official portfolio, click here.

Louis Navellier: “Hang in there, everybody”

Luke isn’t the only one who thinks the selling has gotten ahead of the fundamentals.

Legendary investor Louis Navellier, editor of Growth Investor, released a Special Market Podcast this morning addressing the rout, and his message to subscribers is even more direct: don’t panic.

He quickly zeroed in on the primary fear in today’s market – that the incoming Democratic governors will choke off AI data center construction. He notes that data centers go where energy is cheap and fiber-optic lines are plentiful, and states have every financial reason to keep them:

The narrative that AI is going to slow down because Democrats got elected is a false narrative…

So, the data center boom is not going to slow down…

What the politicians will do is they will assure everybody their electric rates aren’t going up because of the data centers. They will accept the property tax revenue and the jobs that data centers create, and that’s that.

Most important for Louis, the fundamentals haven’t budged. He notes that there have been no meaningful analyst earnings cuts among the AI companies he follows, and that some of the hardest-hit names now trade at remarkably low valuations.

For example, Super Micro Computer, Inc. (SMCI) trades at barely five times forecasted 2027 earnings.

Here’s Louis’ overall take:

The bottom line is the U.S. is the AI leader, and all the AI-related stocks will firm up.

Good stocks bounce. Bad stocks bounce like rocks, but good stocks bounce like fresh tennis balls…

It’s time to back up the truck on these kinds of stocks, but you have to be patient and you have to let the earnings do their thing.

If you’re a Growth Investor subscriber, click here to listen to Louis’ full Special Market Podcast. And if you’d like to learn more about joining Louis in Growth Investor, click here.

From what got hurt to what soared yesterday: solar

Now, not everything got hit on Wednesday.

While the election results kneecapped the AI infrastructure trade, solar stocks soared – and as I’ll show you in a moment, two of our analysts were already in position.

First, as for the rally’s logic, it’s straightforward…

President Donald Trump’s 2025 tax law cut key incentives for most new solar projects that begin operating after 2027. With Democrats now controlling Congress, investors are betting that political pressure on renewables will ease and that some of those incentives could eventually be restored.

We can see this in the Invesco Solar ETF (TAN). It jumped nearly 6% yesterday – a big move for an ETF that holds dozens of stocks. But individual solar plays climbed even higher. For example, Nextpower Inc. (NXT) closed nearly 12% higher.

To be clear, that rally was built on expectations, not legislation. The new Congress isn’t seated until January, and President Trump can veto any attempt to restore the credits. But many of these stocks were so beaten down that it didn’t take much to send them higher.

That’s exactly the setup our global macro expert Eric Fry was targeting when he recommended long-dated call options on TAN in his Leverage service on Tuesday.

Here’s Eric:

The renewable energy sector does not need an overwhelmingly favorable political tailwind in the U.S. in order to thrive; it merely needs a less hostile one…

The TAN portfolio, for example, is trading for just five times estimated gross earnings (EBITDA) – or 30% below its 10-year average valuation.

For additional perspective, the S&P 500 is trading for nearly 12 times estimated EBITDA. Therefore, at TAN’s currently depressed valuation, merely less-bad news could give the stock a boost.

Now, solar is giving some of that back today. As I write, TAN is down about 4% in the broader selloff, but yesterday’s surge is likely a preview of what could be in store for the sector over the coming months.

Another solar trade…with nearly all the risk removed

Our options expert Jonathan Rose, editor of Advanced Notice, also jumped on TAN on Tuesday after spotting enormous unusual options activity in solar.

Traders had piled into more than 12,500 contracts of one TAN call option, against fewer than 500 contracts already open. That’s more than 25 times the existing open interest, and as Jonathan put it, “Where there’s smoke, there’s often fire.”

Then, with TAN surging more than 8% on Wednesday morning, Jonathan used the strength to take his subscribers’ original capital off the table while keeping their upside intact:

That means we can let the trend work in our favor without worrying about losing our original investment. We may sacrifice some upside in exchange for eliminating our risk, but that’s a trade-off I’m more than happy to make.

One day in, it’s close to a free trade – and today’s pullback shows why that matters. Because Jonathan’s subscribers are already playing with house money, a down day like today stings far less. It’s a great illustration of how a trading veteran handles risk.

Two different roads to the same trade

What I find most interesting about this solar trade is how Eric and Jonathan arrived at it.

They look at the market in very different ways. Eric is a big-picture macro investor who builds his case from valuations, policy shifts and long-term trends. Jonathan is a trading veteran who follows the money, watching for unusual options activity that suggests big players are positioning ahead of a move.

Different toolkits, different time frames – yet both landed on solar on the very same day.

Our Editor-in-Chief and co-Digest writer Luis Hernandez just sat down with both to dig into exactly that. In the interview below, Eric walks through his specific case for the solar trade, while Jonathan explains how he reads unusual options activity and what it’s telling him right now. Along the way, they compare how their approaches differ, and why they came to the same conclusion.

With solar pulling back today, it’s a timely conversation. Click here to watch the full interview, or click on the thumbnail below.

Coming full circle

Days like today are why having an investment plan is so important.

Luke is trimming around the edges while keeping his core AI thesis intact. Louis is urging patience with fundamentally superior stocks that he believes will bounce “like fresh tennis balls.” And on the solar side, Jonathan already took his risk off the table before today’s pullback. They’re three different approaches, but none of them involve panic-selling into a rout.

The election has handed Wall Street a new set of rules for the AI trade, and it will take some time for the market to sort out who wins and who loses under them. We’ll keep you updated as our experts weigh in.

Have a good evening,

Jeff Remsburg

The post AI Crashes. What To Do Now appeared first on InvestorPlace.

On a frozen lake, the ice can be two feet thick in one spot… and barely an inch thick a few yards away. That’s why experts warn that you should never judge a lake by its surface.

From the shoreline, it may look like one solid sheet, but “white ice” – the cloudy layer that forms when snow melts and refreezes – is only about half as strong as clear ice, even though it can look every bit as sturdy.

Veteran fishermen have another rule worth mentioning here. Good ice tends to creak and groan before it gives way. “Rotten” ice breaks without warning.

Today’s stock market looks a lot like that frozen lake.

And Wednesday’s post-election rally makes the comparison even more important. The market appeared to be celebrating the election results, with investors betting on a divided government. But a rising market doesn’t necessarily mean the underlying ice has gotten any thicker.

From a distance, everything appears solid. The major indices are hovering near record highs. But step off the shore, and you’ll find the ice is thick in only a few places… and dangerously thin almost everywhere else.

So, in today’s Smart Money, I’ll explain why I believe investors are currently standing on thin ice. Then, I’ll share five tactics that can help you keep your footing.

Let’s get into it…

A Very Bizarre Situation

The market right now is an extremely narrow one.

An unusually large number of stocks are hitting new lows – and very few are reaching new highs. Both readings are approaching historical extremes.

While this isn’t necessarily a dangerous situation, it’s not typically healthy to have that kind of divergence between lows and highs.

A big reason for this divergence is oil. Prices have spent months well above $80 a barrel and recently topped $100. Rising energy prices flow through entire supply chains and also affect interest rates by pushing them higher. That’s bad for most companies.

Larger companies, such as Nvidia Corp. (NVDA), Meta Platforms Inc. (META), and Amazon.com Inc. (AMZN), are strong enough to withstand that headwind. But mid- and small-cap stocks, which tend to have more debt, have been declining since August.

The averages are managing to hang on because the big companies are holding up. But the longer this imbalance persists, the worse it becomes. At some point, even the big companies can’t withstand the pressure.

Meanwhile, the AI trade that’s carrying those big companies has developed some cracks of its own.

AI spending is proceeding at a ferocious pace – close to a trillion dollars per year in new investment in AI data centers and associated infrastructure. At the same time, the price of compute is falling pretty precipitously. That’s not a good combination. You want to see the prospects for return on investment improve, not deteriorate. That’s made the market jittery, reactive, and volatile.

And now that the midterm results are in, the market responded with a rally. But I wouldn’t mistake that reaction for an all-clear signal.

Politics may influence the headlines, but the bigger forces driving stocks remain the AI trade, interest rates, and geopolitics – particularly the war in Iran and its impact on oil prices. Those are the forces I expect to have a much greater influence on stock prices in the months ahead.

In other words, the ice is groaning. That’s not a reason to panic. But it is a reason to watch every step.

Don’t Stay on Shore – Stay Self-Determined

Now, a tricky market is not an impossible one. Thin ice doesn’t mean you have to stay off the lake entirely. It means you need to move deliberately, test the ground in front of you, and refuse to follow the crowd onto the weakest patches.

I call this approach “self-determination.” A self-determined investor honestly evaluates both risk and reward, and then sets a long-term course toward wealth creation. In practical terms, it comes down to five tactics…

1. Own Businesses, Not “Tickers.” In a market this narrow, you can’t just throw a dart at a sector and expect it to work. Self-determined investors insist on buying businesses with formidable competitive moats – special situations that have the potential to do well regardless of what the overall market does.

2. Respect Both Promise and Peril. AI is transformative, but it also has a split personality. The bulls will say that falling compute prices will simply unleash more demand. That could well happen, but it’s likely not going to be a smooth road to that point. The intelligent course is neither blind enthusiasm nor blanket rejection.

3. Think in Years, Not Days. Consider Brazil. When Luiz Inácio Lula da Silva unexpectedly won the presidential runoff, Brazilian stocks sold off about 20%. But Lula is a known quantity. During his first two terms, the Brazilian stock market rose 1,200% in U.S. dollar terms. Brazilian stocks are dirt cheap, so I generally believe this is a buying opportunity. The same patience applies to energy stocks – they are usually one-, two- or three-year holdings – not short-term hedges.

4. Diversify Without Diluting. Diversifying your portfolio the right way means balancing high-growth innovators with stalwarts in sectors like energy, infrastructure, and healthcare. Over the last four months, indices of pharmaceutical and medical technology stocks are up about 20% to 30%. Over the same period, the Magnificent Seven stocks, on average, are up only a little.

5. Refuse the Seduction of Fads. The AI mega-caps are grabbing all the headlines. I don’t expect those big names to be disasters, but I do expect them to do very little, given how high expectations already are. Every AI stock should be dissected. There is opportunity across all four AI categories I’ve identified – Builders, Enablers, Appliers, and Survivors. Spread your investments around all four rather than piling into the same handful of crowded names.

Where to Find Solid Ground

The investors who make it safely and successfully across a frozen lake aren’t the fearless ones. They’re the prepared ones – the ones who know where the ice is thick.

That’s exactly the approach I take in my flagship research service, Fry’s Investment Report.

Rather than chasing the day’s hottest AI headline, I look for the big-picture trends that drive huge, multiyear moves in entire sectors of the market. Our portfolio is built to play the AI trade intelligently while also positioning my subscribers for long-term opportunities in healthcare and energy, where we’ve held large allocations for the past two years.

In a market where the ice is so thin, knowing where to step matters more than ever.

Click here to learn more about Fry’s Investment Report.

Regards,

Eric Fry

P.S. Since World War II, the S&P 500 has risen from November through June after all 21 midterm elections. Will this time be different? In the newest episode of the InvestorPlace podcast, I join Louis Navellier, Luke Lango, and Jonathan Rose to debate a post-midterm rally, AI spending, and the Anthropic IPO. Watch it here.

The post The Post-Election Rally Is Cracking – Make These 5 Moves Now appeared first on InvestorPlace.

On the evening of May 25, 1943, millions of Americans were glued to their radio sets for a special CBS program.

It begins with a “new study in terror,” as a woman attempts to call her husband only for the telephone to glitch and patch in two strangers arranging a murder.

She decides to call for help, but the line is busy no matter who she dials out to. Each failed attempt leaves her with more questions, until she begins to understand that the men were discussing her.

That was the premise of Sorry, Wrong Number, the radio drama starring Agnes Moorehead.

It may come from a different age, but its suspense is familiar: hearing only part of a conversation and trying to work out what happens next.

That’s the problem investors face every earnings season…

We hear what management says. We examine the numbers. Then we make judgments about a future we can’t possibly know completely.

Right now, those judgments have pulled AI stock prices and business results in very different directions.

Could the stocks you’re holding be time bombs?

In our 100th episode of Being Exponential, recorded on Election Day before the results were known, I examine that gap.

Technology stocks were trading at roughly 20 times expected earnings, while analysts projected about 35% annual earnings growth over the longer term.

Those estimates depend heavily on continued spending by the largest technology companies. If those budgets shrink, suppliers will have less growth than Wall Street expects.

The opportunity depends on whether that fear has pushed prices below what the businesses can realistically deliver.

Since then, the election results have added information we need to incorporate. I now expect slower data-center construction and lower earnings estimates across parts of the supply chain. My preference is for chips and related components that can follow investment to other locations, with greater caution toward businesses tied to individual building projects.

The demand story remains compelling. The delivery schedule has become more complicated.

Watch our 100th episode below for the evidence behind my AI outlook, the risks that could change it, and the stocks I’m watching for a recovery:

Continued Spending Can Still Arrive More Slowly

Before the results, my focus was on whether the largest technology companies would voluntarily retreat from their AI investments.

We now have another issue to consider: They may want to build faster than local rules, permits, and power availability allow.

That can delay spending and supplier revenue even when customers remain committed to their projects. It also means some earnings estimates will need to come down.

I expect a slower data-center buildout over the next 12 to 24 months. The companies closest to construction face the greatest pressure: contractors, power providers, and suppliers of electrical and cooling equipment.

Chip and component suppliers have more options. If one location cannot accept equipment, another facility may be ready. That flexibility supports my preference for chips, networking, memory, and optics.

But these businesses can still feel the slowdown. They are simply better positioned to follow spending as its destination changes.

This is why I’m recommending reducing exposure to the most construction-dependent businesses while concentrating on the essential components that growing computing demand still requires.

Look Beyond the Processors

More computing power creates additional demands throughout an AI system.

Processors need to exchange information quickly. They need memory to handle their work and storage to retain data. A bottleneck in any of those areas can limit what the whole system accomplishes.

That is why my attention extends to Marvell Technology (MRVL), Lumentum (LITE), and Astera Labs (ALAB), along with memory and storage companies such as Micron Technology (MU), SanDisk (SNDK), Western Digital (WDC), and Seagate Technology (STX).

In the episode, I identified these as potential beneficiaries if continued AI investment helps restore confidence in future earnings.

Their appeal after the election also reflects where they sit in the buildout. Their products can serve computing demand across different locations, giving them more flexibility than a business dependent on a particular construction site.

But falling prices do not automatically make the whole group a bargain. Customer concentration, competition, financing needs, and the timing of orders differ from company to company.

And a stock that looks inexpensive against an old earnings forecast can become less attractive when that forecast falls.

Nebius Offers More Upside (and More Ways to Disappoint)

My most aggressive rebound idea in the Election Day discussion was Nebius Group (NBIS).

Nebius rents computing capacity to customers building and running AI applications. That makes its growth highly sensitive to continued investment in AI.

If demand remains strong, the company delivers its planned capacity, and investors regain confidence in its earnings outlook, the shares could respond strongly.

That is why I described Nebius as my highest-upside idea for 2027. I also made clear that it was not my preferred choice for balancing potential gains against risk.

The post-election construction outlook makes that distinction even more important.

Nebius needs facilities, electricity, financing, and equipment working together before it can deliver computing services. Customer demand is necessary, but it does not resolve every obstacle between a signed contract and revenue.

A chip supplier may redirect a shipment. A cloud operator cannot relocate an entire contracted deployment as easily.

For Nebius, I want evidence that funding remains available on workable terms and that capacity arrives when promised. Yet, it belongs in the discussion as a higher-risk opportunity whose potential depends on successful execution. It should not be treated as interchangeable with the larger chip suppliers.

The Bottom Line on the AI Trade

The next phase of the AI trade will require more than confidence in the technology.

We need to know which businesses can keep serving demand, which depend on projects staying on schedule, and which have already fallen enough to reflect a more difficult outlook.

That is also why opportunities in application delivery and cybersecurity deserve separate consideration. Businesses still need reliable, secure digital services, but those investment cases should stand on their own customer demand and financial results.

My conviction in AI remains strong. My approach to owning it is becoming more selective.

To help you take that next step, we’ve put together a new free report: 5 Stocks for the Next Wave of Growth.

Watch our 100th episode of Being Exponential With Luke Lango here to download that report.

The post Why I’m Buying the AI Selloff: My Top Picks for 2027 appeared first on InvestorPlace.

As I write on Wednesday morning, the results are in, and they weren’t close.

Democrats dominated yesterday, winning control of both the House and the Senate. They also flipped governorships in several Republican-held states, including Ohio and Texas, where Gina Hinojosa unseated three-term Gov. Greg Abbott.

In Monday’s Digest, we said Tuesday would be a referendum of sorts on the AI buildout. Well, voters delivered a clear verdict…

Let’s start with Ohio, which is home to 21 of the 41 local data-center measures on ballots nationwide. According to Fortune, at least 14 of the 18 Ohio communities voting on the issue passed bans or other restrictions. In Trenton, a ban aimed at keeping out an 18-building Amazon Web Services campus passed 80% to 20%. And in Wilmington, about 80% of voters rejected rezoning for a data-center project across four separate referendums.

Meanwhile, in Ohio’s Senate race, Sherrod Brown ousted Sen. Jon Husted, after running ads calling Husted the “face of data centers.”

Wall Street’s reaction this morning has two sides. As I write, all three major indexes – the Nasdaq included – are up more than 1%. Markets generally like a divided Washington, since it lowers the odds of sweeping policy changes.

But if your portfolio is loaded with AI data center stocks, you’re having a different experience this morning as the stocks most tied to the data-center buildout are getting hit hard.

For example, Constellation Energy Corp. (CEG) is off more than 9% as I write. And Vistra Corp. (VST) is 15% lower. And Comfort Systems USA, Inc. (FIX) is down more than 17%.

So, is the AI data-center trade dead?

No, but it’s not the same trade that it was yesterday.  

A Democratic Congress can hold hearings and stall the permitting reforms the industry wants, but it can’t pass new restrictions over a presidential veto, which President Donald Trump would be almost certain to use.

The more powerful brakes are at the local and state levels, which is exactly where voters acted. In both Texas and Ohio, the governor appoints the utility regulators who decide what data centers pay for power. And Texas is one of the largest data-center markets in the country.

So, the likely outcome isn’t a halt, it’s a buildout that moves slower, costs more, and increasingly must pay its own way – including supplying more of its own power instead of leaning on the public grid.

Before the election, the global equity research shop Bernstein estimated that 55% of the data-center pipeline faced political risk. But the firm also argued that “economic incentives may ultimately outweigh political opposition.”

We’ll see…

Voters may have just made the pipeline trade stronger

If voters and regulators are going to make data centers pay their own way, more of them will need to bring their own power. And much of that power will come from natural gas.

Solar is today’s headline winner, and renewables will get their share, but gas-fired power is the fastest way to deliver electricity around the clock at the scale AI needs, and the companies that move that gas are already lining up the business.

Yesterday, Energy Transfer LP (ET) committed to building a $1.6 billion natural gas pipeline that will run 215 miles from eastern Louisiana across Mississippi, with room to carry up to 1.2 billion cubic feet of gas per day.

Bloomberg put the news in context:

Energy Transfer and other pipeline operators are rushing to put gas conduits into service as consumption of the fuel soars, driven by liquefied natural gas export terminals along the Gulf Coast and new power plants serving AI data centers.

Energy Transfer’s own management was even more direct on yesterday’s earnings call. CEO Tom Long said the company has now signed a 10-year deal to supply “an A-rated hyperscaler,” one of the Big Tech giants building AI infrastructure.

In all, he said, Energy Transfer has signed more than 9.5 million MMBtu (millions of British thermal units) per day of agreements with customers that include “hyperscalers, data centers, and power plants.” That’s roughly eight times the capacity of the pipeline it just approved.

Co-CEO Mackie McCrea put it bluntly:

The demand for our products and what we do, especially natural gas, is going to continue to grow exponentially.

Brian Hunt saw this coming

If you’ve been reading our senior analyst Brian Hunt, editor of Money & Megatrends, none of this is news. Brian has been highlighting this theme repeatedly for nearly two years. Here he is from last Friday’s issue:

In early 2024, I began to see the oil and gas pipeline industry as the best way to generate substantial passive income from the AI boom.

The logic is simple. AI data centers need enormous amounts of electricity, and natural gas is the preferred fuel for the power plants that supply it. But as Brian points out, that only matters if the gas can get where it’s going:

…all the natural gas in the world isn’t worth much if you can’t transport it to customers.

This is where America’s vast natural gas transportation, processing, and storage industry comes in… If we get an AI-driven boom in natural gas consumption, we get a boom in natural gas transportation by default.

So far, the market agrees. Blue chip pipeline operator Enterprise Products (EPD) has returned 14% this year. Fellow blue-chip operator Energy Transfer has climbed 25%.

These individual stock performances have driven the Alerian MLP ETF (AMLP) to a 16% year-to-date gain. Even with AMLP’s big run and shares being near all-time highs, it still yields around 7.8%.

I’ll note that these pipelines offer a way for investors nervous about an AI crash to still participate in AI. Back to Brian on this note:

The typical pipeline operator is not your conventional “high-risk, high-reward” AI play. Instead, it’s a boring, predictable business that generates steady cash flows and shareholder distributions.

But the AI megatrend is giving natural gas a boost that will last for years. Plus, the Iran War and its constriction of Middle Eastern energy flows have made U.S. natural gas exports increasingly more valuable to customers in Europe and Asia.

For more of Brian’s free analysis, he writes Money & Megatrends every day the market is open, highlighting these kinds of opportunities before they become front-page news. His issues are loaded with actionable advice and specific tickers.

You can sign up right here.

Is this 1998 or 2000 for the AI trade?

Now, let’s shift from pipelines back to AI more broadly.

Monday brought another round of AI selling, and by the close, the Nasdaq-100 was in correction territory, more than 10% below its October 6 record high. Yesterday, the script flipped. Chip stocks led a rebound while the Dow struggled. The Nasdaq-100 added 1% as it tried to claw its way out of that correction.

But today, even as the broader market rallies on the election results, the semiconductor index is sliding hard.

So, which is it? Is the AI trade breaking down, or getting ready to bounce?

Here’s our technology expert Luke Lango from Monday’s Innovation Investor Daily Notes with the significance of where the AI trade sits today:

…the whole AI trade is at a major make-or-break point. Nearly every major AI stock, index, and benchmark has fallen to major technical support.

Holding and bouncing here would mean this is late 1998 all over again, right after tech stocks fell 20%-plus and before they soared nearly 300% over the next 18 months.

Breaking down would mean this is potentially late 2000 all over again, right after tech stocks fell 20%-plus and before they crashed another 70%-plus over the next two years.

Luke’s Monday take was that the weight of the fundamental and technical evidence says that we’ve been experiencing a growth scare in a still-alive AI bull market, very similar to late 1998. So, he sees the AI trade roaring back over the next 12 to 24 months. But he doesn’t dismiss the risk that he’s wrong, and that AI has a far bigger slide in front of it.

The levels Luke is watching

Being bullish isn’t the same as being blind, so Luke has mapped out exactly what he’ll do as conditions change.

His focus is the Philadelphia Semiconductor Index (SOX) and its 200-day moving average. That’s the index’s average closing price over roughly the past 10 months, and traders treat it as a dividing line between a healthy uptrend and a broken one.

Luke’s team studied all 26 times since 1995 that the SOX ran more than 10% above that line and then pulled back to it.

Here’s Luke with the results, and what it means for positioning:

Our historical study suggests a modest break below the SOX’s 200-day average often reverses.

We’re holding near 10,800, would begin trimming weaker names below 10,447, and turn more defensive around 10,300.

A close above 11,684 would confirm the rebound and support more aggressive buying.

The key defensive number is roughly 10,300, about 5% below the 200-day. In Luke’s study, the SOX broke below its 200-day moving average but held above it in seven episodes. It was higher 12 months later in six of them, with an average gain of 20%, the best outcome in the study.

But breaks below the 5% line were a coin flip. Seven bounced, averaging 14%. The other six became bear markets, averaging losses of 28%.

He also flags a warning worth respecting:

…the SOX ran 76% above its 200-day this year, second only to 2000, and every past rally that stretched 40%-plus above it and then broke down ended in a crash.

As I write here on Wednesday, the SOX has fallen to 10,203. That’s about 5.5% below its 200-day average, and below the 10,300 line Luke identified as the one that matters most. In his words, that’s the level “where a shakeout turns into a breakdown and we finish tightening.”

To be clear, one day doesn’t confirm a breakdown. Luke’s plan is built around where the SOX settles, not where it trades at a given moment, and his study shows that even breaks below this line bounced about half the time. But this is the scenario where Luke has said he’ll turn defensive, so if the SOX can’t reclaim 10,300 quickly, expect him to be tightening up.

Here’s the full roadmap. Above 11,684, Luke turns more aggressive. Near 10,800, he’s holding. Below 10,447, he starts trimming weaker names. And at 10,300, he turns defensive.

Coming full circle, what’s the takeaway from yesterday’s elections?

The AI buildout isn’t over, but it just got slower, pricier, and more political. That’s bad news for some of yesterday’s AI winners, potentially good news for the pipelines fueling AI, and it puts Luke’s 10,300 line for SOX front and center in the days ahead.

Have a good evening,

Jeff Remsburg

The post What the Democrats’ Sweep Means for the AI Trade appeared first on InvestorPlace.

My colleague Luke Lango sees a disconnect between market trends and the defense industry, and has identified companies that could benefit as America replenishes its arsenal and prepares for next-generation warfare.

Today, Luke takes over to explain why an established defense contractor deserves a closer look — and how it fits into a much larger investment opportunity.

You can learn more about Luke’s broader thesis in his Rearming America presentation.

“Arming.”

Army Chief Warrant Officer 2 Nate Shea had maneuvered his drone behind a fixed-wing target aircraft. Seconds later, he detonated the Claymore mine his drone was carrying.

Watching on a screen, First Lieutenant Francesco La Torre looked up in time to see the target plummet.

The Army’s first drone-on-drone strike had just taken place during a live-fire demonstration at Fort Rucker, Alabama.

This August 2025 training had taken weeks to prepare.

Paratroopers practiced for hours each day. Pilots trained in changing weather to intercept an aircraft that could appear anywhere.

La Torre described the potential plainly: “With the right kit,” paratroopers could use “a low-cost system with preexisting munitions” to protect their units.

Those four words, with the right kit, begin to reveal the investment opportunity here.

Equipping more units requires hardware, reliable components, and manufacturers capable of delivering at scale. Adding AI and automation creates further opportunities for the companies developing the next generation of military systems.

That’s why I’m watching defense stocks closely. And right now, I think Wall Street is overlooking something important.

Defense stocks have been hit hard in recent months. Peace-talk headlines, uncertainty over Washington’s budget, and higher interest rates have weighed on the sector. Yet the military’s underlying needs haven’t gone away.

Missiles that have been fired still need replacing. And nobody is going back to fighting wars without drones.

Today, I’ll explain why America’s military buildup could create opportunities for years to come, why the recent selloff may be giving investors a second chance, and share one established defense stock I believe is worth a closer look.

From One Successful Strike to an Entire Military

Right now, America faces three overlapping defense demands: replenish weapons already deployed, prepare for warfare increasingly shaped by drones and AI, and expand the industrial capacity needed to do both.

Consider the first problem. The war with Iran has consumed substantial quantities of missiles and interceptors. Advanced military equipment requires specialized components, manufacturing capacity, and trained workers. Some systems take years to produce.

Meanwhile, the White House has proposed a $1.5 trillion defense budget for 2027. That’s not money Congress has approved yet, but it shows how seriously Washington is taking the need to rebuild and modernize America’s military.

One defense contractor deserves a closer look here…

Defending the Skies

The basic appeal of a missile manufacturer is pretty straightforward: Militaries use weapons, and then order replacements. Defending against an aerial attack, however, involves much more than firing an interceptor.

First, a system has to detect the incoming object. Then it must track it, identify the threat, and fire a weapon capable of stopping it.

This is where RTX Corp. (RTX), whose Raytheon division has been building military equipment for more than a century, comes in.

RTX’s products include Patriot air and missile defense equipment, GEM-T interceptors, and the Lower Tier Air and Missile Defense Sensor, or LTAMDS. That last one is a radar designed to strengthen the military’s ability to detect and track threats.

For RTX, the potential extends across replenishment, upgrades, and additional systems.

And the orders are already coming in.

In the second quarter of 2026 alone, Raytheon booked a $3.7 billion contract for Patriot interceptors for Ukraine, another $988 million for Poland, and $827 million for new Army missile-defense radars.

By September 30, Raytheon’s defense order backlog had reached $130 billion, up from $75 billion at the end of 2025. That’s equipment customers have ordered but the company hasn’t yet delivered — a substantial pipeline of future work.

And that brings us back to the changing economics of warfare.

Why Cheaper Drones Can Create Demand for Better Defenses

Imagine an attacker launching dozens of inexpensive drones at a military base. Defenders can’t simply ignore them. Even a cheap drone can cause enormous damage if it reaches an aircraft, ammunition depot, or other valuable target.

But using a costly interceptor against every incoming drone quickly becomes an expensive proposition. And an adversary that can manufacture drones faster than you can replace your interceptors has another advantage.

That is one reason I’m interested in layered defenses: systems that combine detection and tracking with multiple ways to defeat an incoming target.

RTX’s counter-drone products, including its Coyote interceptors and Ku-band Radio Frequency System radar, give it exposure to this requirement as well.

In other words, the drone revolution isn’t just good news for drone makers. It’s creating new business for the companies that defend against them.

Of course, there’s more to RTX than missile defense. The company’s Collins Aerospace and Pratt & Whitney divisions give it substantial exposure to commercial aviation as well as military customers.

That’s worth remembering. RTX isn’t a pure defense stock. Commercial aviation, engine costs, and manufacturing problems can affect its results, too. And a $130 billion backlog doesn’t guarantee every contract will be profitable.

But the opportunity I’m seeing goes well beyond RTX.

The Other Side of the Defense Trade

Established contractors such as RTX have something newer defense companies often lack: decades of experience delivering complex military systems, existing customer relationships, and large multiyear contracts.

That can provide a measure of stability. But it doesn’t necessarily offer the fastest growth.

Consider what happens when the Pentagon moves from experimenting with drones to purchasing them by the thousands. The companies developing drones that can operate on their own, software that helps commanders make faster decisions, and other emerging technologies could see demand grow much faster than the overall defense budget.

That’s why I favor owning both types of companies: established contractors that can profit from rebuilding America’s arsenal, and smaller technology firms that could grow much faster as the military adopts new weapons.

But those newer stocks also carry greater risks. They’re especially vulnerable when interest rates rise or investors become less willing to pay high prices for future growth. That’s part of what we’ve seen in the recent selloff.

A falling share price doesn’t automatically mean the business is deteriorating. But neither does it guarantee a bargain.

That’s why I’ve been looking beyond the familiar defense contractors to find companies that could benefit from the next wave of military spending. Some make weapons, others develop new technology, and still others supply the materials that make those weapons possible.

That’s the larger opportunity I’ve been researching in my Rearming America presentation.

I explain why I believe the United States is entering a historic military buildup, how government spending and private investment could accelerate it, and which five companies I’ve identified across three major areas: replenishing the arsenal, developing the next generation of weapons, and rebuilding America’s industrial capacity.

I also discuss two additional opportunities involving the future of naval shipbuilding and military AI.

You can see my complete strategy here, including more info about the companies I believe are best positioned for the years ahead.

The soldiers at Fort Rucker needed the right kit to bring down a drone. Equipping an entire military for the next generation of warfare will take a great deal more.

And that’s where I believe the real investment story begins.

Sincerely,

Luke Lango

Senior Investment Analyst, InvestorPlace

P.S. Luke believes one of the market’s next big investment opportunities could come from America’s effort to rebuild and modernize its military. Missiles need replacing. Drones and AI are changing warfare. And billions of dollars in new business could flow to the companies supplying the equipment. Luke has identified five stocks he believes could be major winners, along with two additional opportunities. See his free Rearming America presentation here to learn which companies he’s watching and why he believes the opportunity is just beginning.

The post The Four Words That Reveal a Much Bigger Defense Opportunity appeared first on InvestorPlace.

BlueChip represents a new line of computers being developed with Qualcomm (QCOM). The first model, planned for 2027, is a rugged military laptop with a carrying handle resembling a rifle strap.

When The Verge asked Luckey how much of the laptop would be American-made at launch, Luckey began working through the obstacles.

There’s the chip factories, memory production, display manufacturing, and components, much of which will not be made in the U.S. at launch but instead come from close allies.

It’s one thing to build a computer. It’s another thing entirely to rebuild the supply chain around it.

Anduril believes its launch model’s U.S.-origin components will represent roughly 65% of the prototype’s component procurement cost.

Its engineers are designing the enclosure for American machining, adapting battery and power-management systems to available U.S. technology, and developing a process to incorporate American-made display glass. Circuit board assembly is planned for its Arsenal-1 facility in Ohio.

A fully domestic supply chain is still a long ways off, though. But we can catch a glimpse into what rebuilding the manufacturing looks like, with engineers solving problems one component, process, and supplier at a time.

For investors, I think that’s the important part of this story.

America’s effort to strengthen its defenses will require years of spending on the physical capacity to produce what the military needs.

Yet, one company is already operating at the center of that effort…

The First Opportunity Is Already Here

You can’t defend an airfield with only an interceptor…

You need to be able to detect the incoming threat, track its movement, and coordinate a response. The missile is one part of a larger system that has to function under pressure.

This is where RTX (RTX) comes in.

RTX’s Raytheon business supplies Patriot systems and GEM-T interceptors, along with the Lower Tier Air and Missile Defense Sensor, or LTAMDS.

In plain English, LTAMDS is a radar designed to help air defenses detect and track advanced threats.

Its opportunity extends across the equipment needed to make air defense work, including radars, interceptors, and the systems connecting detection to a response.

That creates several potential sources of business as customers expand their defenses.

An existing customer may need more missiles. Another may need additional systems to protect more locations. Others may need upgraded sensors, maintenance, or support.

The initial sale can open the door to years of additional work.

We can already see RTX investing to meet that demand.

In June, the company announced a $100 million expansion at its Portsmouth, Rhode Island, facility to increase LTAMDS testing capacity and production of Patriot GEM-T subcomponents.

That followed a separate $53 million expansion of its radar production facility in Andover, Massachusetts.

Notice what those investments address.

Testing capacity. Radar manufacturing. Missile components.

These are the practical steps that allow a defense company to deliver more finished equipment.

They also bring us back to BlueChip.

A laptop manufacturer needs dependable access to batteries, displays, and processors. An air-defense manufacturer needs dependable access to specialized electronics, missile components, and testing facilities.

In both cases, the finished product depends on the development and manufacturing keeping pace.

For shareholders, expanding that capacity creates an opportunity — provided the company can complete the work on time and earn attractive returns on the investment.

The Orders Are Substantial

RTX’s latest results show the scale of the demand.

Third-quarter 2026 sales reached approximately $25 billion, up 11% from a year earlier. Its backlog totaled $340 billion, including $164 billion in defense orders and $176 billion in commercial orders.

Management also raised its full-year free-cash-flow outlook to $9 billion to $9.2 billion.

That backlog provides substantial work to execute. The higher cash-flow outlook is encouraging because fulfilling orders requires investment before shareholders see the full benefit.

Still, backlog is future work. Its value depends on delivery schedules, contract economics, and execution.

I want to see rising production translate into cash after RTX pays for the people, equipment, and facilities needed to support it.

There is another distinction investors should understand: RTX is a diversified aerospace and defense company.

Alongside Raytheon, it owns Collins Aerospace and Pratt & Whitney. Commercial aviation therefore plays a major role in its results.

That can provide another source of growth and cash generation. But keep in mind, it also means engine problems, customer compensation, or other operational setbacks can offset progress in defense.

Where the Opportunity Leads

A working prototype is a start, but producing thousands of dependable machines requires an entire industrial network behind it.

That’s the lesson of Anduril’s laptop ambitions — and a central part of my thesis on America’s rearmament.

When the military needs more interceptors, it needs suppliers with trained workers, specialized machinery, qualified components, and equipment its personnel already know how to use.

Established manufacturers like RTX have that foundation. As orders grow, their challenge is to expand production and turn that demand into cash.

But restocking the arsenal is only the first phase of the opportunity I’m following.

The second involves drones, AI, and autonomous systems that could change how militaries operate… and what it costs to defend against an attack.

The third reaches deeper into the industrial base: securing the materials and manufacturing capabilities needed to produce those technologies at scale.

Each phase creates a different investment opportunity. RTX gives us exposure to one important part of that larger picture.

In my Rearming America presentation, I walk through all three phases and explain how they guide my search for the companies positioned to benefit. I also examine two related opportunities: rebuilding American naval power and supplying the intelligence behind increasingly autonomous military systems.

If today’s look at RTX has you wondering where else this spending could flow, that’s your next step.

Watch my Rearming America presentation to see the three investment opportunities I’m tracking — and the companies behind them.

The post America’s Military Rebuild Starts With a Manufacturing Problem appeared first on InvestorPlace.

As I write on Tuesday, Americans are heading to the polls, and Wall Street will be watching the results closely tonight.

As we covered in yesterday’s Digest, the outcome could tell us a lot about the AI trade. Data centers are on the ballot in more than 40 local measures, giving us a read on how fast public sentiment is turning against the AI buildout.

But there’s another major overhang that comes back into focus now that Election Day is here – and it could matter even more for the market…

Iran.

For weeks, President Donald Trump has been weighing whether to resume major military operations once the midterms are behind him.

Here’s The Wall Street Journal from yesterday:

America’s Gulf allies are steeling themselves for a heavy U.S. bombardment of Iran that they expect to trigger a vicious cycle of retaliation against their own economic and civilian infrastructure as early as this week.

The signs of preparation are hard to miss…

Qatar and the United Arab Emirates have been running security drills, including at airports. Schools in Saudi Arabia’s capital are online this week. And last Thursday, Adm. Brad Cooper, the top U.S. commander in the Middle East, briefed the president on military options in person at the White House – a rare visit.

Over the weekend, the president kept his options open. Here’s Trump at a rally in Iowa on Sunday:

The only reason why I’m not finished with Iran is I want to be nice. I want to try and save all those lives if I can…

But at some point we’re going to have to give them the hammer.

Yesterday, the signals shifted toward a deal

Axios reported that Trump told Israeli Prime Minister Benjamin Netanyahu – who had urged him to resume strikes right after the midterms – that he wants to give diplomacy more time.

Later, Trump told reporters that Tehran wants “to make a deal and that could happen.” Asked whether he’d consider striking Iran after the midterms, he answered “no.”

Vice President JD Vance struck a similar tone on CNN:

The president and I both feel really good about the prospect of potentially coming to a negotiated settlement.

Qatar’s foreign ministry says its delegation is in Tehran working toward an agreement. One plan on the table would have the U.S. loosen its naval blockade if Iran halts attacks on shipping in the Strait of Hormuz.

But the fighting hasn’t stopped…

U.S. officials told the WSJ that the U.S. struck Iran’s Qeshm Island yesterday, describing it as a defensive response to Iranian attacks on U.S. assets. It was the latest in a string of “limited strikes” in recent weeks, kept deliberately low-profile to avoid signaling a major escalation.

Meanwhile, at least four commercial ships have been attacked in and around the Gulf since the start of the month, according to the U.K. Maritime Trade Operations Centre.

So, what are the two paths from here?

If a deal comes together, the fear premium baked into oil could deflate quickly.

We got a preview yesterday. Oil sold off more than 7% as Washington and Tehran both signaled openness to a settlement.

According to Goldman Sachs, as reported by Euronews, a geopolitical risk premium of about $27 a barrel “now explains most of October’s crude price rally.”

But if major strikes resume, few expect Iran to take it with no retaliation. Here’s Behnam Ben Taleblu of the Foundation for Defense of Democracies, speaking to the Journal:

There is no world in which a short and sharp strike by the U.S. will be absorbed by Iran. An intense infrastructure-based targeting campaign by Washington is likely to beget one by Tehran against U.S. partners.

That would put Gulf energy infrastructure and Hormuz shipping squarely in the crosshairs. Goldman has already raised its year-end Brent forecast to $105 from $90, citing escalation risk after the midterms.

So, while today’s elections will give investors clues about the AI trade, the days that follow could bring an even bigger source of uncertainty with market-rattling potential.

Oil’s paradox, revisited

As I write on Tuesday, Brent trades around $103.50 per barrel, and WTI is just below $96, extending yesterday’s sell-off.

Regular Digest readers will recall the paradox we highlighted in our Monday Oct. 26 Digest: more oil is leaving the Persian Gulf now than before the war began, yet prices keep climbing.

The WSJ noted again yesterday that the global surge in energy prices has continued “even with more oil shipments passing through the Strait of Hormuz.”

These elevated prices reflect the cost and danger of moving that oil as attacks on tankers push war-risk insurance and freight to near-record levels. Here’s the WSJ from last month:

War-risk insurance has climbed to as much as 10% of a vessel’s value from less than 3%, according to Windward’s Wiese Bockmann.

“In April, the problem was a shortage of crude. In October, it is the cost of moving it,” said Natasha Kaneva, head of the global commodities strategy team at JPMorgan.

That backdrop has powered two of legendary investor Louis Navellier’s favorite energy plays, which we profiled last week.

Okeanis Eco Tankers Corp. (ECO), a supertanker operator which Louis holds in his Accelerated Profits portfolio, is up 79% since he recommended it in late June.

Meanwhile, HF Sinclair Corp. (DINO), a pure-play refiner that Louis holds in Growth Investor, just posted a blowout quarter.

Last Wednesday, it reported adjusted earnings of $11.75 per share, crushing the roughly $7.80 expected by Wall Street. Its refining margin jumped 183% from a year earlier, which the company credited in part to “elevated crack spreads” – the gap between what refiners pay for crude and what they get for fuels like diesel.

The official return for DINO in Growth Investor is 73% since its late-June recommendation. I’ll note that Louis says DINO is a “buy” up to $127.

But what happens to these stocks and the broader oil trade if peace breaks out?

If a deal reopens Hormuz and drains the risk premium from oil, tanker rates and refining margins could cool, and these stocks could pull back.

ECO is especially tied to Gulf disruptions and tight tanker supply. In mid-October, it fell about 11% in a week, partly on reports that Washington might ease sanctions on “shadow fleet” tankers.

DINO, however, has a second tailwind unrelated to Iran: Russia.

Ukraine has been hammering Russian refineries, knocking out what Kyiv estimates is more than 45% of Russia’s refining capacity. After pausing for almost two weeks under pressure from President Trump, Ukraine resumed its campaign on Friday, launching attacks on three major Russian refineries in three days, according to the WSJ.

This has major implications for energy market prices. As Louis noted in a recent Growth Investor Flash Alert:

You just can’t bomb the Russian refineries. You can’t attack the Saudi Arabian refineries and expect that diesel prices are going to drop. There is a supply chain problem.

Plus, even a peace deal wouldn’t refill the world’s drained oil inventories overnight. That’s a big reason Louis has pointed toward a $90 price floor under crude.

Bottom line: ECO and DINO have been big winners for Louis’ subscribers, and that doesn’t change. But if you’re considering buying today, recognize that the next few days could move them sharply in either direction.

By the way, Louis has gone far deeper into where he sees the energy opportunity heading from here, and he’s put his research into a free presentation. You can check it out right here.

America’s depleted missile stockpile

Oil isn’t the only thing the next move in Iran will put under pressure.

Whether the president strikes or negotiates, the U.S. faces a problem that won’t disappear with a ceasefire: we’ve burned through a huge share of our missile defenses.

According to estimates from the Center for Strategic and International Studies (CSIS), the U.S. has fired up to two-thirds of its prewar Patriot interceptors since the Iran war began in February, taking the stockpile from about 2,330 to fewer than 1,000. THAAD, the system built to knock out ballistic missiles at high altitude, has used up to 48% of its interceptors.

And these aren’t items you can restock off the shelf. As CSIS senior adviser Mark Cancian told Military Times, “It takes several years to produce a missile.”

The shortage is already forcing hard choices. Buried in another WSJ article from yesterday was this line:

Ukraine has run out of air defenses, with the U.S. restricting supplies of Patriot interceptors amid a global shortage caused by the war on Iran.

A new round of fighting with Iran would only draw the stockpile down further. The WSJ reports the U.S. military has been restocking munitions in the region and sending another Patriot antimissile system to Israel.

Now, Washington is responding…

Since July, the Pentagon has signed multiyear missile contracts worth more than $100 billion combined at their full contract values, for Patriot interceptors, SM-6 missiles and AMRAAM air-to-air missiles. Lockheed Martin expects to triple its advanced Patriot production capacity by the end of 2030.

But “by 2030” tells you how deep the hole is. And much of that money still needs Congress to appropriate it – one more reason tonight’s results matter for defense, as we covered yesterday.

Now, turning to the investment implications, who gets paid to refill those shelves – and to build what comes next?

Why Luke Lango sees this as only the beginning

The “who gets paid?” question sits at the center of new research from our technology expert Luke Lango, editor of Early Stage Investor.

Luke believes America is entering its biggest military buildup since World War II, and he sees it unfolding in three phases. Restocking depleted stockpiles like the ones above is just the first. The second is mastering the future of warfare – drones, autonomous systems, and AI-powered defense. The third is rebuilding the industrial base on which those weapons depend, from critical materials to domestic factories.

He also believes Washington won’t be doing it alone…

In July, Sen. Dave McCormick’s Defense and Innovation Summit at the Army War College in Carlisle, Pa., drew nearly $10 billion in investment commitments from defense contractors, shipbuilders, and lenders, including JPMorganChase (JPM). Luke calls this growing public-private effort the “Pennsylvania Plan.”

Luke’s research looks well beyond the defense giants everyone already knows. He has identified five companies across all three phases that he believes are positioned to benefit – including a critical-materials producer with Pentagon backing. You can watch his free presentation here.

Wrapping up

Tonight’s vote count is only the start. In the days ahead, we’ll learn whether the Iran conflict heads toward a deal or a major escalation – and either way, oil prices, inflation and America’s arsenal will feel the effects.

We’ll keep you updated.

Have a good evening,

Jeff Remsburg

The post Election Day Is Here, but Wall Street’s Bigger Test Comes Next appeared first on InvestorPlace.

My colleague Luke Lango believes that’s one opportunity investors may be overlooking amid the recent selloff in defense stocks. Below, he explains why America’s push to replenish its arsenal and upgrade its defenses has him watching one established contractor in particular.

This isn’t just a one-off opportunity. In fact, Luke believes we’re about to see the biggest defense-spending supercycle in U.S. history.

And in his latest presentation, Rearming America, Luke explains that while the same legacy names will benefit, a small group of innovative defense stocks is set to go up by as much as 10X or more over the months ahead.

Take it away, Luke...

************************************

“Arming.”

Army Chief Warrant Officer 2 Nate Shea had maneuvered his drone behind a fixed-wing target aircraft. Seconds later, he detonated the Claymore mine his drone was carrying.

Watching on a screen, First Lieutenant Francesco La Torre looked up in time to see the target plummet.

The Army’s first drone-on-drone strike had just taken place during a live-fire demonstration at Fort Rucker, Alabama.

This August 2025 training had taken weeks to prepare.

Paratroopers practiced for hours each day. Pilots trained in changing weather to intercept an aircraft that could appear anywhere.

La Torre described the potential plainly: “With the right kit,” paratroopers could use “a low-cost system with preexisting munitions” to protect their units.

Those four words, with the right kit, begin to reveal the investment opportunity here.

Equipping more units requires hardware, reliable components, and manufacturers capable of delivering at scale. Adding AI and automation creates further opportunities for the companies developing the next generation of military systems.

That’s why I’m watching defense stocks closely. And right now, I think Wall Street is overlooking something important.

Defense stocks have been hit hard in recent months. Peace-talk headlines, uncertainty over Washington’s budget, and higher interest rates have weighed on the sector. Yet the military’s underlying needs haven’t gone away.

Missiles that have been fired still need replacing. And nobody is going back to fighting wars without drones.

Today, I’ll explain why America’s military buildup could create opportunities for years to come, why the recent selloff may be giving investors a second chance, and share one established defense stock I believe is worth a closer look.

From One Successful Strike to an Entire Military

Right now, America faces three overlapping defense demands: replenish weapons already deployed, prepare for warfare increasingly shaped by drones and AI, and expand the industrial capacity needed to do both.

Consider the first problem. The war with Iran has consumed substantial quantities of missiles and interceptors. Advanced military equipment requires specialized components, manufacturing capacity, and trained workers. Some systems take years to produce.

Meanwhile, the White House has proposed a $1.5 trillion defense budget for 2027. That’s not money Congress has approved yet, but it shows how seriously Washington is taking the need to rebuild and modernize America’s military.

One defense contractor deserves a closer look here…

Defending the Skies

The basic appeal of a missile manufacturer is pretty straightforward: Militaries use weapons, and then order replacements. Defending against an aerial attack, however, involves much more than firing an interceptor.

First, a system has to detect the incoming object. Then it must track it, identify the threat, and fire a weapon capable of stopping it.

This is where RTX Corp. (RTX), whose Raytheon division has been building military equipment for more than a century, comes in.

RTX’s products include Patriot air and missile defense equipment, GEM-T interceptors, and the Lower Tier Air and Missile Defense Sensor, or LTAMDS. That last one is a radar designed to strengthen the military’s ability to detect and track threats.

For RTX, the potential extends across replenishment, upgrades, and additional systems.

And the orders are already coming in.

In the second quarter of 2026 alone, Raytheon booked a $3.7 billion contract for Patriot interceptors for Ukraine, another $988 million for Poland, and $827 million for new Army missile-defense radars.

By September 30, Raytheon’s defense order backlog had reached $130 billion, up from $75 billion at the end of 2025. That’s equipment customers have ordered but the company hasn’t yet delivered — a substantial pipeline of future work.

And that brings us back to the changing economics of warfare.

Why Cheaper Drones Can Create Demand for Better Defenses

Imagine an attacker launching dozens of inexpensive drones at a military base. Defenders can’t simply ignore them. Even a cheap drone can cause enormous damage if it reaches an aircraft, ammunition depot, or other valuable target.

But using a costly interceptor against every incoming drone quickly becomes an expensive proposition. And an adversary that can manufacture drones faster than you can replace your interceptors has another advantage.

That is one reason I’m interested in layered defenses: systems that combine detection and tracking with multiple ways to defeat an incoming target.

RTX’s counter-drone products, including its Coyote interceptors and Ku-band Radio Frequency System radar, give it exposure to this requirement as well.

In other words, the drone revolution isn’t just good news for drone makers. It’s creating new business for the companies that defend against them.

Of course, there’s more to RTX than missile defense. The company’s Collins Aerospace and Pratt & Whitney divisions give it substantial exposure to commercial aviation as well as military customers.

That’s worth remembering. RTX isn’t a pure defense stock. Commercial aviation, engine costs, and manufacturing problems can affect its results, too. And a $130 billion backlog doesn’t guarantee every contract will be profitable.

But the opportunity I’m seeing goes well beyond RTX.

The Other Side of the Defense Trade

Established contractors such as RTX have something newer defense companies often lack: decades of experience delivering complex military systems, existing customer relationships, and large multiyear contracts.

That can provide a measure of stability. But it doesn’t necessarily offer the fastest growth.

Consider what happens when the Pentagon moves from experimenting with drones to purchasing them by the thousands. The companies developing drones that can operate on their own, software that helps commanders make faster decisions, and other emerging technologies could see demand grow much faster than the overall defense budget.

That’s why I favor owning both types of companies: established contractors that can profit from rebuilding America’s arsenal, and smaller technology firms that could grow much faster as the military adopts new weapons.

But those newer stocks also carry greater risks. They’re especially vulnerable when interest rates rise or investors become less willing to pay high prices for future growth. That’s part of what we’ve seen in the recent selloff.

A falling share price doesn’t automatically mean the business is deteriorating. But neither does it guarantee a bargain.

That’s why I’ve been looking beyond the familiar defense contractors to find companies that could benefit from the next wave of military spending. Some make weapons, others develop new technology, and still others supply the materials that make those weapons possible.

That’s the larger opportunity I’ve been researching in my Rearming America presentation.

I explain why I believe the United States is entering a historic military buildup, how government spending and private investment could accelerate it, and which five companies I’ve identified across three major areas: replenishing the arsenal, developing the next generation of weapons, and rebuilding America’s industrial capacity.

I also discuss two additional opportunities involving the future of naval shipbuilding and military AI.

You can see my complete strategy here, including more info about the companies I believe are best positioned for the years ahead.

The soldiers at Fort Rucker needed the right kit to bring down a drone. Equipping an entire military for the next generation of warfare will take a great deal more. And that’s where I believe the real investment story begins.

Sincerely,

Luke Lango

Senior Investment Analyst, InvestorPlace

P.S. Luke believes one of the market’s next big investment opportunities could come from America’s effort to rebuild and modernize its military. Missiles need replacing. Drones and AI are changing warfare. And billions of dollars in new business could flow to the companies supplying the equipment. Luke has identified five stocks he believes could be major winners, along with two additional opportunities. See his free Rearming America presentation here to learn which companies he’s watching and why he believes the opportunity is just beginning.

The post As America’s Arsenal Runs Low, Here’s One Stock to Watch appeared first on InvestorPlace.

The situation in Afghanistan was deteriorating, and McChrystal’s broader campaign proposal required roughly 40,000 more troops.

“The costs were staggering,” he recalls in A Promised Land. “At least $1 billion for every thousand additional troops deployed.”

By Obama’s reading, the proposal could mean waiting five or six years just to bring troop levels back down to where they already stood.

And even that spending offered no guarantee of success.

Keeping Afghanistan secure required dependable Afghan forces. Those forces needed a functioning government behind them. Building that government demanded more time, more resources, and a solution to the corruption undermining the mission.

Meanwhile, every week or so, an assistant placed a folder of condolence letters on Obama’s desk. He closed the door and read the names aloud before signing.

Then he returned to the Situation Room to wrestle with whether to commit more soldiers’ lives to the war in the name of showing “resolve.”

“What does that mean exactly?” he recalls asking. “That we keep doubling down on bad decisions we’ve already made?”

Later, while talking with an aide, he recalled the nursery rhyme “There Was an Old Lady Who Swallowed a Fly.”

An old lady swallows a fly. To catch it, she swallows a spider. Then a bird to catch the spider. Then a cat, a dog, and so on.

“She ends up swallowing a horse,” Obama said.

“And she’s dead, of course,” the aide replied.

This mission, Obama wrote, had to account for “the need to make sure the country wasn’t bled dry in the process.”

That concern raises one of the most consequential questions of any military campaign: How does America secure itself at a sustainable cost?

Today, part of the answer lies in the factories, shipyards, and supply chains behind American military power.

Once an interceptor is fired, replacing it requires specialized components, materials, skilled workers, and a production line capable of delivering an accurate, reliable weapon. When those factories slow down, each engagement leaves us with fewer weapons.

And when an adversary can keep sending inexpensive drones, relying on costly interceptors can make defending against an attack much more expensive than launching it.

America needs enough proven weapons to protect its forces today, more affordable ways to defeat tomorrow’s threats, and the industrial capacity to do both.

This is why I paid special attention to the gathering at the U.S. Army War College in Carlisle, Pennsylvania…

America’s Rearmament Push Starts With the Industrial Base

On July 14 and 15, government and military officials met with defense executives, technology companies, investors, and suppliers at the Pennsylvania Defense and Innovation Summit.

The gathering connected the people buying military equipment with the people designing it, financing it, and building it. Sen. Dave McCormick’s office reported more than $10 billion in investment announcements spanning shipbuilding, munitions, AI, robotics, and other industries.

But the significance was the connection between those efforts.

When you build a promising new weapon, it needs a capable manufacturer behind it. Then, behind the manufacturer, you need reliable suppliers. Those suppliers need equipment, trained workers, and financing before they can expand.

A larger military budget only goes so far if that chain is broken.

The Pennsylvania Plan Connects Weapons, Technology, and Manufacturing

In my Rearming America research, I call this broader build-out the “Pennsylvania Plan.”

I see three connected phases: restocking the missile arsenal, preparing for warfare shaped by drones and AI, and rebuilding the industrial base… including the critical-material supply chains.

See the three phases of my Pennsylvania Plan, and the companies I’m watching in each.

For investors, that creates specific businesses to study.

Which companies can deliver the weapons customers need now? Which can make repeated attacks less expensive to defeat? And which supply the materials and components that everyone else needs to increase production?

I believe companies that solve those problems could become major beneficiaries of America’s military build-out.

But the first phase begins with an immediate need…

Commanders can’t defend their bases with promising prototypes. They need proven systems, trained crews, and replacement interceptors ready when needed.

That is why my Rearming America thesis begins with restocking the arsenal… and it’s why I’m sharing one defense stock to buy with you today.

You probably know this company. It’s behind the F-35 fighter jet, after all. But its interceptor business deserves attention, too, along with the production capacity needed to replenish those weapons.

For investors, the opportunity depends on whether this company can secure the parts, expand production, and turn demand into deliveries and cash flow.

Below, we’ll examine its production ramp, the commitments behind it, and the execution risks that will help determine how much shareholders benefit.

Lockheed Martin’s $58.6 Billion PAC-3 Production Ramp

Lockheed Martin (LMT) is familiar to most investors as the company behind the F-35, but I’m more interested in it for the interceptors and precision weapons that military planners need in greater quantities.

One particularly important product is the PAC-3 Missile Segment Enhancement interceptor, used in the Patriot air and missile defense system.

In January 2026, Lockheed announced a framework agreement targeting an increase in annual PAC-3 MSE capacity from approximately 600 to 2,000. In July, it announced a seven-year contract modification that brought the total multiyear contract value to $58.62 billion, though final contract terms remained to be settled.

By the third quarter of 2026, Lockheed reported $20.7 billion in quarterly sales, up 11% from a year earlier, and $3 billion in free cash flow. Its backlog reached $292 billion, including $52.5 billion associated with the multiyear PAC-3 MSE award.

That gives us some visibility into its future work. In its quarterly filing, Lockheed estimated that approximately 23% of its backlog would convert to revenue over the next 12 months and about 40% over the next 24 months.

Discover how Lockheed fits into the bigger Rearming America opportunity.

That extended delivery schedule is one reason I see Lockheed as a candidate for a defense supercycle portfolio. Lockheed has an established manufacturing base, products customers already use, and a growing body of work to execute. If it expands output efficiently, the resulting cash generation can support reinvestment and shareholder returns.

The challenge is execution. 

More orders can create more pressure on suppliers, labor, and working capital. Fixed-price contracts can become less profitable if costs rise faster than expected. Other large programs can also weigh on consolidated results even when missile demand remains strong.

I would judge progress by deliveries, margins, and cash conversion together. A larger backlog that becomes profitable production is what creates durable shareholder value.

LMT is the established industrial anchor in this group. Its appeal rests on the scale and duration of the work ahead, rather than an assumption that a mature defense contractor must deliver startup-like returns.

Explore the companies beyond Lockheed in my full Rearming America briefing.

The Missile Ramp Is Only the First Phase of Rearmament

Let’s go back to that nursery rhyme Obama thought of, and how every attempted solution created the need for something bigger.

Remember that, to catch the fly, the old lady required a spider. Then the spider required a bird. And the commitments kept growing into absurdity.

His concern was what came after the next decision, and whether America could sustain everything that followed.

That is the question I return to when I study today’s military build-out. Buying another interceptor meets an immediate need. Over time, America also needs more affordable ways to defeat repeated attacks, reliable sources of critical materials, and factories capable of keeping pace.

Those practical needs help explain why the Pennsylvania gathering brought together military officials, manufacturers, technology companies, and investors. Meeting America’s commitments requires work across that entire chain.

Lockheed Martin is a great place to begin looking. My full Rearming America briefing follows the opportunity further: from replenishing missile inventories to drones and autonomous systems, and the materials needed to build them.

I’ll show you how those pieces connect and which companies I’m watching as the build-out takes shape, so you can identify the businesses worth researching beyond the familiar defense names.

Obama’s story asks us to consider what the next commitment will require. And that same question can help investors see where demand may go next.

Watch my Rearming America briefing to see the companies positioned to help meet that demand… and build your watchlist for what comes next.

The post The Lockheed Martin Business I’d Watch More Closely Than the F-35 appeared first on InvestorPlace.

Friday put an exclamation point on a brutal month for the AI trade.

By the closing bell, the Nasdaq had fallen 2.9% on the day while the S&P 500 had lost 1.8% and the Dow had dropped 1%. Chip stocks took the brunt of it, with the Philadelphia Semiconductor Index (SOX) sinking more than 7%.

For October, the Nasdaq fell roughly 5.2% – its worst month since March 2025 – while the SOX did far worse, dropping more than 15%.

Two earnings reports did most of Friday’s damage…

Intel Corp. (INTC) was the biggest casualty, plunging nearly 29% – its steepest one-day drop on record – after forecasting fourth-quarter revenue of $15 billion to $16 billion, well short of the roughly $17 billion Wall Street expected. CEO Lip-Bu Tan said customers were “signaling a PC slowdown” tied to memory prices and availability.

Amazon.com Inc. (AMZN) fell too, though its story is more nuanced. Its cloud business, AWS, grew 39% to $46 billion, which is hardly a sign of weak AI demand. But Amazon spent $77.3 billion on capital expenditures in the quarter, more than double the $35 billion it spent a year earlier. Over the past 12 months, that spending has pushed Amazon’s free cash flow more than $42 billion into the red – a record.

That number gets at what’s really spooking investors…

Friday’s losses piled onto an already brutal stretch. Alphabet Inc. (GOOGL) shed nearly $500 billion in market value after its earnings report earlier in the week, one of the largest single-day wipeouts in stock market history.

Alphabet and Meta Platforms Inc. (META) now sit more than 20% below their highs, which puts both in bear-market territory.

The fear isn’t that AI is failing. It’s that the bill is coming due. JPMorgan estimates that the tech giants will spend roughly $900 billion on AI this year, and investors are increasingly asking when – or whether – that spending will produce a return worth the price.

So, how should AI investors read this?

Is this the beginning of the end for the AI trade, or a gift for patient investors?

Our technology expert Luke Lango, editor of Early Stage Investor, spent the past few days digging through the hyperscalers’ earnings line by line – and while he doesn’t dismiss the bear case, that’s not where he ends.

Here he is from Friday’s Daily Notes:

We get why that story is spooking people. Parts of it are even true…

[But] the AI trade isn’t broken. It’s between paychecks. The spending is front-loaded, the payoff is back-loaded, and the gap between the two is about to start closing, sooner than most people think.

The key question is whether all that spending earns a return. Luke ran the rough math on each new dollar of AI spending, measured against a cost of capital of roughly 9% to 10%. Microsoft Corp. (MSFT) is earning about 19%, Alphabet about 12%, Amazon about 9% to 10%, and Meta about 8%.

In other words, it’s an uneven story. Back to Luke:

Companies that sell compute are expanding margins, while companies that use it internally are lagging for now.

And the companies selling compute have customers lined up. Microsoft, Amazon, and Google are sitting on roughly $1.8 trillion of contracted cloud backlog between them. AWS growth accelerated for a sixth straight quarter, to its fastest pace in about five years. That isn’t the hyperscalers spending money. It’s customers signing up to pay them.

Luke is also upfront about where the real risk lies:

The bigger uncertainty is 2028, when slower hyperscaler spending growth leaves suppliers more dependent on buyers exposed to tighter financing.

As for Amazon, Luke thinks Wall Street is reading too much into one quarter. Part of the weakness was simple timing.

For example, moving Prime Day into the second quarter knocked about 850 basis points off third-quarter ad growth, and management expects ads to bounce back to high-teens growth as soon as this quarter. And for all the worry about Amazon’s borrowing, it covers its interest costs about 16 times over.

To be clear, Luke isn’t calling a bottom, but his big-picture takeaway is clear:

The market is grading a decade-long build-out on one noisy quarter at peak spending, and that’s short-sighted. Our game plan: for long-term investors, this is a dip to buy with confidence.

The headlines say the AI boom is running out of money. The numbers say it’s about to start making a lot more of it.

Interestingly, the very first item on Luke’s catalyst calendar for the next three months is tomorrow’s midterm elections. That’s where the AI trade faces a different kind of test – one that won’t be decided on Wall Street.

Data centers are on Tuesday’s ballot

That’s not a figure of speech.

According to Ballotpedia, voters in 10 states will weigh in on at least 41 local data-center measures tomorrow. Ohio alone accounts for more than half of them – 21 measures across 18 communities – with proposals ranging from outright bans to caps on how much power a facility can draw.

We’ve already gotten a preview of how these votes can go. Earlier this year, about 88% of voters in Monterey Park, California, backed a policy prohibiting data centers. In Augusta Township, Michigan, roughly 90% voted against a rezoning that would have made room for one.

The issue has also worked its way into some of the biggest races on the map…

In Ohio’s U.S. Senate race, Democrat Sherrod Brown has run ads calling Republican Sen. Jon Husted the “face of data centers,” a reference to tax breaks Husted backed as lieutenant governor. Data centers have also become a talking point in the Texas and Pennsylvania governors’ races. In Pennsylvania, Gov. Josh Shapiro has already tightened the rules for approving new projects.

And this isn’t a one-party story. A Washington Post analysis of candidates’ posts found that politicians in both parties have turned significantly more negative on data centers since 2024 – with Republicans souring even more than Democrats.

The driver is the electric bill. A 2026 Reuters/Ipsos survey, cited by the Brookings Institution, found that 77% of Americans worry data centers will raise their electricity rates. Nearly two-thirds said building data centers at a rapid pace isn’t a good thing.

To be clear, a zoning vote in a small Ohio town won’t decide whether Amazon builds its next campus. But taken together, tomorrow’s results will give us the first nationwide read on how quickly public sentiment is turning against the AI buildout.

That matters more today than it would have a few months ago. As we just saw with Amazon, Big Tech is already spending far more than its operations bring in to build this infrastructure. If local resistance means slower permits, pricier power, and fewer available sites, the payback period on that spending stretches even further. And that’s exactly the question Wall Street is wrestling with right now.

The other spending boom on tomorrow’s ballot

AI isn’t the only corner of the market with a lot riding on tomorrow.

The election will also decide which party controls Congress come January. And that has major implications for a spending package that hasn’t gotten much attention from investors.

Earlier this year, the Pentagon sent Congress a $1.5 trillion budget request for fiscal 2027. Most of it would go through the normal appropriations process. But $350 billion – about 23% of the total – was earmarked for a separate budget reconciliation package.

Reconciliation lets the majority party pass spending with a simple majority, sidestepping the Senate filibuster. The catch is that it depends on party-line votes. According to Air & Space Forces Magazine, if Democrats win control of either the House or the Senate, that path effectively closes.

So, what’s in the package?

Two items stand out…

The first is the Golden Dome, the administration’s proposed missile-defense shield. The second is $53.6 billion for an office most Americans have never heard of: the Defense Autonomous Warfare Group, or DAWG – the Pentagon’s new drone-warfare unit.

That drone figure is staggering. DAWG received about $226 million in fiscal 2026. Including a small slice of base-budget funding, its fiscal 2027 request totals $54.6 billion, roughly 240 times larger.

Why is the Pentagon going all-in on drones?

I wrote about this last spring in our Investing Insider newsletter, and one comparison has stuck with me ever since.

Iran mass-produces a drone called the Shahed, which it fires in swarms. Each one costs roughly $20,000 to build.

The Patriot interceptor the U.S. fires to shoot one Shahed down costs approximately $3 million to $4 million.

The math here just isn’t sustainable. It’s like using a Ferrari to destroy a used Honda Civic – except the Civics keep coming, a thousand at a time.

The economics of warfare have flipped. Cheap, autonomous, mass-produced systems are overwhelming expensive ones, and the Pentagon is racing to catch up.

It’s also racing to restock…

Since July, the Pentagon has signed multiyear contracts worth more than $100 billion combined at their full values to replace missile stockpiles drained by conflict in the Middle East. But industry executives say Congress still hasn’t appropriated the money, which limits how fast contractors can invest in new capacity.

What happens if the package stalls?

It wouldn’t reverse the shift. But it could change the speed – and who ends up paying for it.

Defense analysts have long viewed the post-election “lame duck” session as the likeliest window to pass the package. Tomorrow’s results will tell us whether that window is a starting point or a last chance. And even if reconciliation fails, Pentagon leadership has signaled it may cut expensive legacy programs to fund low-cost autonomous weapons anyway.

And this brings us back to Luke…

He believes America is entering its biggest military buildup since World War II. And he argues that government spending is only part of the story.

He points to a recent gathering organized by Sen. Dave McCormick of Pennsylvania that brought together Wall Street heavyweights, defense leaders, government officials, and emerging technology companies. Luke calls the public-private effort coming out of it the “Pennsylvania Plan” – and he believes it could accelerate the rebuilding of America’s arsenal regardless of how any single budget fight plays out.

Luke has just wrapped up a research project on this rearmament boom – including the five companies he believes are best positioned to profit across its three phases. He’s put everything together in a new video presentation, which you can watch right here, free of charge.

Wrapping up

Tomorrow isn’t just a political event – it’s a market event.

For AI, it’s a referendum on how much patience voters have for the buildout. For defense, it could decide how quickly hundreds of billions of dollars start flowing – and Luke’s new presentation explains where he believes that money is headed.

We’ll report back.

Have a good evening,

Jeff Remsburg

(Disclosure: I own GOOGL, AMZN, MSFT)

The post The AI Selloff Meets Election Day appeared first on InvestorPlace.

Interest rates remain elevated, inflation remains sticky – and the AI skeptics are having a field day, warning that Big Tech’s spending spree has the entire artificial intelligence (AI) boom headed for trouble.

Some are even predicting a major stock market crash.

Folks, if you want to wait for every worry to melt away, you could be waiting for a long time.

There’s an old Wall Street saying that market climbs a “wall of worry.” And that’s exactly what I think is happening right now.

But the simple fact is we’re in one of the strongest earnings environments I’ve seen in my career. AI spending continues to surge, order backlogs are growing and analysts keep raising their earnings estimates for many of my favorite stocks.

That’s why I’m not losing sleep over the midterm elections or the latest predictions of a market crash.

But that doesn’t mean I’m ignoring the risks, though. So, in today’s Market Buzz, I discuss the three warning signs that actually matter, according to my eight-factor fundamental model.

I also answer recent questions subscribers have about gold mining stocks, interest rates,  how to approach the rest of the year – and more.

Click the image below to watch today’s Market Buzz.

An Energy Opportunity That Could Outlast Election Day

As I mentioned in today’s video, people worry, we profit.

The reality is some of our best opportunities right now are outside the AI sector.

Our oil refiners and tanker stocks have been delivering stunning earnings results. And I believe we’re still in the early stages of a much bigger shift in American energy.

And it’s all because of a piece of legislation President Trump signed last year that requires oil and gas lease sales in the Gulf through 2040.

That gives companies a federal leasing schedule around which to plan years of potential development.

It also means billions of dollars are flowing into new pipelines, export terminals and other infrastructure to supply energy to customers around the world.

When you combine that with rising global demand for American energy, I believe we’re looking at an extraordinary opportunity over the next 15 years.

I call it America’s $31.5 Trillion IPO.

I recently released my latest research about what I’m seeing in the Gulf and how you can invest: four critical pipeline companies, two smaller Gulf exploration companies and an unusual income opportunity you’re unlikely to hear about anywhere else.

Click here to watch my free interview get the details now.

Sincerely,

Louis Navellier

Editor, Market 360

The post 3 Warning Signs That Matter More Than the Midterm Elections appeared first on InvestorPlace.

Tomorrow, 36 states will elect governors, 46 states will vote on legislative seats, and thousands of local offices will be up for grabs.

The forecasts call for the Democrats to take control of the House, and I believe the market has already priced this in.

A change in Senate control, however, could catch the market off guard.

If Democrats gain control of both chambers, stocks could sell off in the near term as investors react to the unexpected shift.

We saw how quickly political surprises can rattle markets from Brazil last week, when Brazilian President Luiz Inácio Lula da Silva won re-election against expected-winner Flávio Bolsonaro. Brazil’s benchmark stock index plunged 13.9% the following day, its biggest one-day drop since March 2020.

Brazil is a reminder that markets can get caught leaning too heavily in one political direction. And U.S. investors may be similarly positioned for a particular midterm outcome. If the election delivers a surprise, the market could take a hit as investors scramble to unwind their bets.

Now, I was surprised by the Brazilian results, and I could easily be surprised by the U.S. results. But there is a difference: Brazil’s market reaction was tied not just to an unexpected election result, but specific concerns about government spending and mounting debt. A Democratic takeover of Congress doesn’t automatically create the same concerns for the U.S. economy.

If there is a Democratic sweep, though, we may see a near-term sell-off because that’s the typical reaction in U.S. politics. That said, over at least the last two years of the Trump administration – and even farther back – politics has not been a major driver of stock market trends or even short-term moves.

In this market environment, AI and broader economic forces matter more.

What has had a greater longer-term impact on the market has been the AI trade, AI investment spending, and AI developments. We’ve also seen dramatic revenue growth from companies like Anthropic and OpenAI, as well as the high-profile IPO of Space Exploration Technologies Corp. (SPCX).

This week, several major technology companies will report earnings – and that could drive the broader market direction more than the midterm results. Investors will be watching Apple Inc. (AAPL) for services growth and progress on its AI strategy… Advanced Micro Devices (AMD) for AI chip demand and data-center growth… and Palantir Technologies Inc. (PLTR) for evidence that demand for AI software is driving commercial growth.

The latest jobs report will also be released on Friday, and it will be particularly important to investors following the Federal Reserve’s decision to leave rates unchanged at its last Federal Open Market Committee (FOMC) meeting. Economists expect approximately 65,000 new jobs, following September’s disappointing gain of 29,000. A weaker report could raise concerns about the economy’s health, while stronger employment could give the Fed more reason to keep interest rates higher for longer.

And, of course, the war involving Iran remains an important variable. Disruptions to shipping through the Strait of Hormuz have pushed oil prices higher, adding to inflationary pressures and raising costs for businesses that depend on fuel and transportation.

I expect these real-world trends to be much more influential over stock prices than politics.

So, even if the midterms trigger a temporary pullback, the forces that will ultimately determine where stocks go are much bigger than the political makeup of Congress.

The bottom line is two-fold: Don’t make portfolio decisions based on predictions about the U.S. midterms. And don’t mistake political volatility for a change in the market’s fundamentals.

Instead, prepare for a potential short-term sell-off without losing sight of the forces actually driving the market. That means keeping your focus on the bigger investment trends.

We explored several of those trends in Smart Money this past week. Let’s revisit those stories below and look at where they may be creating opportunities…

Smart Money Roundup

October 28, 2026

What to Buy When AI Computing Gets Cheaper

Cheaper AI could spell trouble for today’s biggest AI stocks. Tom Yeung explains why the falling cost of AI computing could threaten today’s biggest AI investments – and what history’s $9 calculator can teach us about finding winners in the AI trade.

October 29, 2026

Why I Sold This Copper Stock for a 430% Gain

A company can be well-run and benefit from AI’s powerful trend, but that doesn’t make it a good buy. That brings us to a surprising case study: a company whose stock has soared this year, thanks in part to the AI boom.

In this article we examine this company and explore why strong growth doesn’t always make a stock worth buying. Then, I share where I see better opportunities instead.

October 31, 2026

Before Celebrating the Mag 7, Remember Yesterday’s Tech Giants

While demand for AI is clearly real, there remains an important question: Which companies will remain standing once excitement – and investment – fades? History shows that building a world-changing technology doesn’t guarantee lasting success for the businesses behind it. We look at the Mag 7 companies latest quarterly earnings and what they reveal about investing in AI today.

November 1, 2026

What Your Next Takeout Order Could Teach You About AI Investing

A late food delivery is an everyday frustration. For my InvestorPlace colleague Luke Lango, DoorDash’s new drone delivery system points to a much larger investment opportunity. He explains what faster deliveries, better batteries, and American factories have in common… and how that connects to the larger investment shift he explores in his latest briefing.

Look Beyond the Midterm Noise

Washington may set the mood on Tuesday, but Wall Street has plenty of other things to worry about. And that’s where I’m keeping my attention: on the companies, technologies, and economic forces reshaping the market – not the political headlines.

Remember, if the midterms do spook the market, don’t automatically head for the exits. In fact, a pullback can create opportunities for those willing to look beyond the headlines.

Look for solid businesses swept up in the selling, especially overlooked companies growing sales, expanding profits, and trading at prices that don’t reflect their potential.

More specifically, I recommend shifting some attention away from the companies spending billions to build AI infrastructure and toward the companies putting that infrastructure to work.

These companies – which I call AI Appliers – have the potential to use cheaper, more powerful technology to cut costs and grow profits.

Click here to learn more.

Regards,

Eric Fry

The post A Political Surprise Could Hit Stocks – Here’s Where to Look Instead appeared first on InvestorPlace.

Army Chief Warrant Officer 2 Nate Shea had maneuvered his drone behind a fixed-wing target aircraft. Seconds later, he detonated the Claymore mine his drone was carrying.

Watching on a screen, 1st Lt. Francesco La Torre looked up in time to see the target plummet.

The Army’s first drone-on-drone strike had just taken place during a live-fire demonstration at Fort Rucker, Alabama.

This had taken weeks to prepare.

Paratroopers practiced for hours each day. Pilots trained in changing weather to intercept an aircraft that could appear anywhere.

La Torre described the potential plainly: “With the right kit,” paratroopers could use “a low-cost system with preexisting munitions” to protect their units.

Those four words, with the right kit, carry the investment story.

Equipping more units requires hardware, training, reliable components, and manufacturers capable of delivering at scale. Adding AI and autonomy creates further opportunities for the companies developing the next generation of military systems.

That’s why I’m watching defense stocks closely, even as investors worry about politics, interest rates, and the direction of the next peace-talk headline.

This week, I joined The InvestorPlace podcast with Jonathan Rose to explain why I believe the military’s need to replenish weapons and develop new capabilities could support years of demand.

My approach pairs established contractors like Lockheed Martin (LMT) and Northrop Grumman (NOC) with companies pursuing growth in drones and space, including Rocket Lab (RKLB), and Planet Labs (PL).

But an attractive business outlook doesn’t automatically signal that a stock has finished falling.

Jonathan and I discuss that distinction, including the buying activity he wants to see before gaining confidence in a recovery.

Watch our conversation below to see which defense companies we’re watching, plus what could turn military demand into the next stock-market opportunity:

From One Successful Strike to an Entire Military

Right now, America faces three overlapping demands: replenish weapons already consumed, prepare for warfare increasingly shaped by drones and AI, and expand the industrial capacity needed to do both.

Each creates work for a different part of the defense industry. Taken together, they could support lasting demand.

While a successful drone demonstration can establish what is possible, equipping an army requires a much larger commitment.

I’m looking for companies that can turn those requirements into market-ready products… and orders they can fulfill profitably.

One established company deserves a closer look here…

Defending the Skies

The basic appeal of a missile manufacturer is pretty straightforward: Militaries use weapons, then order replacements. Defending against an aerial attack, however, involves much more than firing an interceptor.

First, a system has to detect the incoming object. Then it must track it, help determine the threat, and support a decision about how to respond. The interceptor has to reach its target. Afterward, crews must be able to defend against the next attack.

This is where RTX (RTX) and its Raytheon business comes in, as it supplies several pieces of that process.

Its products include Patriot air and missile defense equipment, GEM-T interceptors, and the Lower Tier Air and Missile Defense Sensor, or LTAMDS — a radar designed to strengthen the military’s ability to detect and track threats.

That breadth is what’s important here.

“Patriot” describes a defense system with multiple components and suppliers. Investors need to understand which company supplies which equipment, because spending on an interceptor, a radar upgrade, or additional launch equipment can create different revenue opportunities.

For RTX, the potential extends across replenishment, upgrades, and additional systems.

An existing customer may need replacement interceptors. Another may seek better radar coverage. A third may want to expand the number of locations it can protect.

Those decisions can generate years of work involving manufacturing, integration, maintenance, and support.

Why Cheaper Drones Can Create Demand for Better Defenses

The Fort Rucker demonstration also points to a critical economic problem for military planners… Namely, the worth of an expensive interceptor when it protects soldiers or critical infrastructure.

Comparing its price with the attacking drone’s price alone misses the value of what is being defended. But that math is complicated by persistent adversaries who can keep throwing inexpensive aircraft at their problems.

Defenders need enough weapons to withstand repeated attacks. They also need a range of responses suited to different threats.

That is one reason I’m interested in layered defenses: systems that combine detection and tracking with multiple ways to defeat an incoming target.

Raytheon’s counter-drone products, including its Coyote interceptors and Ku-band Radio Frequency System radar, give RTX exposure to this requirement as well.

It also reinforces a central part of my thesis: New technology can create additional demand for established defense suppliers, particularly when those suppliers already have products, customer relationships, and manufacturing experience relevant to the problem.

Yet military demand is only the beginning of the investment case.

The company still needs to obtain components, hire and train workers, manage its suppliers, and deliver on terms that leave a profit.

That is why I would evaluate RTX through several connected measures: orders, deliveries, margins, and cash flow.

But RTX also has businesses beyond Raytheon. Collins Aerospace and Pratt & Whitney give it substantial exposure to commercial aviation as well as military customers.

That diversification broadens its opportunities, but it also means defense demand alone cannot explain the stock. Engine-program costs, airline activity, manufacturing performance, and other aerospace developments can influence companywide results.

The Bottom Line on RTX Stock

As I explained in my conversation with Jonathan Rose, I see room for both established contractors and emerging defense technology companies.

The established businesses bring manufacturing experience, longstanding programs, and customers already using their equipment. Smaller drone, autonomy, and space companies may offer faster growth, alongside greater volatility and execution risk.

RTX belongs on the established side of that approach.

Its appeal is the opportunity to supply equipment militaries need to replenish, improve, and expand… and to support that equipment over time.

The Fort Rucker team showed what skilled soldiers and engineers could accomplish with the right tools. Making capabilities like that widely available requires a much larger network of manufacturers, technology developers, and suppliers.

I believe the companies meeting those needs could become some of the next major stock-market winners.

In my Rearming America briefing, I follow that demand from missile replenishment to drones and autonomous systems, and into the materials and production capacity behind them. Watch it now to see the other companies I’m researching and how they fit into the build-out.

The post Why I’m Watching This Missile Defense Giant as America Rearms for Drone Warfare appeared first on InvestorPlace.

Luke, Senior Investment Analyst at InvestorPlace, has been following AI’s move into machines that carry goods, operate equipment, and work alongside people. He believes the companies supplying those machines could offer investors opportunities well beyond the familiar AI names.

Below, he explains what faster deliveries, better batteries, and American factories have in common… and how that connects to the larger investment shift he explores in his latest briefing.

Take it away, Luke…

It’s 8 a.m. on a Monday, and you just ordered a hot coffee through DoorDash Inc. (DASH) to start your day. Only, the estimated arrival time keeps getting pushed later and later.

Your driver is stuck at a light. Then they hit traffic at another turn. Just when you think they’re heading to you, they make another stop first. By the time the cup finally reaches your door, that first satisfying sip has become a lukewarm disappointment.

When you used DoorDash, you paid a premium for convenience. Now you’re putting your coffee in the microwave.

The same frustration builds with every order of cold fries or late dinner that leaves your guests’ collective stomachs grumbling. Once an order leaves the kitchen, every extra minute can make it a little less worth waiting for.

But DoorDash is working on a way to shorten that wait.

How? By bypassing traffic and human decision-making entirely.

On Sept. 30, the company unveiled DoorDash Air, a new drone delivery system, with pilots planned in Northern California and restaurant partners including Chipotle Mexican Grill Inc. (CMG) and Popeyes.

DoorDash says initial tests produced deliveries from the restaurant to the customer’s door in under five minutes on average. Those results cover a limited sample of order sizes and distances, and delivery times aren’t guaranteed.

Still, you can understand the appeal. Your dinner could fly over the traffic that would otherwise hold it up.

For investors, though, the most revealing part of the announcement was where DoorDash began building the system.

Before Dinner Can Take Flight

Of course, there are some logistics that need to be sorted out first.

Who loads the drone? Does the bag fit on it? What happens to the drinks?

Without changing a thing, you might save five minutes in the air but add ten minutes of work inside the restaurant.

Delivery Drone Carrying Package Over Urban Buildings. Source: Envato

DoorDash says it designed its loading options to fit existing restaurant operations. And that’s where this becomes an investment story.

A working delivery network needs manufacturers to build loading equipment, suppliers to provide sensors, and batteries that can carry an aircraft and its cargo through repeated trips.

As more machines go to work, those practical requirements can create demand for businesses far beyond the familiar AI names.

Someone has to make the loading equipment, supply the sensors, and provide the power. That’s why I’m watching the companies that can help turn a promising demonstration into equipment customers could use every day.

An AI system that can guide a drone or direct a robot opens similar possibilities. Turning those possibilities into thousands of working machines takes motors, sensors, specialized materials, and factories capable of producing them reliably.

That creates a challenge when choosing stocks: Which companies can turn growing demand into actual deliveries?

AI Is Getting a Body

I call what DoorDash is doing “physical AI”: machines that use artificial intelligence to act in the world around us.

That includes warehouse robots, vehicles that drive themselves, and drones that can navigate without someone steering every movement. Humanoid robots could eventually take on a wider range of jobs in spaces designed for people.

These machines have something in common. They have to work around real obstacles, with real consequences when something goes wrong.

A warehouse robot needs to move goods without damaging them or injuring someone. A delivery aircraft needs to reach the right address and get its cargo down safely. Being clever is only useful if the machine can also do its job dependably.

And there are already businesses earning money from this shift.

Consider Symbotic Inc. (SYM), which supplies robotic systems used to move and organize goods in warehouses. In its third quarter of fiscal 2026, it reported $721 million in revenue, up 22% from a year earlier, and $55 million in net income.

That gives investors actual sales and profits to examine. It’s one company worth researching if you’re interested in physical AI.

This is the kind of evidence I want to see: people paying for machines that do useful work. But there’s another requirement these machines can’t escape.

Power.

A Smarter Robot Still Needs a Better Battery

A machine that moves freely through a warehouse or flies across town can’t drag a power cord behind it.

It has to carry its energy. And adding more battery adds weight that the machine must ferry along with everything else.

That creates a difficult trade-off. A bigger battery might allow longer trips, but it can also leave it with less carrying capacity. Charging takes time, too, and batteries wear down with repeated use.

Think about a delivery operator choosing between another flight and a return trip to recharge. Or a business paying for a robot that spends too much of the workday plugged into a wall.

Battery performance affects how much useful work the customer gets for the money. That’s why I see advanced batteries as much more than an electric-car story.

Solid-state batteries (SSBs) are one promising approach. They replace the liquid inside conventional batteries with a solid material. Depending on the design, that could allow more stored energy in a smaller or lighter package and reduce some fire risks.

Researchers at Oak Ridge National Laboratory are testing whether these battery advances can hold up outside small laboratory experiments. Their work specifically includes potential uses in drones and robotics.

There’s still work to do, though. A battery has to survive repeated use and be manufactured consistently at a price customers can afford. Solid-state designs also need careful safety testing; Sandia researchers are studying how they can fail and overheat.

But the opportunity is easy to understand. Help a machine work longer without making it heavier, and you could make that machine useful to more customers.

Someone Has to Build Enough of Them

Better batteries are one part of the job. Producing them in dependable quantities is another.

On July 14, Re:Build Manufacturing announced a line of U.S.-assembled battery packs for commercial and defense drones. It connected the launch to a broader expansion of drone manufacturing at its Pennsylvania facility, which was revitalized as part of an $81 million investment.

These are lithium-ion products. Customers need equipment they can use today while researchers work on what comes next.

And this is where the story becomes much bigger than dinner.

The ability to produce reliable machines in large numbers matters enormously to national defense. A promising design offers limited protection if the equipment takes too long to arrive or its parts are difficult to replace.

America needs manufacturers that can deliver, along with suppliers that can keep those manufacturers working.

As AI moves into drones and other physical systems, the stakes rise. A failure can mean more than a late delivery. Protecting people and essential services requires equipment that works when it’s needed… and enough of it to do the job.

Follow the Money to What America Needs to Build

DoorDash needs more than an aircraft to get dinner to your door. It needs equipment, power, and a system that works reliably from the kitchen to the doorstep.

America faces the same challenge on a much larger scale: turning advanced technology into machines it can build, deploy, and depend on.

For investors, the question is concrete: Which companies supply the parts, materials, and production capacity that make those plans possible?

That’s the opportunity I’ve been researching.

At July’s Pennsylvania Defense and Innovation Summit, government, finance, technology, and military leaders gathered at the U.S. Army War College. Sen. Dave McCormick’s office reported more than $10 billion in new investment commitments spanning shipbuilding, advanced manufacturing, AI, and robotics.

The announcements included a new drone battery production line, expanded manufacturing facilities, and equipment to increase output. These projects still have to deliver, but they show investors where to start looking.

Consider what happens when a customer moves from testing a handful of drones to ordering thousands.

The manufacturer needs more batteries, motors, and specialized components. It needs dependable sources of raw materials. And it needs suppliers that can increase production without sacrificing quality.

A supplier that solves that problem can become essential to its customer’s expansion.

That’s why I’m following the buildout all the way down to the businesses that make it possible.

My latest briefing takes you inside the investment thesis behind America’s push to rebuild its industrial capacity.

I explain the companies I’m watching, what makes their capabilities valuable, and the developments that could bring them to investors’ attention.

You’ll come away with a clearer way to evaluate this opportunity… and specific businesses to put on your research list.

Watch the briefing now to discover the companies I’m watching as America funds and builds its next generation of machines.

Sincerely,
Luke Lango
Senior Investment Analyst, InvestorPlace

The post What Your Next Takeout Order Could Teach You About AI Investing appeared first on InvestorPlace.

In 2024, the second-best-performing stock in the S&P 500 wasn’t a chipmaker or an artificial intelligence firm.

It was Vistra Corp. (VST), a Texas power producer that most people had never heard of. Shares rose over 250% in 2024, beating even Nvidia Corp. (NVDA). Only Palantir Technologies Inc. (PLTR) did better, though it did not join the S&P 500 until late September that year.

Vistra never built an AI model. Nor did it have anything directly to do with the AI Revolution.

But it did produce the one thing AI needed: electricity.

In fact, electrical power has become one of the tightest bottlenecks of the AI Revolution. Roughly 40% of data centers planned for 2026 have been pushed into next year from the lack of grid hookups, according to Goldman Sachs. And many states are even considering “bring your own power” policies for new projects because electricity is in such short supply.

It’s a pattern we’ve written about before:

When a new technology arrives, everyone piles into the obvious winner, leaving the real gems behind for perceptive investors to buy.

It’s happening again right now. Investors are thinking about how AI can move into new applications like drones and other unmanned aerial vehicles (UAVs). Far fewer are asking about the things you need to shoot them down.

In a new presentation, senior InvestorPlace analyst Luke Lango names the companies he thinks get paid as the Pentagon restocks for the next stage of AI. He’s calling this The Pennsylvania Plan.

Luke’s given me the go-ahead to reveal one of these stocks to you today. And I’ve picked the biggest, most conservative name on his list on purpose. If the potential is this large for such a major firm, it’s worth seeing what Luke expects from his six smaller picks. You can watch his presentation here.

Booked Solid Through 2029

Last week, defense contractor Lockheed Martin Corp. (LMT) reported something I’ve never seen from a company of its size.

It wasn’t revenue, which rose 11% to $20.7 billion. Nor was it earnings, which beat estimates by 6%.

Instead, it was the number “4.”

That was the company’s “book-to-bill ratio,” the figure you get when you divide the number of new orders by sales. Lockheed had booked $83 billion of new orders, four times the $20.7 billion it sold.

Think of a restaurant that serves 100 customers on a Saturday night… and then receives reservations for 400 more before closing time. If you’re an investor, you’d want a piece of that restaurant, especially if those bookings were backed by reputable customers like the U.S. Department of War.

In fact, Lockheed’s order book is now so large that it would take almost four years to go through at the current pace. And we’re not even counting the reservations that will happen down the road yet.

That’s why Luke likes Lockheed: It is rearming America for AI-enabled combat. AI might be making drones cheaper and smarter… but Lockheed is the one building the missiles, interceptors, and planes that the U.S. military will need to counter these technologies.

Saved by One Vote

Let’s take a quick look at how Lockheed got here in the first place.

In August 1971, the U.S. Senate voted on whether The Lockheed Aircraft Corp. should continue to exist.

The aircraft manufacturer was weeks from bankruptcy. Its L-1011 TriStar airliner was behind schedule. Its engine supplier, Rolls-Royce, had collapsed into receivership. And cost overruns on the C-5 Galaxy transport were draining whatever cash Lockheed had left. The company needed a $250 million loan guarantee, and a funding bill had barely cleared the House by three votes.

The Senate passed it 49 to 48.

That move kickstarted a virtuous funding cycle where cash from one military aircraft could pay for the development of the next generation, and so on. Lockheed would bring us the F-117 Nighthawk, the world’s first operational stealth attack aircraft, the F-22 Raptor, the C-130J “Super Hercules” and the X-35 Joint Strike Fighter. It would also use the cash to buy out other defense contractors, expanding its reach.

Today, Lockheed is the world’s largest arms producer by revenue. And its virtuous funding cycle is now driven by three profit engines:

1. Aeronautics. This is Lockheed’s cash-flow machine. In 2001, the company was awarded the largest defense program ever after beating Boeing Co. (BA) for the F-35 fighter jet contract. Production is expected to continue through 2060, while maintenance and spare parts should keep the program going until at least 2070. Lockheed also produces other aircraft, such as the C-130 Hercules and the F-16 Fighting Falcon. This segment also houses much of its classified work and maintenance contracts for the F-22 Raptor fleet.

2. Missiles and Fire Control. This represents Lockheed’s growth prospects. The segment is growing at around 20% per year, and is being led by appetite for PAC-3 interceptors – the weapons used to stop ballistic missiles. The company is aiming to deliver 2,000 of these annually by 2030, up from 620 last year. In addition, Lockheed produces other well-known missile systems, including THAAD, GMLRS, JAGM, and Javelin. These, too, are seeing unprecedented purchases from conflicts in the Middle East and in Ukraine.

3. Rotary and Space. Rotary mostly involves helicopters, where Lockheed has an enormous installed base under its Sikorsky name. Space involves Trident ballistic missiles, hypersonic missiles, and missile defense systems. Both businesses offer wide moats and dependable profits, because switching costs are so high. Once a navy flies Seahawks, it buys Sikorsky parts and upgrades for decades. This segment could become a major growth area if Congress keeps funding the “Golden Dome” missile defense system.

Together, these three businesses create a stable source of cash flow that can fund tomorrow’s growth.

Refilling America’s Stockpiles

The rise of cheap drones in the Middle East and Russia’s war in Ukraine has cut into American stockpiles of missiles and interceptors. The Center for Strategic and International Studies (CSIS), for instance, estimates the U.S. has used two-thirds of its Patriot inventory and has fewer than 1,000 of these interceptors left.

Many have focused on upcoming counterdrone technologies to fill the gap. In fact, we’ve talked here about the importance of Ondas Inc. (ONDS), a company using interceptor drones to take down other UAVs. After all, firing a multimillion-dollar missile at a drone that costs less than a used car is a losing trade. And the Pentagon knows it.

But such AI-powered technologies are not yet reliable enough in the battlefield to protect crucial equipment, such as aircraft carriers and U.S. bases. Also, nothing cheap stops a ballistic missile. And so, interceptors have become what electricity was like to AI: the consumable that the new technology forces everyone else to buy more of.

That’s where Lockheed comes in. Over the past year, the company has won contracts such as:

• A seven-year deal for PAC-3 interceptors worth up to $58.6 billion.
• A separate seven-year agreement for THAAD missile-defense interceptors.
• A 10-year framework for at least 850 F-35 fighters.
• A $1.2 billion order for Precision Strike Missiles

Over the next several years, Lockheed should likely see even greater demand as America and its allies move from refilling reserves to building larger stockpiles.

In addition, for most of the past 30 years, defense contractors signed deals that left them holding the bag if costs rose. Lockheed itself took two major charges in the past two years for that reason. These new multiyear agreements now include annual inflation “escalators” that kick in if costs go up. With stockpiles this low, the Pentagon has less room to drive a hard bargain.

So, much like Vistra, Lockheed is becoming a growth stock again – and it’s thanks to an AI technology the company never had to build itself.

An Even Faster-Growing Business

With Lockheed, we have a defense contractor trading near five-year average multiples that is doing much better than at any time in the past five years.

By my reckoning, shares are worth $700 in the base case, and possibly $825 in the bull case. Aggressive investors might consider buying into the rally, while conservative ones wait for a sub-$600 entry price.

However, Lockheed is only one of seven picks Luke is eyeing. And several of these have far higher upside, given their smaller starting size.

Luke explains this all in his latest presentation, which you can watch here. He will also reveal several other picks that are part of what he’s calling The Pennsylvania Plan, and explains why his most aggressive projections call for potential gains of up to 2,600% over the next 12 to 24 months.

Vistra highlighted how the biggest winners of a new technology are often the suppliers in the background, not the ones that make headlines. Lockheed is the one I can name now. Luke’s presentation has the rest. 

Until next week,

Thomas Yeung, CFA

Market 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 The No. 2 Stock of 2024 Wasn’t an AI Company – and the Pattern Is Repeating appeared first on InvestorPlace.

Editor’s note: “AI Has Entered the Chain of Command” was previously published in July 2026 with the title, “The Bearish AI Headline That’s Actually the Most Bullish Signal of the Year.” It has since been updated to include the most relevant information available.

Count the number of times the Pentagon has created a brand-new command in the past 40 years. You can do it on one hand. 

Special Operations Command was born in 1987, after a failed hostage rescue in the Iranian desert exposed that America’s elite units couldn’t operate together. Northern Command arrived in 2002, after 9/11. Cyber Command followed a 2008 worm that crawled into the military’s classified networks from a thumb drive. Space Force stood up in 2019, once rivals began treating orbit as a battlefield.

Each new command marked the moment the military admitted its old structure couldn’t handle a new reality.

On Sept. 30, it added another.

Secretary of War Pete Hegseth announced plans for a four-star Autonomous Warfare Command – “Autowarcom,” in Pentagon shorthand – charged with scaling drones, robotics, and AI across the entire joint force, with what he called “service-like authorities.” The doctrine behind it is a “high-low mix”: a handful of exquisite, expensive weapons alongside swarms of cheap, expendable ones.

The next day, the Army ordered up its own Futures and Autonomous Systems Command, along with a dedicated acquisition executive for autonomy.

Then, the Army selected Amazon Web Services and World Wide Technology for Project Griffin, a pilot designed to use autonomous AI to defend military networks at machine speed.

Three moves in less than a month.

Instead of simply experimenting with AI, the U.S. military is starting to organize around it.

There is a short list of technologies governments decide they cannot afford to lose:

Nuclear power. Semiconductors. Satellites. GPS. The internet.

AI just joined them.

And once the military begins building around a technology, the infrastructure behind it – and the companies that supply it – become much harder to ignore.

AI Is Now a National-Security Asset

For years, Washington mostly treated frontier AI as a commercial technology.

Powerful? Absolutely. Worth watching and regulating? Sure – but still something built by technology companies and sold to customers.

This summer, that began to change.

The government briefly forced Anthropic to restrict access to Claude Fable 5 and Mythos 5 on national-security grounds. The Commerce Department lifted those controls a few weeks later, and access was restored July 1.

Though the restriction was short-lived, Washington had shown that it was willing to treat an AI model like a strategic asset.

Now the Pentagon is going further, creating commands, acquisition offices, technical jobs, and working military programs around AI and autonomy. These systems have already seen combat, too: back in March, Hegseth confirmed that AI-enabled autonomous systems were being used in the campaign against Iran.

The question is no longer whether the military will build around these technologies. It’s how quickly it can.

Sovereign AI Is Becoming a Full-Stack Infrastructure Buildout

In 1942, when the U.S. government decided that atomic weapons were a national-security imperative, it built an industrial pipeline to ensure it succeeded – from uranium mining to enrichment to delivery systems – at a scale and speed that had never been attempted in peacetime.

We are watching the early stages of something structurally analogous.

The difference is that the ‘Manhattan Project’ of sovereign AI requires not one centralized government program but an entire ecosystem: domestic semiconductor fabs, secure data center campuses, high-bandwidth networking, stable power grids, and model development labs operating under strict security protocols.

The proof is in the usage logs.

This spring, the Pentagon signed agreements with eight major AI companies to bring advanced models onto classified networks. Within five months of launch, its GenAI.mil platform passed 1.3 million users, with military personnel running hundreds of thousands of agents.

The Army’s plans go further.

By 2028, it wants autonomous systems working across combat vehicles, resupply, reconnaissance, breaching, fires, and teams of crewed and uncrewed machines.

That sounds like a technology the military expects to use every day.

And the United States isn’t building alone.

The Sovereign AI Race Is Already Global

Japan became the first international partner in the U.S.’ Genesis Mission, committing $500 million alongside a matching $500 million from the U.S. Department of Energy – a combined $1 billion over five years to advance AI science, next-generation computing, and autonomous laboratory systems through joint teams spanning 12 DOE National Laboratories and 12 leading Japanese research institutions. 

Saudi Arabia’s Project Transcendence is deploying $100 billion toward AI infrastructure, model development, and data centers. 

The UAE has launched G42 as its sovereign AI vehicle, with Abu Dhabi committing billions to domestic compute capacity. 

And China has been quietly building sovereign AI infrastructure for years – ChangXin Memory Technologies scaling domestic HBM production, Huawei developing its own GPU stack, and state-directed capital flowing into data center construction at a pace that rivals the hyperscalers. 

Every one of those commitments reinforces the others. Sovereign AI is now a race – and races don’t have off switches. 

Why Military AI Spending Gets Harder to Cut

Once a technology is classified as critical to national security, the political cost of underfunding it becomes unacceptably high. That means capital will flow regardless of economic cycles, earnings misses, or Fed policy. 

But what has to be built before this strategy can work?

The answer runs through the entire AI infrastructure stack.

• Secure compute: Foreign-access restrictions mean domestic, sovereign, security-hardened data centers become a requirement, not a preference. Hyperscaler buildout just got a policy tailwind.
• Chips and memory: If frontier models are strategic assets, the chips that run them are, too. Domestic semiconductor production, Nvidia (NVDA) allocations, high-bandwidth memory supply – all become matters of national priority. Networking and optics: AI infrastructure communicates, constantly, at scales that dwarf anything the internet was originally designed to handle. All of it runs across physical fiber, switches, and optical transceivers. 
• Power and cooling: Sovereign AI clusters run continuously, consume extraordinary amounts of power, and generate heat that requires industrial-scale cooling systems. That demand grows with every new model generation.
• Cybersecurity: If AI models are now in the same category as military hardware, then the security perimeter around them will be built to military-grade standards. 
• Autonomy and robotics: Someone has to build the drones, robotic vehicles, and unmanned systems. Someone else has to provide the edge processors, sensors, batteries, motors, and secure communications inside them. As the military moves from small pilots to full fleets, that supplier base becomes part of the trade. 

Together, these trades form a single investment thesis: own the infrastructure layer of a technology that governments have decided they cannot afford to lose. 

How the Sovereign AI Race Expands the Infrastructure Trade

No country wants to discover that a rival controls the better models, the larger computing base, or the autonomous systems that could decide a future conflict.

So, one government builds. The others respond.

More data centers go up. More chips get ordered. More power is secured. More autonomous systems move from testing into production.

The race itself creates the demand.

Core AI infrastructure names – like NVDA, AVGO, ANET, and VRT – are precisely the companies that benefit most when AI infrastructure becomes a sovereign imperative rather than an enterprise discretionary.

We are watching closely for:

• New government AI infrastructure contracts and sovereign AI fund announcements
• Allied-nation buildout cadence
• Accelerated domestic fab investment, particularly anything related to secure, export-controlled advanced packaging and HBM production
• Security hardware specs for AI data centers – when DoD and allied governments start publishing requirements for secure AI infrastructure, those spec sheets will be a roadmap for which companies win.

The Bottom Line

AI entering the chain of command raises a larger question:

Can America build enough of the physical equipment to keep up?

Remember the Pentagon’s own blueprint: a “high-low mix” of exquisite, expensive systems and masses of cheap, expendable ones. Right now, America can’t produce enough of either. Drones need batteries, motors, sensors, and secure communications. Autonomous vehicles need processors and factories. AI systems need chips, power, networking, and domestic manufacturing capacity.

And the military needs a supply base that can deliver all of it quickly – after decades of letting that capacity drift overseas.

Rebuilding it is going to take more than Pentagon budgets. It’s why some of the biggest names on Wall Street are now sitting at the same table as defense leaders and emerging technology companies, working out how private capital gets pulled into the effort.

That is the opportunity I’ve been researching.

AeroVironment is one of five companies I’ve identified to profit from it – a group that spans established producers, the emerging technologies replacing them, and the critical materials both depend on. I lay out all five in a new presentation, along with the developments I believe could bring them to the market’s attention very soon.

Watch the full presentation right here.

The post AI Has Entered the Chain of Command appeared first on InvestorPlace.

While trick-or-treaters fill neighborhoods across the U.S. tonight, our neighbors to the south are preparing for another celebration: Día de los Muertos, or Day of the Dead.

On the eve of this Mexican holiday, those who celebrate are preparing their ofrendas – altars adorned with images and mementos to honor loved ones who have passed away.

It is a cultural tradition rooted in remembrance and the celebration of the cyclical nature of life and death.

Now, I have a feeling that if the market were to participate in this holiday, its ofrenda would include the once-mighty Cisco Systems Inc. (CSCO).

In its day, Cisco was the darling of the internet boom. It went public in 1990 with a $224 million valuation. By March 2000, it had grown into a $550 billion giant – briefly making it one of the most valuable companies in the world.

Also on the ofrenda would sit RCA, the radio pioneer of the Roaring Twenties. As radio took over American living rooms, RCA’s stock rose about 200-fold over the decade.

But both of these market legends eventually became symbols of booms gone bust. Cisco’s shares fell nearly 90% between March 2000 and late 2002 as the dot-com bubble burst. And RCA’s stock plunged about 98% between 1929 and 1932, after radio mania gave way to the Great Crash.

Neither company’s technology necessarily died. Radio and the internet went on to change the world.

What didn’t last was the dominance of the companies that built them.

And that’s exactly why it’s important to remember the companies that once ruled the market.

I expect we’ll see this pattern play out with AI, too. While demand for AI is clearly real, there remains an important question: Which companies will remain standing once excitement – and investment – fades? History shows that building a world-changing technology doesn’t guarantee lasting success for the businesses behind it.

That question is especially relevant as the biggest AI players, those in the Magnificent Seven who once ruled the stock market, report their most recent earnings.

In today’s Smart Money, I’ll share the latest quarterly earnings from the Mag 7 companies and what they reveal about investing in AI today. Hint: the best investments to make now are not the Mag 7 stocks that are spending billions to build AI data centers, but in the kinds of companies that can profit from AI without having to foot the construction bill.

The Price of AI Is Falling, but the Cost of Building It Isn’t

Tesla Inc. (TSLA) and Meta Platforms Inc. (META) kicked things off after the market closed last Wednesday, October 21.

Tesla’s revenue came in flat at $28.05 billion, yet its capital expenditures (CapEx) – the money a company spends on physical assets like factories, chips and data centers – more than doubled to $4.7 billion to fund its robotaxis, Optimus robots, and AI ambitions. The carmaker is now an AI builder. But for now, Tesla’s AI ambitions are costing more than they’re bringing in.

Meta’s revenue rose 26% to $64.6 billion, topping Wall Street’s estimate. But CapEx climbed to $34.9 billion for the quarter, and Meta raised its 2026 CapEx outlook to between $135 billion and $145 billion. Free cash flow – the cash left over after those investments – turned negative, at -$2.1 billion. So, the payoff from its AI investments has yet to catch up with the cost.

This past Wednesday, Alphabet Inc. (GOOGL) and Microsoft Corp. (MSFT) reported after the close.

Alphabet’s earnings per share came in at $2.67, below Wall Street’s $3.02 estimate, while revenue of $127.58 billion fell just short of the $128.22 billion estimate. Google Cloud revenue rose 103% to $30.7 billion. But CapEx also more than doubled to $51.4 billion, and free cash flow came in at -$9.1 billion.

Finance chief Anat Ashkenazi added that CapEx will “increase significantly in 2027.” The next day, the stock fell nearly 13% – its worst single-day drop ever. So, Google Cloud’s explosive growth suggests strong demand for AI and cloud services. But spending is rising just as quickly, and negative cash flow leaves investors questioning whether the investment is paying off.

Microsoft, by contrast, reported quarterly revenue growth of 19% and earnings per share of $4.89, beating expectations. Azure cloud revenue grew 48%. CapEx rose about 30% to $45.2 billion – less than investors expected – and free cash flow stayed positive at $18.6 billion. Microsoft appears to be making the strongest case that AI growth can justify the spending. But while positive cash flow is encouraging, it remains to be seen whether that growth will generate enough returns to justify the investment.

Finally, Amazon.com Inc. (AMZN) reported on Thursday after markets closed. Its Amazon Web Services (AWS) cloud business grew 39% to $46 billion, its fastest pace in nearly five years. But revenue and earnings came in slightly below estimates, and CapEx jumped to $77.3 billion – well above the roughly $59 billion analysts expected. Over the past 12 months, Amazon’s free cash flow was -$42.4 billion, and management signaled it will spend even more in 2027. Shares fell about 7% in early trading on Friday.  With spending far outpacing expectations and free cash flow deep in the red, Amazon still has a lot to prove before its AI investments pay off.

The Builders Won’t Rule Forever

The pattern here is hard to miss. AI revenue is real, and it’s growing fast. But spending is growing faster. Alphabet, Meta, and Amazon all spent more cash than their businesses brought in. And none of them plan to slow down.

Cisco and RCA were right about the future of their industries. But investors who paid top dollar for the companies building that infrastructure waited years – even decades – to break even, if they ever did. Cisco’s stock didn’t return to its 2000 high until December 2025.

I expect the Mag 7 – all of which are AI Builders– to face a similar reckoning. As AI gets cheaper, the hundreds of billions they’re pouring into data centers and chips will become harder to earn back. And the market is already starting to notice, punishing the biggest spenders and rewarding restraint.

Meanwhile, a different group stands to benefit: the companies that apply AI. These businesses don’t need to build data centers or design chips. They simply put AI to work – cutting costs, improving products, and growing profits. Every time AI gets cheaper, their opportunity gets bigger.

The biggest winners of the internet era weren’t the companies building its plumbing. They were the ones that used it. I believe the same will be true for AI.

My Fry’s Investment Report portfolio reaches well beyond the biggest names in AI. It includes a drive-thru beverage chain, multiple healthcare and biotech companies, and leaders in design and retail – businesses with different ways to benefit from changing technology and consumer demand.

Check out the full portfolio – and learn how to join us here.

I don’t expect to see the Mag 7 on the market’s ofrenda next year. But history shows that the builders of a technological revolution aren’t always the ones who get to celebrate it.

The real opportunities may shift to companies that know how to put the technology to work – and turn it into lasting profits.

Regards,

Eric Fry

The post Before Celebrating the Mag 7, Remember Yesterday’s Tech Giants appeared first on InvestorPlace.

Growing up in South Texas, I didn’t go to the neighborhood convenience store for candy or gum. I went to the icehouse.

The term was a leftover from a time before electric refrigeration when storefronts sold large blocks of ice to keep home iceboxes cold.

This was a critical business in a place as hot as Texas.

The business of delivering ice was so big that one New England native, Frederic Tudor, became known as “The Ice King.” His business cut massive blocks from frozen lakes in New England, packed them in sawdust, and shipped them to customers hundreds or even thousands of miles away.

For decades starting in the 1820s, Tudor invested in specialized equipment, icehouses, transportation networks, and distribution systems.

Then electric refrigeration became widespread, and the demand for ice delivery, well …melted away.

Another Industry May Be Approaching a Similar Turning Point

The business cycle repeats this process more often than you might think.

At the beginning of the 20^th century, cities depended on horses for transportation and deliveries. The widespread adoption of automobiles put carriage manufacturers, blacksmiths, harness makers, stables, and feed suppliers out of business.

Kodak dominated the film business for generations, but digital cameras gave consumers a better alternative to buying film and paying to develop every photograph.

Blockbuster operated thousands of stores nationwide. But Netflix and other streaming services made their business model obsolete.

Nokia was the world’s leading cellular phone manufacturer when Apple introduced the iPhone in 2007. Just a few years later, smartphones shifted the marketplace, and Nokia was left behind.

And now Luke sees that a similar pattern may be emerging in a familiar industry.

For decades, big companies have dominated this industry by building increasingly sophisticated – and increasingly expensive – products.

They’ve invested billions of dollars in research, manufacturing facilities, and specialized equipment.

And they’ve developed relationships with some of the world’s most powerful customers.

But a new generation of technology is challenging the economics that made these companies so successful. Less expensive innovations can now accomplish tasks that once required equipment and infrastructure costing millions of dollars.

When technology changes the rules of an industry, the big money will flow in new directions. Companies that seemed insignificant can suddenly become essential suppliers.

And investors who recognize the shift early can find themselves in on the ground floor of the companies that will dominate the future.

That’s exactly the kind of opportunity technology investing expert Luke Lango has spent his career looking for.

Luke knows that when a technological revolution begins, the biggest winners aren’t necessarily the companies everyone already knows.

Sometimes they’re the relatively obscure businesses supplying the technology that makes the revolution possible.

And he’s demonstrated that insight before.

Consider Bloom Energy (BE).

The stock is considered part of the AI megatrend that started in November 2022. Data centers require massive, continuous amounts of electricity, and BE manufactures solid-oxide fuel cells that can be installed quickly and can provide electricity without relying on the traditional power grid.

Luke first recommended the stock in 2022, before ChatGPT’s debut and the start of the AI megatrend.

What did Luke see? Here’s what he wrote in May 2022.

We believe the world is embarking upon a journey toward energy independence. The end goal of this movement is to create a series of distributed energy systems (as energy folks like to call them) that are cheaper, easier, more reliable, and more convenient than the current interconnected global energy ecosystem.

We call this movement the Distributed Energy Revolution – and we think it’s a big, big idea.

It will rewrite the rules of the multi-trillion-dollar energy industry and create a new generation of energy infrastructure titans.

And investors who followed Luke’s recommendation had the opportunity to see gains of more than 1,000%!

Right now, Bloom Energy is trading below Luke’s buy below price of $300. So, he believes there is still plenty of room for this stock to grow.

Now, Luke believes he’s identified another major technological transformation.

And he thinks it could create an entirely new generation of stock market winners.

The transformation Luke is tracking now isn’t being driven by consumer demand alone.

Some of the world’s most powerful institutions are preparing to spend enormous sums to embrace a new generation of technology.

And just as Bloom Energy became an essential supplier to the AI revolution, Luke believes a handful of little-known companies could become indispensable to this next wave of spending.

He’s identified several stocks he believes are especially well positioned to benefit.

And he’s revealing them in a special presentation he’s prepared for investors.

Click here to watch Luke’s presentation and discover the technological revolution he believes could create the next generation of stock market winners.

You may already know the companies that dominated the last era.

The question is whether you’ll recognize the companies positioned to dominate the next one.

Icehouses rapidly disappeared after the advent of electric refrigeration, even if the name survived a little longer. But you’d rather be invested in new technologies than the ones they’re replacing.

Enjoy your weekend,

Luis Hernandez

Editor in Chief, InvestorPlace

The post An Entire Industry Is About to Change. Again. appeared first on InvestorPlace.

For my colleague Luke Lango, this glimpse at DoorDash’s new delivery system is part of a much bigger shift taking place right now.

A Senior Investment Analyst at InvestorPlace, Luke has been following AI’s move into machines that carry goods, operate equipment, and work alongside people. And he believes the companies supplying those machines could offer investors opportunities well beyond the familiar AI names.

And in his latest briefing, Luke explains which ones he’s watching and what could bring them to investors’ attention.

Take it away, Luke…

****************************

It’s 8 a.m. on a Monday, and you just ordered a hot coffee through DoorDash Inc. (DASH) to start your day. Only, the estimated arrival time keeps getting pushed later and later.

Your driver is stuck at a light. Then they hit traffic at another turn. Just when you think they’re heading to you, they make another stop first. By the time the cup finally reaches your door, that first satisfying sip has become a lukewarm disappointment.

When you used DoorDash, you paid a premium for convenience. Now you’re putting your coffee in the microwave.

The same frustration builds with every order of cold fries or late dinner that leaves your guests’ collective stomachs grumbling. Once an order leaves the kitchen, every extra minute can make it a little less worth waiting for.

But DoorDash is working on a way to shorten that wait.

How? By bypassing traffic and human decision-making entirely.

On Sept. 30, the company unveiled DoorDash Air, a new drone delivery system, with pilots planned in Northern California and restaurant partners including Chipotle Mexican Grill Inc. (CMG) and Popeyes.

DoorDash says initial tests produced deliveries from the restaurant to the customer’s door in under five minutes on average. Those results cover a limited sample of order sizes and distances, and delivery times aren’t guaranteed.

Still, you can understand the appeal. Your dinner could fly over the traffic that would otherwise hold it up.

For investors, though, the most revealing part of the announcement was where DoorDash began building the system.

Before Dinner Can Take Flight

Of course, there are some logistics that need to be sorted out first.

Who loads the drone? Does the bag fit on it? What happens to the drinks?

Without changing a thing, you might save five minutes in the air but add ten minutes of work inside the restaurant.

Delivery Drone Carrying Package Over Urban Buildings. Source: Envato

DoorDash says it designed its loading options to fit existing restaurant operations. And that’s where this becomes an investment story.

A working delivery network needs manufacturers to build loading equipment, suppliers to provide sensors, and batteries that can carry an aircraft and its cargo through repeated trips.

As more machines go to work, those practical requirements can create demand for businesses far beyond the familiar AI names.

Someone has to make the loading equipment, supply the sensors, and provide the power. That’s why I’m watching the companies that can help turn a promising demonstration into equipment customers could use every day.

An AI system that can guide a drone or direct a robot opens similar possibilities. Turning those possibilities into thousands of working machines takes motors, sensors, specialized materials, and factories capable of producing them reliably.

That creates a challenge when choosing stocks: Which companies can turn growing demand into actual deliveries?

AI Is Getting a Body

I call what DoorDash is doing “physical AI”: machines that use artificial intelligence to act in the world around us.

That includes warehouse robots, vehicles that drive themselves, and drones that can navigate without someone steering every movement. Humanoid robots could eventually take on a wider range of jobs in spaces designed for people.

These machines have something in common. They have to work around real obstacles, with real consequences when something goes wrong.

A warehouse robot needs to move goods without damaging them or injuring someone. A delivery aircraft needs to reach the right address and get its cargo down safely. Being clever is only useful if the machine can also do its job dependably.

And there are already businesses earning money from this shift.

Consider Symbotic Inc. (SYM), which supplies robotic systems used to move and organize goods in warehouses. In its third quarter of fiscal 2026, it reported $721 million in revenue, up 22% from a year earlier, and $55 million in net income.

That gives investors actual sales and profits to examine. It’s one company worth researching if you’re interested in physical AI.

This is the kind of evidence I want to see: people paying for machines that do useful work. But there’s another requirement these machines can’t escape.

Power.

A Smarter Robot Still Needs a Better Battery

A machine that moves freely through a warehouse or flies across town can’t drag a power cord behind it.

It has to carry its energy. And adding more battery adds weight that the machine must ferry along with everything else.

That creates a difficult trade-off. A bigger battery might allow longer trips, but it can also leave it with less carrying capacity. Charging takes time, too, and batteries wear down with repeated use.

Think about a delivery operator choosing between another flight and a return trip to recharge. Or a business paying for a robot that spends too much of the workday plugged into a wall.

Battery performance affects how much useful work the customer gets for the money. That’s why I see advanced batteries as much more than an electric-car story.

Solid-state batteries (SSBs) are one promising approach. They replace the liquid inside conventional batteries with a solid material. Depending on the design, that could allow more stored energy in a smaller or lighter package and reduce some fire risks.

Researchers at Oak Ridge National Laboratory are testing whether these battery advances can hold up outside small laboratory experiments. Their work specifically includes potential uses in drones and robotics.

There’s still work to do, though. A battery has to survive repeated use and be manufactured consistently at a price customers can afford. Solid-state designs also need careful safety testing; Sandia researchers are studying how they can fail and overheat.

But the opportunity is easy to understand. Help a machine work longer without making it heavier, and you could make that machine useful to more customers.

Someone Has to Build Enough of Them

Better batteries are one part of the job. Producing them in dependable quantities is another.

On July 14, Re:Build Manufacturing announced a line of U.S.-assembled battery packs for commercial and defense drones. It connected the launch to a broader expansion of drone manufacturing at its Pennsylvania facility, which was revitalized as part of an $81 million investment.

These are lithium-ion products. Customers need equipment they can use today while researchers work on what comes next.

And this is where the story becomes much bigger than dinner.

The ability to produce reliable machines in large numbers matters enormously to national defense. A promising design offers limited protection if the equipment takes too long to arrive or its parts are difficult to replace.

America needs manufacturers that can deliver, along with suppliers that can keep those manufacturers working.

As AI moves into drones and other physical systems, the stakes rise. A failure can mean more than a late delivery. Protecting people and essential services requires equipment that works when it’s needed… and enough of it to do the job.

Follow the Money to What America Needs to Build

DoorDash needs more than an aircraft to get dinner to your door. It needs equipment, power, and a system that works reliably from the kitchen to the doorstep.

America faces the same challenge on a much larger scale: turning advanced technology into machines it can build, deploy, and depend on.

For investors, the question is concrete: Which companies supply the parts, materials, and production capacity that make those plans possible?

That’s the opportunity I’ve been researching.

At July’s Pennsylvania Defense and Innovation Summit, government, finance, technology, and military leaders gathered at the U.S. Army War College. Sen. Dave McCormick’s office reported more than $10 billion in new investment commitments spanning shipbuilding, advanced manufacturing, AI, and robotics.

The announcements included a new drone battery production line, expanded manufacturing facilities, and equipment to increase output. These projects still have to deliver, but they show investors where to start looking.

Consider what happens when a customer moves from testing a handful of drones to ordering thousands.

The manufacturer needs more batteries, motors, and specialized components. It needs dependable sources of raw materials. And it needs suppliers that can increase production without sacrificing quality.

A supplier that solves that problem can become essential to its customer’s expansion.

That’s why I’m following the buildout all the way down to the businesses that make it possible.

My latest briefing takes you inside the investment thesis behind America’s push to rebuild its industrial capacity.

I explain the companies I’m watching, what makes their capabilities valuable, and the developments that could bring them to investors’ attention.

You’ll come away with a clearer way to evaluate this opportunity… and specific businesses to put on your research list.

Watch the briefing now to discover the companies I’m watching as America funds and builds its next generation of machines.

Sincerely,

Luke Lango
Senior Investment Analyst, InvestorPlace

The post AI’s Next Shift, Hiding in a Drone Battery appeared first on InvestorPlace.

Your driver is stuck at a light. Then they hit traffic at another turn. Just when you think they’re heading to you, they make another stop first. By the time the cup finally reaches your door, that first satisfying sip has become a lukewarm disappointment.

When you used DoorDash, you paid a premium for convenience. Now you’re putting your coffee in the microwave.

The same frustration builds with every order of cold fries or late dinner that leaves your guests’ collective stomachs grumbling. Once an order leaves the kitchen, every extra minute can make it a little less worth waiting for.

But DoorDash is working on a way to shorten that wait. 

How? By bypassing traffic and human decision-making entirely.

On Sept. 30, the company unveiled DoorDash Air, a new drone delivery system, with pilots planned in Northern California and restaurant partners including Chipotle Mexican Grill Inc. (CMG) and Popeyes.

DoorDash says initial tests produced deliveries from the restaurant to the customer’s door in under five minutes on average. Those results cover a limited sample of order sizes and distances, and delivery times aren’t guaranteed.

Still, you can understand the appeal. Your dinner could fly over the traffic that would otherwise hold it up.

For investors, though, the most revealing part of the announcement was where DoorDash began building the system.

DoorDash Air Shows Why the Hard Part Starts on the Ground

Of course, there are some logistics that need to be sorted out first. 

Who loads the drone? Does the bag fit on it? What happens to the drinks?

Without changing a thing, you might save five minutes in the air but add ten minutes of work inside the restaurant.

DoorDash says it designed its loading options to fit existing restaurant operations. And that’s where this becomes an investment story.

A working delivery network needs manufacturers to build loading equipment, suppliers to provide sensors, and batteries that can carry an aircraft and its cargo through repeated trips.

As more machines go to work, those practical requirements can create demand for businesses far beyond the familiar AI names.

Someone has to make the loading equipment, supply the sensors, and provide the power. That’s why I’m watching the companies that can help turn a promising demonstration into equipment customers could use every day.

An AI system that can guide a drone or direct a robot opens similar possibilities. Turning those possibilities into thousands of working machines takes motors, sensors, specialized materials, and factories capable of producing them reliably.

That creates a challenge when choosing stocks: Which companies can turn growing demand into actual deliveries?

Physical AI Is Moving Into the Real World

I call what DoorDash is doing “physical AI”: machines that use artificial intelligence to act in the world around us.

That includes warehouse robots, vehicles that drive themselves, and drones that can navigate without someone steering every movement. Humanoid robots could eventually take on a wider range of jobs in spaces designed for people.

These machines have something in common. They have to work around real obstacles, with real consequences when something goes wrong.

A warehouse robot needs to move goods without damaging them or injuring someone. A delivery aircraft needs to reach the right address and get its cargo down safely. Being clever is only useful if the machine can also do its job dependably.

And there are already businesses earning money from this shift.

Consider Symbotic Inc. (SYM), which supplies robotic systems used to move and organize goods in warehouses. In its third quarter of fiscal 2026, it reported $721 million in revenue, up 22% from a year earlier, and $55 million in net income.

That gives investors actual sales and profits to examine. It’s one company worth researching if you’re interested in physical AI.

This is the kind of evidence I want to see: people paying for machines that do useful work. But there’s another requirement these machines can’t escape.

Power.

Battery Performance Could Become a Physical AI Bottleneck

A machine that moves freely through a warehouse or flies across town can’t drag a power cord behind it.

It has to carry its energy. And adding more battery adds weight that the machine must ferry along with everything else.

That creates a difficult trade-off. A bigger battery might allow longer trips, but it can also leave it with less carrying capacity. Charging takes time, too, and batteries wear down with repeated use.

Think about a delivery operator choosing between another flight and a return trip to recharge. Or a business paying for a robot that spends too much of the workday plugged into a wall.

Battery performance affects how much useful work the customer gets for the money. That’s why I see advanced batteries as much more than an electric-car story.

Solid-state batteries (SSBs) are one promising approach. They replace the liquid inside conventional batteries with a solid material. Depending on the design, that could allow more stored energy in a smaller or lighter package and reduce some fire risks.

Researchers at Oak Ridge National Laboratory are testing whether these battery advances can hold up outside small laboratory experiments. Their work specifically includes potential uses in drones and robotics.

There’s still work to do, though. A battery has to survive repeated use and be manufactured consistently at a price customers can afford. Solid-state designs also need careful safety testing; Sandia researchers are studying how they can fail and overheat.

But the opportunity is easy to understand. Help a machine work longer without making it heavier, and you could make that machine useful to more customers.

Scaling Physical AI Requires Manufacturing Capacity

Better batteries are one part of the job. Producing them in dependable quantities is another.

On July 14, Re:Build Manufacturing announced a line of U.S.-assembled battery packs for commercial and defense drones. It connected the launch to a broader expansion of drone manufacturing at its Pennsylvania facility, which was revitalized as part of an $81 million investment.

These are lithium-ion products. Customers need equipment they can use today while researchers work on what comes next.

And this is where the story becomes much bigger than dinner.

The ability to produce reliable machines in large numbers matters enormously to national defense. A promising design offers limited protection if the equipment takes too long to arrive or its parts are difficult to replace.

America needs manufacturers that can deliver, along with suppliers that can keep those manufacturers working.

As AI moves into drones and other physical systems, the stakes rise. A failure can mean more than a late delivery. Protecting people and essential services requires equipment that works when it’s needed… and enough of it to do the job.

Physical AI Is Becoming a U.S. Manufacturing Story

DoorDash needs more than an aircraft to get dinner to your door. It needs equipment, power, and a system that works reliably from the kitchen to the doorstep.

America faces the same challenge on a much larger scale: turning advanced technology into machines it can build, deploy, and depend on.

For investors, the question is concrete: Which companies supply the parts, materials, and production capacity that make those plans possible?

That’s the opportunity I’ve been researching.

At July’s Pennsylvania Defense and Innovation Summit, government, finance, technology, and military leaders gathered at the U.S. Army War College. Sen. Dave McCormick’s office reported more than $10 billion in new investment commitments spanning shipbuilding, advanced manufacturing, AI, and robotics.

The announcements included a new drone battery production line, expanded manufacturing facilities, and equipment to increase output. These projects still have to deliver, but they show investors where to start looking.

Consider what happens when a customer moves from testing a handful of drones to ordering thousands.

The manufacturer needs more batteries, motors, and specialized components. It needs dependable sources of raw materials. And it needs suppliers that can increase production without sacrificing quality.

A supplier that solves that problem can become essential to its customer’s expansion.

That’s why I’m following the buildout all the way down to the businesses that make it possible.

My latest briefing takes you inside the investment thesis behind America’s push to rebuild its industrial capacity. 

I explain the companies I’m watching, what makes their capabilities valuable, and the developments that could bring them to investors’ attention.

You’ll come away with a clearer way to evaluate this opportunity… and specific businesses to put on your research list.

Watch the briefing now to discover the companies I’m watching as America funds and builds its next generation of machines.

The post DoorDash’s Five-Minute Drone Test Opens a Much Bigger AI Story appeared first on InvestorPlace.

Unfortunately, that includes finding ways to break into computer systems…

Last week’s internet security scare offered a troubling glimpse of this new reality. AI helped researchers uncover dangerous vulnerabilities in software used across millions of websites, triggering an urgent race to protect affected systems before attackers could exploit the weaknesses.

For our technology expert Luke Lango, the episode highlights an investment opportunity that extends well beyond traditional cybersecurity.

In today’s Friday Digest takeover, Luke explains why increasingly sophisticated AI could force businesses and governments to spend far more protecting their digital infrastructure. He highlights one established cybersecurity company that could benefit, and then takes the argument a step further.

As AI moves into drones, robotics, and other physical systems, the need for protection expands to factories, power plants, military installations, and critical infrastructure. And meeting those threats will require an enormous range of technologies, components, and specialized manufacturers.

Luke explores that broader opportunity in his latest free briefing, where he identifies companies he believes could benefit as America strengthens its defenses. You can watch it right here.

The AI Revolution is creating extraordinary new capabilities. Luke believes protecting ourselves from some of them could become a major investment theme of its own.

I’ll let Luke take it from here.

Have a good evening,

Jeff Remsburg

Last week, for operators of affected websites, the choice was terrible. Either take the site offline, cutting off customers and business, or leave it running with a flaw that could let an attacker take over the server without the need for a password.

The National Security Agency recommended taking affected systems offline if they couldn’t be updated or otherwise secured right away. And many organizations did just that.

Imagine making that decision for your business. Keep the heart of your business running and risk exposing your systems or take it down and risk losing customers.

Before the vulnerability became widely known, a repair was scheduled for Thursday, Oct. 22. But two days before the scheduled fix, word began spreading online about dangerous flaws in PHP, a programming language used to run roughly 70% of websites across the internet.

The PHP team brought the release forward to Wednesday. Suddenly, the companies preparing easy-to-install updates had one less day to finish.

After the accelerated release was announced, a security firm mistakenly published a demonstration video, revealing additional clues. And even after the original was deleted, copies kept circulating. By Wednesday, purported exploits for the vulnerabilities, dubbed “PHP2Shell,” were circulating, though the PHP team said it had not identified a working public exploit at the time of release.

The pressure was mounting: Every hour online meant more exposure. Every hour offline meant more disruption.

Enter Ondřej Surý, a volunteer maintainer in Czechia.

The PHP project had notified him earlier that week; now he, too, had one less day to prepare. But a fix couldn’t protect their servers until it reached them in a form they could use. Surý’s role was to turn the repair into updates that website operators could quickly install.

When the dust settled, his work earned him an extraordinary description from The Atlantic: “The Man Who Saved the Internet Yesterday.”

Now consider what helped bring this emergency to light in the first place.

Artificial intelligence.

OpenAI says researchers at security firm Calif used its AI to uncover the PHP flaw. While researchers at Google’s Wiz independently found and reported the vulnerabilities known as PHP2Shell.

Now imagine attackers using AI to find and exploit a vulnerability before defenders can fix it – cutting power across several cities, shutting down multiple ports, or disrupting communications at military bases.

I’ve spent years looking for companies that will benefit as AI gets smarter. Last week reminded me that some of those companies will make their money helping protect the rest of us.

Today, I want to show you one cybersecurity company worth considering. Then I’ll explain why I think the opportunity goes well beyond keeping websites online.

The Patch Is Just the Beginning

AI can help researchers find weaknesses in software. It can also help criminals figure out how to break in. OpenAI warned about both sides of that problem when it explained what happened with PHP.

For businesses, that could mean spending money sooner than they planned.

A business may have software that has worked for years. Employees know how to use it. Customers depend on it. Replacing it would cost money, take time, and risk interrupting operations.

So the business keeps it running.

Then someone finds a weakness, and fixing it becomes a priority. The company has to find every computer using that software and update it without stopping employees from doing their jobs.

AI can help find the problem. People still have to get it fixed.

As these weaknesses become easier to find, companies need to get faster at dealing with them. They need to know which computers and programs are at risk, spot signs of a break-in, and stop an attacker from reaching more of the business. And their security teams need tools they can actually use.

I think AI will move more of that work from “we’ll get to it” to “we need to pay for this now.”

The companies getting that money will have to earn it. AI will make some security work cheaper by doing it automatically. But businesses will still pay for tools that keep them safer and make life easier for their employees.

That’s where I’m looking.

One Cybersecurity Stock Worth Your Attention

Fortinet Inc. (FTNT) is one of the cybersecurity stocks we’re looking at closely after the PHP threat.

Fortinet helps businesses protect their computers and the connections between them. Its tools can block unwanted traffic and help keep people from breaking in. It also protects the computers used to run factory equipment and other machinery.

Here’s what interests me about that business.

Think about a business with offices, factories, employees working from home, and programs they use over the internet. All of that needs protection. Using a separate security tool for each part can leave employees with a complicated job.

Fortinet brings many of those tools together. That lets a business manage more of its security in one place.

And this is already a substantial, profitable business.

In the second quarter of 2026, Fortinet reported $2.05 billion in revenue, up 26% from a year earlier. After paying its operating expenses, it kept about 34 cents of every revenue dollar as operating profit.

Those results give us a way to judge the opportunity. Are customers still spending? Are sales growing? Can Fortinet keep making strong profits while improving its products?

We still have to be careful about what we pay for the stock. Fortinet has competitors, and it has to keep delivering for customers. I’d weigh the share price against its sales, profits, and prospects before buying.

But it’s worth a closer look. Fortinet already helps businesses deal with problems that AI could make more urgent.

And its work with factories and other industrial customers points to a bigger opportunity.

When a Software Problem Becomes a Physical One

Think about what happens when a hacker breaks into the computers used by a factory or a power company.

Those computers may help run machinery, check equipment, or keep an essential service working. If they stop working properly, production could stop, too. The damage can reach far beyond a website that won’t load.

That’s why I think investors should look at the wider need for protection.

The NSA’s involvement in the PHP response helps explain why this matters to the country. The agency warned about risks to government and national security computers, as well as other affected systems.

The U.S. and its allies need better protection against hackers. They also need stronger defenses against physical attacks.

Consider what it takes to protect a power plant from both a hacker and a drone that can fly without someone steering it.

You need to secure the computers. You also need equipment that can spot and stop the drone. And designing that equipment is only the start. Someone has to make the parts, build the finished product, test it, and deliver enough of it to do the job.

As AI moves into more machines and equipment, investors have more businesses to consider.

Who can build what’s needed? Who can supply parts that work reliably? Which factories need to grow before customers can buy enough of the new equipment?

The answers lead us to manufacturers, materials producers, and the companies supplying them. And that’s where another big wave of spending could begin.

Follow the Spending Beyond the Screen

Last week, Ondřej Surý became known as “the man who saved the internet.” But he had spent years doing the work that made his response possible. The emergency simply revealed how much depended on someone most people had never heard of.

It also revealed how quickly a problem can become impossible to postpone. America now faces this challenge on a wide scale as new technology changes what it takes to defend the country.

Now consider the stakes when the threat reaches a power plant, a port, or a military base.

As AI moves into drones and other machines, the potential damage becomes physical. Equipment can be destroyed. Essential services can be interrupted. Lives can be lost.

Meeting those threats requires better technology; and the factories, materials, and workers to build it.

The response is already drawing investment. But developing better technology is only part of the job. Someone has to supply the materials, manufacture the components, and turn a promising design into equipment that can be deployed.

That’s why I’m paying attention to where the money is moving right now.

I want you to understand where it could go next… and which businesses could benefit.

In July, government, technology, finance, and military leaders gathered at the U.S. Army War College for the Pennsylvania Defense and Innovation Summit.

Sen. Dave McCormick’s office reported more than $10 billion in new investment commitments. The announcements covered shipbuilding, ammunition and weapons, and newer technologies such as AI and robotics.

Those commitments still have to turn into completed projects. But they give investors a concrete reason to start looking now.

Every new production line needs equipment. Every manufacturer needs parts and materials. And when customers move from testing a few products to ordering hundreds or thousands, the companies supplying them can become much more important.

That’s the opportunity I’ve been researching as America strengthens its defenses.

Some of those businesses remain unfamiliar to most investors. But as defense spending reaches their factories and order books, that will change.

The time to study these businesses is while their opportunity is taking shape.

Fortinet gives you one company to consider for protecting computer systems. My latest briefing takes you further, into the businesses that could help America prepare for threats in the physical world.

Wait until a company’s new orders and expanding factories are obvious to everyone, and its share price may already reflect much of that growth.

Watch my latest briefing now to discover the companies supplying America’s defense buildout and learn what makes them worth your attention as an investor.

Sincerely,

Luke Lango

Senior Investment Analyst, InvestorPlace

The post The Volunteer Who Saved the Internet appeared first on InvestorPlace.

*****************************

Last week, for operators of affected websites, the choice was terrible. Either take the site offline, cutting off customers and business, or leave it running with a flaw that could let an attacker take over the server without the need for a password.

The NSA recommended taking affected systems offline if they couldn’t be updated or otherwise secured right away. And many organizations did just that.

Imagine making that decision for your business. Keep the heart of your business running and risk exposing your systems or take it down and risk losing customers.

Before the vulnerability became widely known, a repair was scheduled for Thursday, Oct. 22. But two days before the scheduled fix, word began spreading online about dangerous flaws in PHP, a programming language used to run roughly 70% of websites across the internet.

The PHP team brought the release forward to Wednesday. Suddenly, the companies preparing easy-to-install updates had one less day to finish.

After the accelerated release was announced, a security firm mistakenly published a demonstration video, revealing additional clues. And even after the original was deleted, copies kept circulating. By Wednesday, purported exploits for the vulnerabilities, dubbed “PHP2Shell,” were circulating, though the PHP team said it had not identified a working public exploit at the time of release.

The pressure was mounting: Every hour online meant more exposure. Every hour offline meant more disruption.

Enter Ondřej Surý, a volunteer maintainer in Czechia.

The PHP project had notified him earlier that week; now he, too, had one less day to prepare. But a fix couldn’t protect their servers until it reached them in a form they could use. Surý’s role was to turn the repair into updates that website operators could quickly install.

When the dust settled, his work earned him an extraordinary description from The Atlantic: “The Man Who Saved the Internet Yesterday.”

Now consider what helped bring this emergency to light in the first place.

Artificial intelligence.

OpenAI says researchers at security firm Calif used its AI to uncover the PHP flaw. While researchers at Google’s Wiz independently found and reported the vulnerabilities known as PHP2Shell.

Now imagine attackers using AI to find and exploit a vulnerability before defenders can fix it – cutting power across several cities, shutting down multiple ports, or disrupting communications at military bases.

I’ve spent years looking for companies that will benefit as AI gets smarter. Last week reminded me that some of those companies will make their money helping protect the rest of us.

Today, I want to show you one cybersecurity company worth considering. Then I’ll explain why I think the opportunity goes well beyond keeping websites online.

The Patch Is Just the Beginning

AI can help researchers find weaknesses in software. It can also help criminals figure out how to break in. OpenAI warned about both sides of that problem when it explained what happened with PHP.

For businesses, that could mean spending money sooner than they planned.

A business may have software that has worked for years. Employees know how to use it. Customers depend on it. Replacing it would cost money, take time, and risk interrupting operations.

So the business keeps it running.

Then someone finds a weakness, and fixing it becomes a priority. The company has to find every computer using that software and update it without stopping employees from doing their jobs.

AI can help find the problem. People still have to get it fixed.

As these weaknesses become easier to find, companies need to get faster at dealing with them. They need to know which computers and programs are at risk, spot signs of a break-in, and stop an attacker from reaching more of the business. And their security teams need tools they can actually use.

I think AI will move more of that work from “we’ll get to it” to “we need to pay for this now.”

The companies getting that money will have to earn it. AI will make some security work cheaper by doing it automatically. But businesses will still pay for tools that keep them safer and make life easier for their employees.

That’s where I’m looking.

One Cybersecurity Stock Worth Your Attention

Fortinet Inc. (FTNT) is one of the cybersecurity stocks we’re looking at closely after the PHP threat.

Fortinet helps businesses protect their computers and the connections between them. Its tools can block unwanted traffic and help keep people from breaking in. It also protects the computers used to run factory equipment and other machinery.

Here’s what interests me about that business.

Think about a business with offices, factories, employees working from home, and programs they use over the internet. All of that needs protection. Using a separate security tool for each part can leave employees with a complicated job.

Fortinet brings many of those tools together. That lets a business manage more of its security in one place.

And this is already a substantial, profitable business.

In the second quarter of 2026, Fortinet reported $2.05 billion in revenue, up 26% from a year earlier. After paying its operating expenses, it kept about 34 cents of every revenue dollar as operating profit.

Those results give us a way to judge the opportunity. Are customers still spending? Are sales growing? Can Fortinet keep making strong profits while improving its products?

We still have to be careful about what we pay for the stock. Fortinet has competitors, and it has to keep delivering for customers. I’d weigh the share price against its sales, profits, and prospects before buying.

But it’s worth a closer look. Fortinet already helps businesses deal with problems that AI could make more urgent.

And its work with factories and other industrial customers points to a bigger opportunity.

When a Software Problem Becomes a Physical One

Think about what happens when a hacker breaks into the computers used by a factory or a power company.

Those computers may help run machinery, check equipment, or keep an essential service working. If they stop working properly, production could stop, too. The damage can reach far beyond a website that won’t load.

That’s why I think investors should look at the wider need for protection.

The NSA’s involvement in the PHP response helps explain why this matters to the country. The agency warned about risks to government and national security computers, as well as other affected systems.

The U.S. and its allies need better protection against hackers. They also need stronger defenses against physical attacks.

Consider what it takes to protect a power plant from both a hacker and a drone that can fly without someone steering it.

You need to secure the computers. You also need equipment that can spot and stop the drone. And designing that equipment is only the start. Someone has to make the parts, build the finished product, test it, and deliver enough of it to do the job.

As AI moves into more machines and equipment, investors have more businesses to consider.

Who can build what’s needed? Who can supply parts that work reliably? Which factories need to grow before customers can buy enough of the new equipment?

The answers lead us to manufacturers, materials producers, and the companies supplying them. And that’s where another big wave of spending could begin.

Follow the Spending Beyond the Screen

Last week, Ondřej Surý became known as “the man who saved the internet.” But he had spent years doing the work that made his response possible. The emergency simply revealed how much depended on someone most people had never heard of.

It also revealed how quickly a problem can become impossible to postpone. America now faces this challenge on a wide scale as new technology changes what it takes to defend the country.

Now consider the stakes when the threat reaches a power plant, a port, or a military base.

As AI moves into drones and other machines, the potential damage becomes physical. Equipment can be destroyed. Essential services can be interrupted. Lives can be lost.

Meeting those threats requires better technology; and the factories, materials, and workers to build it.

The response is already drawing investment. But developing better technology is only part of the job. Someone has to supply the materials, manufacture the components, and turn a promising design into equipment that can be deployed.

That’s why I’m paying attention to where the money is moving right now.

I want you to understand where it could go next… and which businesses could benefit.

In July, government, technology, finance, and military leaders gathered at the U.S. Army War College for the Pennsylvania Defense and Innovation Summit.

Sen. Dave McCormick’s office reported more than $10 billion in new investment commitments. The announcements covered shipbuilding, ammunition and weapons, and newer technologies such as AI and robotics.

Those commitments still have to turn into completed projects. But they give investors a concrete reason to start looking now.

Every new production line needs equipment. Every manufacturer needs parts and materials. And when customers move from testing a few products to ordering hundreds or thousands, the companies supplying them can become much more important.

That’s the opportunity I’ve been researching as America strengthens its defenses.

Some of those businesses remain unfamiliar to most investors. But as defense spending reaches their factories and order books, that will change.

The time to study these businesses is while their opportunity is taking shape.

Fortinet gives you one company to consider for protecting computer systems. My latest briefing takes you further, into the businesses that could help America prepare for threats in the physical world.

Wait until a company’s new orders and expanding factories are obvious to everyone, and its share price may already reflect much of that growth.

Watch my latest briefing now to discover the companies supplying America’s defense buildout and learn what makes them worth your attention as an investor.

Sincerely,

Luke Lango

Senior Investment Analyst, InvestorPlace

The post The Man Who Saved the Internet – And What Investors Can Learn appeared first on InvestorPlace.

The NSA recommended taking affected systems offline if they couldn’t be updated or otherwise secured right away. And many organizations did just that.

Imagine making that decision for your business. Keep the heart of your business running and risk exposing your systems or take it down and risk losing customers.

Before the vulnerability became widely known, a repair was scheduled for Thursday, Oct. 22. But two days before the scheduled fix, word began spreading online about dangerous flaws in PHP, a programming language used to run roughly 70% of websites across the internet. 

The PHP team brought the release forward to Wednesday. Suddenly, the companies preparing easy-to-install updates had one less day to finish. 

After the accelerated release was announced, a security firm mistakenly published a demonstration video, revealing additional clues. And even after the original was deleted, copies kept circulating. By Wednesday, purported exploits for the vulnerabilities, dubbed “PHP2Shell,” were circulating, though the PHP team said it had not identified a working public exploit at the time of release.

The pressure was mounting: Every hour online meant more exposure. Every hour offline meant more disruption.

Finding the Flaw Was Only Half the Job

Enter Ondřej Surý, a volunteer maintainer in Czechia.

The PHP project had notified him earlier that week; now he, too, had one less day to prepare. But a fix couldn’t protect their servers until it reached them in a form they could use. Surý’s role was to turn the repair into updates that website operators could quickly install.

When the dust settled, his work earned him an extraordinary description from The Atlantic: “The Man Who Saved the Internet Yesterday.”

Now consider what helped bring this emergency to light in the first place.

Artificial intelligence.

OpenAI says researchers at security firm Calif used its AI to uncover the PHP flaw. While researchers at Google’s Wiz independently found and reported the vulnerabilities known as PHP2Shell.

Now imagine attackers using AI to find and exploit a vulnerability before defenders can fix it – cutting power across several cities, shutting down multiple ports, or disrupting communications at military bases.

I’ve spent years looking for companies that will benefit as AI gets smarter. Last week reminded me that some of those companies will make their money helping protect the rest of us.

Today, I want to show you one cybersecurity company worth considering. Then I’ll explain why I think the opportunity goes well beyond keeping websites online.

AI Is Making Cybersecurity Problems More Urgent

AI can help researchers find weaknesses in software. It can also help criminals figure out how to break in. OpenAI warned about both sides of that problem when it explained what happened with PHP.

For businesses, that could mean spending money sooner than they planned.

A business may have software that has worked for years. Employees know how to use it. Customers depend on it. Replacing it would cost money, take time, and risk interrupting operations.

So the business keeps it running.

Then someone finds a weakness, and fixing it becomes a priority. The company has to find every computer using that software and update it without stopping employees from doing their jobs.

AI can help find the problem. People still have to get it fixed.

As these weaknesses become easier to find, companies need to get faster at dealing with them. They need to know which computers and programs are at risk, spot signs of a break-in, and stop an attacker from reaching more of the business. And their security teams need tools they can actually use.

I think AI will move more of that work from “we’ll get to it” to “we need to pay for this now.”

The companies getting that money will have to earn it. AI will make some security work cheaper by doing it automatically. But businesses will still pay for tools that keep them safer and make life easier for their employees.

That’s where I’m looking.

Fortinet: An AI Cybersecurity Stock Worth Watching

Fortinet Inc. (FTNT) is one of the cybersecurity stocks we’re looking at closely after the PHP threat.

Fortinet helps businesses protect their computers and the connections between them. Its tools can block unwanted traffic and help keep people from breaking in. It also protects the computers used to run factory equipment and other machinery. 

That capability was already being put to work against PHP2Shell. Fortinet had released protections designed to detect and block known exploitation attempts while customers worked to install the permanent fix.

Here’s what interests me about that business.

Think about a company with offices, factories, employees working from home, and programs they use over the internet. All of that needs protection. Using a separate security tool for each part can leave employees with a complicated job.

Fortinet brings many of those tools together. That lets a business manage more of its security in one place.

And this is already a substantial, profitable business.

In the third quarter of 2026, Fortinet reported $2.08 billion in revenue, up 20% from a year earlier. Product revenue grew 37% year over year to $765 million. And after paying its operating expenses, it kept about 34 cents of every revenue dollar as operating profit.

Those results give us a way to judge the opportunity. Are customers still spending? Are sales growing? Can Fortinet keep making strong profits while improving its products?

We still have to be careful about what we pay for the stock. Fortinet has competitors, and it has to keep delivering for customers. I’d weigh the share price against its sales, profits, and prospects before buying.

But it’s worth a closer look. Fortinet already helps businesses deal with problems that AI could make more urgent.

And its work with factories and other industrial customers points to a bigger opportunity.

AI Cybersecurity Risk Extends Into Critical Infrastructure

Think about what happens when a hacker breaks into the computers used by a factory or a power company.

Those computers may help run machinery, check equipment, or keep an essential service working. If they stop working properly, production could stop, too. The damage can reach far beyond a website that won’t load.

That’s why I think investors should look at the wider need for protection.

The NSA’s involvement in the PHP response helps explain why this matters to the country. The agency warned about risks to government and national security computers, as well as other affected systems.

The U.S. and its allies need better protection against hackers. They also need stronger defenses against physical attacks.

Consider what it takes to protect a power plant from both a hacker and a drone that can fly without someone steering it.

You need to secure the computers. You also need equipment that can spot and stop the drone. And designing that equipment is only the start. Someone has to make the parts, build the finished product, test it, and deliver enough of it to do the job.

As AI moves into more machines and equipment, investors have more businesses to consider.

Who can build what’s needed? Who can supply parts that work reliably? Which factories need to grow before customers can buy enough of the new equipment?

The answers lead us to manufacturers, materials producers, and the companies supplying them. And that’s where another big wave of spending could begin.

Follow the Spending Beyond the Screen

Last week, Ondřej Surý became known as “the man who saved the internet.” But he had spent years doing the work that made his response possible. The emergency simply revealed how much depended on someone most people had never heard of.

It also revealed how quickly a problem can become impossible to postpone. America now faces this challenge on a wide scale as new technology changes what it takes to defend the country.

Now consider the stakes when the threat reaches a power plant, a port, or a military base.

As AI moves into drones and other machines, the potential damage becomes physical. Equipment can be destroyed. Essential services can be interrupted. Lives can be lost.

Meeting those threats requires better technology; and the factories, materials, and workers to build it.

The response is already drawing investment. But developing better technology is only part of the job. Someone has to supply the materials, manufacture the components, and turn a promising design into equipment that can be deployed.

That’s why I’m paying attention to where the money is moving right now.

I want you to understand where it could go next… and which businesses could benefit.

In July, government, technology, finance, and military leaders gathered at the U.S. Army War College for the Pennsylvania Defense and Innovation Summit.

Sen. Dave McCormick’s office reported more than $10 billion in new investment commitments. The announcements covered shipbuilding, ammunition and weapons, and newer technologies such as AI and robotics.

Those commitments still have to turn into completed projects. But they give investors a concrete reason to start looking now.

Every new production line needs equipment. Every manufacturer needs parts and materials. And when customers move from testing a few products to ordering hundreds or thousands, the companies supplying them can become much more important.

That’s the opportunity I’ve been researching as America strengthens its defenses.

Some of those businesses remain unfamiliar to most investors. But as defense spending reaches their factories and order books, that will change.

The time to study these businesses is while their opportunity is taking shape.

Fortinet gives you one company to consider for protecting computer systems. My latest briefing takes you further, into the businesses that could help America prepare for threats in the physical world.

Wait until a company’s new orders and expanding factories are obvious to everyone, and its share price may already reflect much of that growth.

Watch that briefing now to discover the companies supplying America’s defense buildout and learn what makes them worth your attention as an investor.

The post PHP2Shell Put Millions of Websites on Alert – and Fortinet in Focus appeared first on InvestorPlace.

In yesterday’s Digest, we said last night’s earnings from Microsoft Corp. (MSFT) and Alphabet Inc. (GOOGL) would show us how hard the hyperscalers are still pressing the AI “gas pedal.”

The answer: very hard.

But Wall Street is now grading them on a new question – can they afford it? And judging by this morning’s trading, Alphabet failed badly.

As I write on Thursday, Alphabet is down about 12%, on pace for its worst day since March 2020. Microsoft opened higher before slipping about 1% as the Nasdaq dropped 1.5%. That’s hardly a victory lap. But an 11-point gap between the two tells you how differently Wall Street graded them.

To dig into the different reactions, let’s start with Microsoft…

Revenue rose 19% to $92.3 billion, and adjusted earnings of $4.89 per share beat estimates. Azure, Microsoft’s cloud platform, grew 48%, and management guided for 49% to 50% growth next quarter. Meanwhile, Microsoft’s contracted backlog of future business jumped 73% to $677 billion.

Most importantly, it did all this while still generating cash. Here’s CNBC:

The software giant has been rapidly building out data center infrastructure to meet artificial intelligence demand, while also maintaining positive free cash flow unlike its fellow hyperscalers.

Free cash flow – the cash left over after a company pays for its operations and investments – came in at $18.6 billion, and management expects it to stay positive for the full fiscal year.

Alphabet’s story is more complicated

The AI side is booming. Google Cloud revenue soared 103% to $30.7 billion, and the Gemini app just reached 1 billion users, making it the fastest-growing product in Google’s history.

The problem is what AI is doing to Google’s core business…

Search revenue came in at $63.4 billion, missing estimates. Google said its fast-growing AI Mode search earns less per query than traditional search ads. CEO Sundar Pichai framed that as a deliberate trade-off:

Just like our shift to mobile over a decade ago, we are focused on building the best Search user experience, followed by monetization.

In other words, Google is prioritizing winning users with AI first and figuring out how to profit from them later. Wall Street doesn’t want to wait.

Then there’s the bill…

Alphabet’s free cash flow swung to negative $9.1 billion. That comes one week after Meta Platforms Inc. (META) reported negative cash flow for the first time since 2012. Alphabet has also paused stock buybacks and is now selling new shares and bonds to help fund the build-out.

How did last night’s results influence fears of “peak AI spend”?

Both earnings reports included a detail that could have kneecapped the AI infrastructure trade: both companies spent less on capex than Wall Street expected last quarter.

However, both management teams quickly put fears of “peak AI spend” to rest.

Microsoft’s spending last quarter came in about $5 billion below its own forecast of “over $50 billion.” But management says that’s a matter of timing, not a pullback.

It expects more than $50 billion again this quarter, about $170 billion for the fiscal year, and faster spending in the second half as chip deliveries and data center capacity catch up.

As for Alphabet, it held its 2026 guidance at $195 billion to $205 billion – which implies a big fourth-quarter jump – and said it expects capex to increase significantly in 2027.

In fact, Alphabet said demand is so strong that it has started renting third-party computing capacity because it can’t build fast enough.

What does this mean for the wider AI trade?

Last night didn’t call AI demand into question. Nor did it signal a spending slowdown. Both companies are capacity-constrained and still pressing the gas.

But Wall Street is questioning how the hyperscalers will pay for it – and whether AI cannibalizes the businesses that fund it. Microsoft is paying from its profits. Alphabet is now leaning on stock and bond sales as AI nibbles at its search ads.

For the companies supplying the build-out – on the receiving end of all these hyperscaler dollars – last night’s spending outlook is good news. But as the response to Meta’s earnings last week showed, infrastructure stocks can still sell off when investors start to doubt whether that spending can last. We’re seeing a version of that this morning, with many chip stocks lower alongside Alphabet.

Our next test comes tonight, when Amazon.com Inc. (AMZN) reports after the close. We’ll report back.

The other big news today – hot prices, and an even hotter economy

In yesterday’s Digest, we noted that this morning’s PCE inflation report could shift expectations for the Fed’s next move. Here’s what we got…

The personal consumption expenditures (PCE) price index – the Fed’s preferred inflation gauge – rose 0.5% in September, its biggest monthly jump since March. That put annual inflation at 3.6%. The biggest culprit was energy, with gasoline and other energy goods jumping 9.2% in the month.

Core PCE, which strips out food and energy, rose 0.3% for the month and 3.1% for the year, up from 3.0% in August.

While hot, at least the numbers were roughly in line with forecasts.

Speaking of hot, third-quarter GDP grew at a 3.4% annualized pace, beating the 3.1% estimate and marking the fastest growth in a year.

And what accounts for the acceleration? You guessed it – AI. Business investment soared 19.4%, led by a 20.9% surge in equipment spending – much of it tied to the AI build-out.

That’s the same hyperscaler spending we just covered. And it ties back to yesterday’s Digest, where we looked at how AI is adding to inflation now while its productivity payoff comes later. This morning’s data showed both sides of that coin: the build-out is powering growth, but Main Street is getting the bill first.

Real disposable income – what households have left after taxes and inflation – fell for the first time since April. And the savings rate dropped to 3.8%, its lowest level since the end of 2022.

Here’s Bloomberg Economics:

September’s personal income and outlays report paints a troubling picture of the US consumer: Inflation came in hotter, while income growth failed to keep pace.

Squeezed by higher prices, consumers held real spending flat even as the saving rate declined.

As for the Fed, strong growth plus inflation stuck well above its 2% target makes it hard for the Fed to justify holding off on another hike. On that note, the CME Group’s FedWatch Tool puts the odds of at least one quarter-point hike in December at 80%.

Finally, let’s circle back to Brazil, where a shock election earlier this week could be setting up a very profitable trade.

Brazil’s shock election: why Eric Fry is calling it an overreaction

On Monday, Brazil’s stock market suffered one of its worst days in decades. We waited to cover it until we had analysis from one of our own experts. Now we do.

First, a quick recap…

On Sunday, Brazilian voters gave President Luiz Inácio Lula da Silva a fourth term, beating Flávio Bolsonaro in the runoff roughly 51.8% to 48.2%. Bolsonaro had won the first round, and on Sunday morning, prediction markets gave him about an 80% chance of victory.

So, on Monday, investors who had bet on a Bolsonaro presidency ran for the exits.

Brazil’s Ibovespa index plunged as much as 17%, triggering the country’s first circuit-breaker halt since March 2020, before closing down 14%. Here at home, the iShares MSCI Brazil ETF (EWZ) closed down 20%.

In the fund’s 26-year history, only one day was worse: March 16, 2020.

That EWZ number could sting for some of our readers

Last Tuesday, we highlighted senior analyst Brian Hunt’s bullish call on EWZ, which was up 21% since his July note. We’ll pass along Brian’s take when it crosses our desk. In the meantime, our global macro expert Eric Fry, editor of Fry’s Investment Report, has plenty to say, since he’s recommended a handful of positions with exposure to Brazil in his newsletters.

Eric explains that the market’s worry is fiscal. Brazil’s public debt tops 82% of GDP, and investors fear Lula will keep spending high, keeping interest rates elevated.

Meanwhile, critics call Lula a “socialist” and a “populist.” But Eric believes the market’s fear rests more on those labels than on Lula’s record:

Lula’s critics apply both labels to him, and they have a point. But when it counts, Lula has also chosen pragmatism over ideology…

In October 2002, Brazilian markets collapsed on fears that Lula would win his first presidential election, and the real sank to record lows. Then Lula installed an orthodox finance team, and investors spent the next several years unwinding their “Lula discount.”

Eric also points out that the Ibovespa Index soared by nearly 1,200% in U.S. dollar terms during Lula’s first two terms, from 2003 through 2010.

But investors aren’t convinced yet. The Ibovespa slipped Tuesday and Wednesday and is down again as I write on Thursday. And with Bolsonaro refusing to concede, more volatility could be ahead.

So, where does this leave investors with Brazilian exposure?

First, what you own matters.

For example, old-line Brazilian banks Itaú Unibanco (ITUB) and Banco Bradesco (BBD) finished Monday down roughly 24% and 29%, respectively, on fears of tax increases and tighter regulation. Meanwhile, e-commerce leader MercadoLibre Inc. (MELI) fell a more modest 8%, and has since bounced almost 5% off its Monday low.

Overall, Eric sees a buying opportunity:

Markets often fixate on narratives over substance. I believe [Monday’s] selloff is an overreaction and a buying opportunity…

I expect to see a lot more of the pragmatic Lula over the next four years than the populist one.

Maintain your position [in Eric’s recommended plays].

To find out which Brazil-exposed stocks Eric holds, plus the rest of his international picks, click here to learn about joining him in Fry’s Investment Report.

Summing it all up…

The hyperscalers are still pressing hard on the AI gas pedal, but Wall Street now wants proof they can pay for the fuel. On that note, all eyes turn to Amazon after the closing bell.

Meanwhile, hot inflation keeps the Fed’s foot hovering over the brake. And in Brazil, Eric sees a selloff driven more by fear than fundamentals – which is often where the best opportunities begin.

Have a good evening,

Jeff Remsburg

(Disclosure: I own GOOGL, MSFT, AMZN)

The post The AI Test Alphabet Just Failed appeared first on InvestorPlace.

She wanted to downsize. So, in April 2025, she listed her four-bed, 3.5-bath home in Murphy, Texas, for $750,000. Six months and several price cuts later, it still hadn’t sold. So she pulled the listing, then tried again this February.

Finally, more than a year later, a buyer agreed to $650,000, after Suder threw in $9,000 toward repairs, according to the Associated Press.

Her experience isn’t unique.

In Oregon, 36-year-old Ethan Butner is having the opposite problem. His family is growing, and they need a bigger home.

He’d already accepted an offer on a new house near Portland. But first, he needs to sell his current home.

After more than two months on the market, Butner cut his asking price by $30,000. One offer fell through. He even replaced appliances and flooring in hopes of attracting a buyer.

But his family is still waiting to move, according to the AP.

Folks, these two families are at very different stages of life. But they’re facing the same problem: a housing market squeezed by high prices and high borrowing costs.

That’s why the Federal Reserve’s interest rate decisions matter, even when it leaves rates alone.

On Wednesday, the Fed voted to do just that. It was the outcome Wall Street expected, and frankly, so did I.

But the details are worth getting into – and that’s exactly what we’ll do in today’s Market 360. I also know investors are eager to hear what the Fed will do next. I’ll share my thoughts on that in a moment.

Then, I want to turn our attention to something that could have a much bigger impact on your portfolio over the long run. It has to do with a major shift in global energy trade – away from the Middle East and toward the American Gulf Coast.

I’ll explain why this could be a major long-term shift in the balance of power, and how I believe investors can position themselves to profit right now.

Why the Fed’s Split Decision Matters

On Wednesday, the Federal Reserve left its key interest rate unchanged at 3.75% to 4% while giving itself more time to assess the economy.

The vote was 10-2, with Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-point increase. I expect the disagreement over what comes next is the story that will continue to play out for the remainder of the year.

In its policy statement, the Federal Open Market Committee (FOMC) described economic activity as expanding at a “strong pace” while acknowledging that inflation remains elevated.

But in his post-meeting press conference, Fed Chair Kevin Warsh noted that while “monetary medicine is starting to work,” he made it clear that the central bank isn’t ready to declare victory.

September’s inflation report helps explain the caution. Consumer prices rose 0.6% for the month and 3.7% from a year earlier, with gasoline accounting for more than half the monthly increase.

That means with inflation still well above the Fed’s 2% target, another rate hike remains on the table.

A hold doesn’t immediately make borrowing cheap again. Mortgage rates tend to follow the 10-year Treasury yield, while credit-card rates respond more directly to the Fed through banks’ prime rates.

The bond market is showing some encouraging signs of easing, though. The 10-year yield fell from about 5.3% on October 5 to just above 5%. If yields continue to fall, it could ease some pressure on borrowers.

But the Fed still needs to bring inflation under control. In fact, today we learned that the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index (PCE), rose 0.5% in September and 3.6% from a year ago.

Personally, I would not be surprised by another hike before year-end. CME Group’s FedWatch shows the market expects a 75% chance for another hike this year.

I suspect Warsh would prefer to avoid another hike if inflation gives him room. An agreement that eases the Iran conflict could help by taking pressure off energy prices.

But the bottom line is that the Fed is still walking a tightrope. It needs to bring inflation under control without putting too much pressure on the economy.

And while Wall Street waits to see what happens next, I want us focused on something we can actually measure: corporate earnings.

Why Energy Earnings Are Soaring

Earnings season is in full swing.

According to our friends at FactSet, the Information Technology (IT) sector is on track for 65.6% earnings growth in the third quarter, the second-highest rate of any sector.

Coming in first? Energy, which leads with a whopping 136% earnings growth, more than double IT. Those figures combine results already reported with estimates for companies still to report.

Higher oil prices explain part of energy’s surge. Prices were roughly 32% higher in the third quarter compared to a year earlier, boosting producers’ revenue. Strong refining profits are contributing, too.

Across the energy sector, profit margins have nearly doubled compared to a year ago. The S&P energy sector rallied 23% over the past six months, compared to a 7% rise for the broader market.

Folks, those are impressive numbers. And they’re a good reminder of why I always tell you to follow the earnings.

Of course, higher oil prices won’t last forever. If supply disruptions ease and crude prices fall, some of the industry’s recent earnings windfall could fade.

But that’s why I’m especially interested in another trend that’s developing in American energy. One that could create opportunities long after the current crisis has passed.

I’m talking about the growing number of customers around the world making long-term commitments to buy American oil and natural gas.

And those commitments are helping lay the groundwork for what I believe could be a historic expansion of America’s energy industry.

An Energy Opportunity Measured in Decades

While the Fed makes decisions one meeting at a time, some of America’s energy customers have been making commitments for the next 20 years.

According to the Energy Information Administration, roughly 95% of the U.S. liquefied natural gas (LNG) volumes newly contracted in 2025 were covered by 20-year agreements.

Think about that. These companies aren’t buying a few shipments of natural gas to get through the next winter. They’re securing American energy supplies for the next two decades.

These deals began before the Iran conflict, which tells me something important. The demand for American energy isn’t simply a response to the latest crisis in the Middle East – although the conflict has made the need for reliable supplies even more urgent.

It’s part of a much larger trend.

And meeting that demand will require an enormous amount of infrastructure. More pipelines, processing facilities and export terminals to move American energy to customers around the world.

That’s where I see some of the most exciting investment opportunities.

I call it America’s $31.5 Trillion IPO. And I believe the newly-named Gulf of America is the centerpiece of this “IPO.”

I believe we’re witnessing a shift in global energy trade that could create opportunities for investors over the next 15 years.

And I’ve spent the past several months researching how to take advantage of it.

In my latest presentation, I explain what President Trump set in motion last year, why I believe the U.S. could unseat the Middle East as the balance of power shifts – and the companies you’ll want to own as this unfolds.

If I’m right about where global energy trade is heading, this is a shift you’ll want to get ahead of.

Click here to watch my presentation and see how you can position yourself for America’s next great energy boom.

Sincerely,

Louis Navellier

Editor, Market 360

The post The Fed Hit Pause, But the Energy Boom Is Just Getting Started… appeared first on InvestorPlace.

In his 1989 letter to Berkshire Hathaway shareholders, Warren Buffett penned one of the most famous investing quotes: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Buffett warns that buying a seemingly cheap business can be a poor investment if the underlying business is weak. But there’s another side to this coin:

Even a great business doesn’t automatically make its stock a great buy.

Today, this lesson applies to the AI boom. A company can be well-run and benefit from the technology’s powerful trend, but that doesn’t make it a good buy.

That’s because, across industries, AI-related spending is helping companies grow even while their traditional markets remain weak. The risk is that investors mistake AI-driven growth for strength across the entire business.

This is especially important for companies selling the infrastructure, equipment, and materials needed to build out AI. Their AI-related businesses may be booming, but other parts of their operations can still struggle. And if AI spending slows, that growth could prove less durable than investors expect.

That brings us to a surprising case study: a company whose stock has soared this year, thanks in part to the AI boom. On the surface, the story looks like a clear win. But look closer, and the picture gets more complicated.

I recently recommended selling this stock to my subscribers. The reasons why reveal a bigger risk hiding beneath the AI rally – and a lesson to keep in mind before buying other stocks riding the same wave.

In today’s Smart Money, let’s examine this company, and explore why strong growth doesn’t always make a stock worth buying.

Then, I’ll share where I see better opportunities instead.

A Great Stock to Sell

This story starts with copper.

The metal has rallied this year on expectations that building out AI infrastructure will require huge amounts of the commodity.

Back in January, I predicted that copper would top $7.50 this year. It came close to $6.85 in September, although it has ultimately fallen short of my prediction. Even so, Freeport-McMoRan Inc. (FCX), one of the world’s largest copper producers, has gained 29% so far this year – more than double the S&P 500’s 12.8%.

It might come as a surprise, then, that I recommended my Fry’s Investment Report subscribers sell the company last week. Freeport delivered a 430% gain for my subscribers who followed my initial recommendation back in January 2020.

But this wasn’t just about locking in profits.

The mining company’s rally raises an important question: How much more growth can investors reasonably expect? The answer starts with the same two words that helped launch this recommendation: artificial intelligence.

Back then, AI was a production story. Freeport had been testing a machine-learning model at its Bagdad mine in Arizona that promised to lift output by about 5%. Today, AI is a demand story, and the market trades FCX like a data-center stock.

On Freeport’s second-quarter conference call in July, for example, CEO Kathleen Quirk said customers reported robust order books tied to AI data centers and energy infrastructure. Together with better auto demand, she said, those orders were “more than offsetting weakness in private construction.”

In other words, AI demand has been covering for weakness elsewhere.

For now, AI demand is helping keep Freeport’s business strong. While that could seem like good news, the underlying risk is that Freeport isn’t benefiting from a broad-based surge in copper demand. The company’s growth depends more heavily on continued spending on AI and energy infrastructure. However, if that source of demand weakens, which recent trends suggest it might, the copper price could come under pressure.

Copper Demand Is Cooling

The first signs of cooling have already appeared. Copper has fallen 3.7% over the past month and now sits about 5% below its record. The supply picture has shifted, too. The International Copper Study Group forecast a 150,000-tonne deficit for 2026 last October, then reversed that to a 96,000-tonne surplus by April.

Meanwhile, Comex warehouses – storage facilities where copper and other metals are held for delivery through futures markets – hold a record-high 800,000 tonnes of copper. That massive stockpile is double what it was one year ago, and EIGHT times what the COMEX held two years ago! Those inventories could weigh heavily on prices if demand softens even a little. The financial group Macquarie warns a collapsing copper price is not out of the question.

Freeport’s profits are closely tied to copper prices. According to its CFO, every 10-cent change in copper prices affects the company’s annual earnings by about $390 million, or 4.4%. So, copper’s 34-cent drop from its record could reduce Freeport’s annual earnings by roughly 15% if prices stay at current levels.

Right now Freeport is a well-run company. But its future upside now depends largely on continued AI and infrastructure spending.

Avoid the AI Growth Trap

Bottom line: Beware of confusing AI-driven growth with lasting business strength.

Companies are spending billions on AI infrastructure, supporting demand for everything from copper and electrical equipment to chips and data-center hardware. But if AI-related spending slows, it could expose the weakness that strong demand has been masking.

That doesn’t mean you need to avoid every company benefiting from AI. It means looking beyond the AI boom for businesses with durable demand that can thrive even if AI spending cools.

That’s the kind of opportunity we’re looking for in Fry’s Investment Report. These companies include health care leaders, energy producers, and businesses serving everyday consumer needs.

They have one significant thing in common: growth drivers that extend beyond the AI boom.

To learn more about Fry’s Investment Report, click here. As a member, you’ll receive access to my latest research and reports.

Most importantly, I’ll help you identify “wonderful companies,” as Buffett calls them, trading at attractive prices – and recognize when it’s time to take your profits and move on.

Join me at Fry’s Investment Report today.

Regards,

Eric Fry

The post Why I Sold This Copper Stock for a 430% Gain appeared first on InvestorPlace.

In my October 27 episode of Being Exponential, I explained why the recent pressure on AI infrastructure stocks doesn’t mean the AI computing boom is finished. It means investors need to get much more selective about which companies can fund the next phase of growth.

That’s where Nebius comes in. Among the NeoCloud stocks I reviewed, it was the only one where I saw enough fundamental strength and technical evidence to make a high-conviction case for buying the dip. Here’s why.

Why NeoCloud Stocks Are Under Pressure

Building AI infrastructure takes much more than buying NVIDIA Corp. (NVDA) GPUs. Providers need suitable sites, reliable power, expensive networking equipment and, crucially, enough capital to bring computing capacity online before collecting all the revenue it can generate.

Meanwhile, hyperscalers such as Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOGL) are pouring capital into their own AI buildouts. My concern is that as these larger, established companies seek additional financing, smaller NeoCloud operators could face tougher terms and higher borrowing costs.

That creates a potential shakeout. A company can have impressive customer demand and still struggle if it cannot afford to deliver the computing capacity it has promised. I expect the industry to consolidate, and the survivors could ultimately enjoy a larger share of the market.

For investors, the question is which NeoCloud businesses have the financial resources, infrastructure and strategic relationships to survive that consolidation.

Nebius Stock: Why It Stands Out

1. A More Attractive Financing Profile

In the episode, I compared Nebius’s approximately $8 billion in cash and $10 billion in debt with a far more heavily leveraged CoreWeave Inc. (CRWV) balance sheet, based on the figures available in my analysis at the time. Those point-in-time figures are not a substitute for the companies’ latest filings, but they illustrate why I see Nebius as relatively better positioned.

Borrowing terms matter alongside the size of a company’s debt. In the podcast, I discussed relatively low-coupon convertible financing as part of Nebius’s advantage. Separately, Nebius announced a $3.5 billion Citigroup Inc. (C) facility on October 22, 2026, with a 364-day maturity and initial interest at Term SOFR plus 2.75%, subject to adjustments. That is additional access to funding, but it also creates floating-rate and refinancing exposure.

My point is comparative: I believe Nebius has more room to maneuver than some rivals if capital becomes harder to obtain.

2. Microsoft and Meta Provide Demand Visibility

Long-term commitments from major customers give Nebius something important: visibility into future demand for computing capacity. On the show, I highlighted Microsoft and Meta Platforms Inc. (META) as major customers. These agreements strengthen the case for Nebius, but delivering that capacity will still require substantial capital and execution.

In its March 16, 2026 announcement, Nebius described a five-year agreement with Meta comprising $12 billion of dedicated capacity beginning in early 2027 and additional capacity purchases of up to $15 billion. Nebius said the overall agreement could be worth up to $27 billion. Those figures are future commitments, not revenue already recognized.

Those relationships strengthen the investment case, although they also create customer concentration risk. If a major customer changes its deployment plans, the consequences could be significant.

3. Power, Land and NVIDIA Backing Matter

AI computing capacity is only useful if the operator can power and deploy it. That’s why I put so much weight on access to electricity, suitable land and data center development rights.

Nebius has campuses and development projects in Europe and the United States, including major power plans in Missouri. Planned or contracted megawatts should not be confused with capacity already energized and producing revenue. Still, I see its infrastructure footprint as an advantage in an industry where getting power online can be a major bottleneck.

NVIDIA’s strategic backing also matters to my thesis. In a March 11, 2026 announcement, NVIDIA and Nebius disclosed a partnership and a $2 billion NVIDIA investment. That relationship lends credibility, but it does not guarantee profitability or stock returns.

Nebius Revenue Growth Shows the Opportunity, and the Risk

Demand is translating into reported growth. According to Nebius’s August 12, 2026 earnings release, second-quarter group revenue reached $582.3 million, up 454% year over year. Its AI cloud business contributed $574.9 million, approximately 99% of group revenue.

The company also reported a $3 billion annualized revenue run rate at the end of June. Annualized run rate is a snapshot of business activity expressed on a yearly basis, not revenue already recognized for the year.

These figures help explain my optimism, but fast revenue growth does not solve every problem. Nebius continues to face substantial capital spending requirements, and positive adjusted EBITDA does not mean its expansion is generating positive free cash flow.

Want more of my AI investing research? I cover the companies, technologies and market shifts I’m watching in my free e-letter. Sign up for Hypergrowth Investing here.

Is NBIS Stock Showing Signs of a Bottom?

Fundamentals are only part of my analysis. In the episode, I also pointed to Nebius holding an important support area around $150, an oversold relative strength index (RSI) bounce, improving momentum and the possibility of a bullish moving average convergence/divergence (MACD) crossover.

Those were observations about the chart when I recorded the episode, not permanent price levels. At the time, the bullish MACD crossover had not fully triggered, and other confirmation was still missing. Technical indicators can reverse, especially in volatile stocks.

I was sufficiently encouraged to favor Nebius for investors with a high tolerance for risk. For more cautious investors, my approach was to consider starting with a smaller position and adding only as the chart and broader conditions improved. That is a way to manage uncertainty, not a guarantee against losses.

The Biggest Risks to My Nebius Stock Thesis

The central risk is straightforward: Nebius must keep financing, building and delivering expensive AI computing infrastructure. Strong customer demand does not guarantee profitable execution.

• Financing and dilution: Expansion may require more debt or equity capital, potentially increasing borrowing costs or diluting shareholders.
• Customer concentration: A relatively small number of major customers account for important commitments.
• Deployment delays: Power connections, construction and GPU deliveries can affect when contracted capacity begins generating revenue.
• Market volatility: Sentiment, interest rates and AI capital spending expectations can move NBIS sharply, even without a major change in reported demand.

My Bottom Line on Nebius Stock

I remain bullish on the long-term demand for AI computing. But the next phase of the NeoCloud market may be defined by financing discipline and execution, not just the size of a company’s order book.

That’s why Nebius is the name I favor. I believe its customer relationships, infrastructure position, strategic backing and comparatively attractive financing give it a better chance of emerging from a difficult industry shakeout. In my review of the group, it was the one NeoCloud stock where the fundamentals and technical setup aligned most convincingly.

I’ve previously explained how rising demand for AI agents could expand the need for computing capacity in The 3 AI Stocks That Will Define 2027. But demand alone isn’t enough. Nebius still has to deliver.

Follow my next AI stock ideas for free.

In my free e-letter, I share research on AI trends, companies and investment opportunities I’m following, along with my perspective on market developments. If you want to follow how the NeoCloud opportunity develops, subscribe to Hypergrowth Investing here.

Nebius Stock FAQ

What is Nebius Group (NBIS)?

Nebius Group N.V. is a Nasdaq-listed company whose primary business provides specialized AI cloud computing infrastructure, including GPU capacity and supporting software. The group also includes other technology businesses.

Why does Luke Lango favor Nebius stock?

Luke favors Nebius because he believes its financing profile, large customer agreements, access to power and land, and NVIDIA relationship make it better positioned than some rivals to withstand NeoCloud industry consolidation.

What are the biggest risks of buying NBIS stock?

Key risks include high capital spending, borrowing and refinancing costs, possible shareholder dilution, dependence on major customers, infrastructure deployment delays and volatile stock prices.

Want more of my AI investing research? I cover the companies, technologies and market shifts I’m watching in my free e-letter. Sign up for Hypergrowth Investing here.

The post The One NeoCloud Stock to Buy Now appeared first on InvestorPlace.

When Micron (MU) reported its quarterly earnings in early October, we told you Wall Street had developed a peculiar complaint: Business was booming, but perhaps it wasn’t booming quite spectacularly enough.

Revenue had surged. Earnings had exploded. Management’s forecast pointed to another record quarter. Yet, after the report, investors still found reasons to worry. Margins could be peaking. The beat wasn’t as big as previous beats. Memory is cyclical, after all.

Our answer then was that investors were drawing the wrong conclusion from the history. The question that actually matters is how much earning power these companies can sustain before supply catches up with demand – and Micron’s evidence suggested that catch-up could take years.

This week, the two other giants of memory and storage took the stand. And both testified for the bulls.

Seagate’s AI Storage Demand Now Stretches Into 2030

On Oct. 27, Seagate (STX) – the leading supplier of the high-capacity hard drives that store the world’s AI training data – reported fiscal first-quarter revenue of $4.23 billion, up 61% year-over-year. Earnings came in at $7.68 per share, versus $2.61 a year ago. CEO Dave Mosley called it “another quarter of record profitability and our highest ever free cash flow.”

More important than the record results was what Mosley said about visibility. The vast majority of Seagate’s near-term supply is already allocated under long-term agreements running through 2028, with some cloud customer agreements extending through calendar 2030. In his words: “Data creation, retention and reuse continue to compound storage demand with long term customer demand visibility reinforcing our view of a multiyear growth phase” – with that visibility “extending beyond 2030.”

And the market’s response to all this? The stock slipped, with analysts flagging – you guessed it – slowing margin growth.

Sound familiar?

SK Hynix Says DRAM and HBM Are Effectively Sold Out Through 2029

Then, the next day, SK Hynix (SKHY) – the high-bandwidth memory leader, newly listed on the Nasdaq this summer – delivered what may be the single most emphatic data point of this entire supercycle.

Quarterly revenue crossed 100 trillion won ($74.4 billion USD) for the first time in company history. Operating profit soared 632% year-over-year, blowing past Wall Street estimates on both lines. DRAM average selling prices rose by a high-20s percentage in a single quarter. Server DDR5 shipments jumped more than 40% sequentially. And HBM4 – the next-generation memory bound for Nvidia’s newest AI platforms – is set to surpass HBM3E in both shipments and revenue this quarter as production ramps.

But here’s the number we care most about: SK Hynix has secured long-term agreements with 14 major customers covering more than 50% of its production capacity for 2027 and ‘28 – and management considers its DRAM and HBM output effectively sold out through 2029, with demand expected to outpace supply through 2030.

The company is so confident in that trajectory that it announced plans to return roughly 100 trillion won to shareholders – at least 30 trillion in cash dividends, plus 60 trillion in buybacks and cancellations – while also significantly increasing investment next year.

Micron, SK Hynix and Seagate Point to a Multiyear Supply Squeeze

If customers expected plentiful supply and falling prices around the corner, they would have no reason to reserve capacity years in advance. They could simply wait and let suppliers compete for their business.

Instead, look at what the whole complex just told us, within a span of four weeks:

• Micron: More than 75% of fiscal 2027 shipments already committed, allocation discussions moving into 2028, some agreements stretching beyond 2030 – and management still can’t identify when DRAM supply catches up with demand.
• SK Hynix: Over half of 2027-28 capacity locked under long-term agreements, effectively sold out through 2029, demand outpacing supply through 2030.
• Seagate: Near-term supply allocated through calendar 2028, cloud contracts into 2030, demand visibility beyond it.

That’s DRAM. That’s high-bandwidth memory. And now it’s hard drives, too. 

Every tier of the data storage stack, sold out years in advance, confirmed by three different management teams with three different customer bases.

One supplier saying this could be company-specific enthusiasm. All three saying it, in the same month, is structural.

Now, as we’ve said before, volume commitments improve visibility, but they don’t make every future shipment irrevocable, and committed volumes don’t always carry fixed prices. 

Still, when the entire supply chain is telling the same story, we give that story a lot more weight.

AI Agents Could Add Another Layer of Memory and Storage Demand

The story extends beyond the high-bandwidth memory attached to AI accelerators, too.

AI agents need the rest of the server to do useful work: CPUs to execute tasks, system memory to keep information available, and storage to retain and retrieve it. Micron specifically identified agents as a growing source of CPU demand, with implications for memory and storage across the system. Seagate’s results show the storage leg of that stool is already bearing weight.

And according to Micron management, customers are currently limiting memory per system just to stretch scarce supply across more deployments. That suggests today’s purchases may understate what customers would install if availability improved – a second wave of demand waiting on supply that, per this week’s reports, isn’t arriving anytime soon.

The Bottom Line: The AI Memory Supercycle Still Has Room to Run

Our bullish view doesn’t require memory and storage to stop being cyclical. It requires this expansion to last longer than investors currently expect. And the market keeps telling us expectations remain remarkably low.

Micron trades at roughly six to seven times forward earnings. Seagate just posted record profitability and its highest-ever free cash flow – and the stock fell anyway. These are skeptical valuations for companies whose customers are contractually locking up supply into the next decade.

We believe that disconnect – years of committed demand priced like a cycle about to roll over – remains the opportunity in the AI memory supercycle.

As demand grows, the companies supplying essential components gain both pricing power and a clearer view of future orders. Memory and storage are those constraints today. Power and physical infrastructure are next.

For investors willing to look beyond the most familiar AI names, those dependencies open up a much broader field of opportunities.

Explore our research on the infrastructure behind the AI buildout.

The post SK Hynix Is Sold Out Through 2029 as Seagate Locks In Demand Into 2030 appeared first on InvestorPlace.

Earlier today, the Federal Reserve held its benchmark rate at a target range of 3.75% to 4%.

The decision itself was no surprise. Heading in, futures traders had priced in roughly a 10% chance of a hike.

As for the official statement, it offered little substantive detail. Beyond saying that “the accumulation of more information” will guide its next move, it offered no hint about December.

What’s more interesting is today’s vote…

It was 10-2, with Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack both dissenting in favor of a quarter-point hike. That’s a notable shift from September, when the committee voted unanimously to raise rates. The Fed is divided again – and the dissenters want to move faster, not slower.

Cook’s dissent is especially relevant to today’s Digest because she pointed at the AI buildout as her top concern heading into next year. As she recently put it at the New York Fed, “It’s already causing inflationary pressure.” Those pressures, she added, “may not resolve very quickly.” We’ll return to this idea in a moment…

Then came Warsh’s press conference, which was vintage Warsh: loads of words with little message. He called inflation “too high,” insisted there’s “no soft inflation target,” and once again refused to signal the Fed’s next move.

The one real piece of news was structural. Starting next year, the Fed will vote on rates at only seven of its eight meetings, using the other for a broader strategy discussion. In 2028, it drops to six rate decisions. Fewer decision points could mean bigger market moves around each one.

Now, returning to AI and the Fed, the most interesting part of the press conference was when Warsh was asked whether rate hikes could affect the AI investment surge. His answer:

…with respect to the new technology and this investment surge – do interest rates matter?

I believe they do. And I don’t believe that they’re somehow divorced from the rest of the economy.

Fair enough – rates do matter, and we’ll look at where they bite below. But “matter” isn’t the same as “decide.”

The risk the Fed can’t fix

Wall Street will spend tonight speculating about hikes in December and beyond. And tomorrow’s PCE inflation report could influence opinions on where rates are going and push stocks around over the coming days.

But for AI investors, the Fed can only slow or speed up this trade. It can’t stop it.

The bigger risk is one the Fed can’t fix – and its rate hikes may make things worse.

To unpack this, let’s start with how Warsh himself described the AI spending boom two weeks ago – a “shock.” The problem is that the consequences of this shock will linger long after the Fed stops hiking or even starts cutting rates.

Warsh’s new word for AI

Before becoming Fed Chair, Warsh was one of AI’s biggest optimists on inflation. Last November, he wrote that AI would be “a significant disinflationary force.”

But two weeks ago in Bangkok, at the IMF’s annual meetings, he described the AI spending boom very differently:

If you’re a central banker… you’ve got to recognize this as a shock.

His point was about timing: AI-related spending is hitting the economy now – shocking it – while the productivity payoff arrives later.

In other words, AI comes with a bill before it delivers a benefit. The long-term promise is AI making everything cheaper and more efficient. But first comes the cost of building it – and right now, that cost is rippling through the economy.

How big is the bill?

Bigger than most investors realize.

Researchers at the Minneapolis Fed found that AI-driven demand for memory chips and computer hardware pushed prices in that category up 12.2% over the year through July. That alone added roughly 0.4 percentage points to core PCE inflation – about as much as President Trump’s entire tariff program. Goldman Sachs estimates AI’s contribution could reach 0.5 points by year-end.

For context, core PCE – the Fed’s preferred inflation gauge – ran at 3.0% in August against the Fed’s 2% target. That makes AI responsible for about 40% to 50% of the overshoot.

You can see it in your own budget. A 32GB memory kit for a home PC that cost $100 to $200 a year ago now runs about $450.

Meanwhile, data center demand has driven electricity costs to climb where those centers cluster. As of June, residential power rates were up 10.4% in Pennsylvania and 9.7% in Ohio from a year earlier – roughly double the national average.

Why rate hikes can’t fix this

The hyperscalers aren’t going to stop building AI because the fed funds rate climbs a quarter point. They’re funding the buildout mostly from mountains of cash (and now, some new equity issuance as we saw with Meta Platforms Inc. (META) last week).

Hammack – one of today’s two dissenters – acknowledged as much, noting that higher rates could slow activity outside the AI sector without necessarily interrupting tech investment.

Now, as we noted above, Warsh pushed back on this idea today. And at the margins, he’s right – rates “get in the cracks,” as he put it in today’s press conference. You can see those cracks in companies building AI with borrowed money.

As we highlighted in the Digest last week, bonds of AI cloud provider CoreWeave Inc. (CRWV) touched a 15% yield earlier this month as lenders demanded higher yields to fund its debt-heavy buildout. Its stock fell, and so did peer Nebius Group N.V. (NBIS).

As The Wall Street Journal put it today:

Borrowing costs have risen for some lower-rated companies tied to the AI build-out.

But those are the edges of the buildout, not its core. Higher rates may thin the herd of debt-funded players. They won’t stop the hyperscalers’ spending, which is driving most of AI’s price pressure.

So, for the hyperscalers driving most of this inflation, a hike barely registers. Instead, it lands on the family with a mortgage, a car loan, and a rising power bill. The Fed’s main tool doesn’t touch AI-driven inflation – it just adds to Main Street’s bill. And as you’ll see, that bill matters more for your AI stocks than any rate decision.

The good news that isn’t

Now, here’s a twist – AI’s contribution to inflation may be near its peak.

Memory prices are still rising, but far more slowly. Contract prices for conventional memory chips jumped 90% to 95% in the first quarter of this year, then rose just 13% to 18% in the third quarter. Goldman expects its memory-linked price index to peak around November, and Oxford Economics projects AI’s drag on core inflation diminishing through 2027. Power costs are leveling off, too.

So, by next year, AI’s price pressure may stop getting worse. But that’s not the same thing as getting better.

As we’ve highlighted in the Digest many times, inflation measures how fast prices are rising – not how high they already are. And certainly not the fallout of high prices.

We have a great example of this with the housing market.

The latest Case-Shiller national home price index, released yesterday, rose 2.1% over the year through August. That trails the 3.4% inflation rate, meaning home values have fallen in real terms for 15 straight months. By that measure, housing has no significant inflation problem at all.

Yet the median existing-home price was still higher in September than a year earlier – the 39th straight month of annual gains – and sales are crawling along near their slowest pace in roughly three decades.

You see, after the price explosion a few years ago, prices never came down even after inflation faded. The result is a price level that makes buying completely unrealistic for most people, inflation levels be damned.

And that’s the trap. The Fed may win today’s inflation fight, with rate hikes cooling the rest of the economy and AI’s price spike running its course. But AI-driven prices may not come back down meaningfully. So, Main Street can keep losing the affordability war long after the Fed declares victory.

So, where will Main Street’s frustration over high prices go?

To the ballot box.

When Gallup asked Americans whether they want an AI data center in their community, 70% said no. And the backlash is bipartisan, with critics ranging from Bernie Sanders on the left to Josh Hawley on the right.

Just last week, NBC’s Meet the Press devoted a segment to whether AI anger could help decide control of Congress in next Tuesday’s midterms.

What about AI’s long-term payoff? Any chance it arrives soon enough to ease the pressure?

Well, in one way, it may be starting to show up. According to the BLS, U.S. worker productivity rose 2.2% over the year through the second quarter, and some economists see early signs of AI at work.

But so far, those gains are going to profits, not paychecks. Over that same quarter, real hourly compensation fell 3.1%, and the share of business output paid to workers as wages and benefits fell to 52.9%, the lowest on record.

So, the payoff may be arriving – just not for Main Street. And that only adds fuel to this simmering anger.

Regular Digest readers know our technology expert Luke Lango, editor of Innovation Investor, has been warning about exactly this.

Here’s Luke:

The force that will derail the AI Boom is not a technological failure, demand collapse, or even a recession.

It is politics – specifically, a populist backlash against AI that is already building momentum.

Luke has tied that backlash mostly to the 2028 election cycle – “not this earnings season or even this year.”

And this is where we come back to the Fed. The backlash comes from high prices, not the inflation rate. So, it won’t fade when AI inflation peaks – or when the Fed stops hiking.

So, what do you do with this?

Let’s start with a simple metaphor – the AI trade as a race car…

Interest rates are the brake. Rate expectations tap it or ease off it from week to week, often driven more by emotion than substance.

The hyperscalers’ spending is the gas pedal – the longer-term force that actually drives this trade forward.

Finally, politics is the emergency brake. Ultimately, it will decide whether the AI trade keeps running – or skids out when that brake gets yanked.

Too many AI investors are focusing on the brake, paying less attention to the gas pedal, and hardly any attention to the emergency brake.

Luke’s advice for handling this is simple – use the window while it’s open:

Make your money now. The window for transformational wealth creation in this AI cycle is the next two to three years. This trade will not last forever.

In practice, that means three things:

• Know where the political heat lands. The parts of the AI trade that show up on a voter’s monthly bill – especially power-hungry data centers where rates have spiked – are the likeliest targets for new fees, rules, and siting fights.
• Favor builders that pay their own way. Last week, the market punished Meta after its report showed negative free cash flow alongside $825 billion in spending commitments. Companies funding the buildout from cash rather than debt hold up better if rates stay high or the politics turn.
• Write down your exit plan now. Decide in advance which AI names you’ll hold through a political storm and which you’ll sell – and when.

To follow along with Luke’s analysis of the AI boom, his Peak Watch List that we covered in yesterday’s Digest, and which specific AI stocks he’s positioning in before 2028, click here to learn about joining him in Innovation Investor.

Before you go – a check on the gas pedal

Microsoft Corp. (MSFT) and Alphabet Inc. (GOOGL) were scheduled to report after the closing bell today, so their results are likely out by the time you’re reading this.

The key number to watch is spending.

Alphabet alone has guided to roughly $180 billion to $190 billion in capital expenditures this year. Whether these two keep raising their budgets – and whether Wall Street rewards or punishes them for it, as it did Meta last week – will set the tone for tomorrow. Amazon.com Inc. (AMZN) reports after the close tomorrow.

So, to sum up the week: Today, the Fed kept its foot off the brake – for now. Tonight’s reports tell us how hard the hyperscalers are still pressing the gas. And next Tuesday’s midterms will give us our first real read on the emergency brake.

We’ll report back on all of it.

Have a good evening,

Jeff Remsburg

(Disclosure: I own MSFT, GOOGL, AMZN)

The post Fed Holds. AI’s Bigger Risk Isn’t Rates appeared first on InvestorPlace.

The sector’s recent selloff comes as Washington lines up a major increase in military spending. The White House’s fiscal 2027 budget request seeks a record $1.5 trillion for defense. According to Pentagon officials, that includes nearly $54 billion for drones and other unmanned systems. By comparison, the Pentagon’s Defense Autonomous Warfare Group received about $226 million in fiscal 2026.

With prices down and budgets rising, are established defense contractors or newer drone and space companies better positioned for the years ahead? That is the question host Crystal Navellier puts to InvestorPlace analysts Luke Lango and Jonathan Rose in the latest episode of The Investor Place. (The episode was recorded on Oct. 27, ahead of the Nov. 3 midterm elections.)

Both see reasons to watch defense stocks closely, but they approach the opportunity differently. Luke focuses on the long-term spending cycle and the balance between established contractors and emerging military technology. Jonathan looks at the Nov. 3 midterm elections, interest rates and the options-market activity that could signal a change in momentum.

Watch the full episode below.

Why Defense Stocks Could Be Worth Watching After the Pullback

Luke argues that Middle East peace-talk headlines and a stalled budget in Washington have weighed on defense stocks even as the need for military equipment and new technology continues. Prices could stay choppy into the midterms and the December funding deadline, he says, but he sees the potential for a multiyear spending cycle, particularly in autonomous systems and drones.

Jonathan also sees a potential disconnect between stock prices and underlying demand. But he cautions that smaller, higher-growth companies can be particularly sensitive to interest rates and election uncertainty. For the smaller names, he would hold off until there is more clarity after the Nov. 3 midterms.

That caution applies mainly to the smaller names. Jonathan still sees the pullback as an opportunity for long-term investors, and he explains why in the episode.

The two analysts agree on the long-term relevance of drone technology. They differ in what investors should watch before acting.

9 Defense, Drone and Space Stocks Discussed in the Episode

The episode spans traditional defense contractors and newer technology companies. The analysts mention nine publicly traded companies. The table below identifies who discussed each name. (These are not nine formal buy recommendations or a ranked list.)

Also mentioned: SPDR S&P Aerospace & Defense ETF (XAR) and privately held SpaceX.

Lockheed Martin Stock (LMT), RTX Stock (RTX) and Northrop Grumman Stock (NOC)

Luke identifies these three established defense contractors as the more stable side of his preferred approach. Their large, multiyear military programs offer a different type of exposure from smaller, rapidly evolving drone businesses. He points to contract visibility and dividends as reasons to consider established contractors alongside higher-growth names.

AeroVironment Stock (AVAV) and Kratos Defense Stock (KTOS)

These are two of the more direct drone and autonomous-defense names discussed. Luke highlights their growth prospects and what he views as attractive valuations relative to their histories. Jonathan also discusses AeroVironment’s backlog as an example of why a falling share price does not necessarily indicate weakening demand.

Rocket Lab Stock (RKLB) and Planet Labs Stock (PL)

Luke extends the discussion beyond battlefield hardware to space infrastructure and satellite intelligence. He sees Rocket Lab as a company with opportunities beyond defense, while Planet Labs offers exposure to satellite imagery and intelligence applications. His view is that both may benefit from several sources of demand, with defense representing one part of the opportunity. Luke wrote more about both companies in his recent piece on how space is becoming a battlefield and a business.

Want more ideas from the analysts?

Explore Luke Lango’s free Hypergrowth Investing e-letter for his perspective on emerging technologies.

Or join Jonathan Rose’s free Masters in Trading class to learn more about his market-analysis approach.

Can an Aerospace and Defense ETF Offer Broader Exposure?

Jonathan highlights the SPDR S&P Aerospace & Defense ETF (XAR) as a way to get broad exposure to aerospace and defense rather than betting on a single company. In the episode, he explains why investors who have sat out the sector so far may be in a better spot than they think.

For newer investors, Luke describes a “barbell” approach: established contractors on one side, higher-growth drone and space companies on the other. The goal is to combine different business profiles, while recognizing that emerging technology stocks can be much more volatile.

What Could Trigger the Next Rally in Drone Stocks?

For Luke, rate relief and getting past the midterms could improve the outlook for smaller defense-technology companies. He emphasizes preparing for a potential turn rather than trying to catch a falling stock before its decline ends.

Jonathan takes a trading-oriented approach. Drawing on his experience as an options market maker, he describes watching for unusually large, speculative call-option purchases that might indicate renewed institutional interest. He says the signals he wants to see had not yet appeared at the time of recording.

Neither analyst suggests that a rebound is guaranteed. Their discussion centers on the conditions that could improve the investment setup and the risks that remain in the meantime.

Watch The Investor Place and Get Free Investing Research

Watch Luke Lango and Jonathan Rose discuss the defense-stock outlook in the full episode. Then subscribe to The Investor Place podcast on InvestorPlace’s YouTube channel for more weekly discussions of market trends, investing risks and potential opportunities.

Jonathan Rose: Learn how a former options market maker evaluates market signals and unusual options activity. FREE: Join Jonathan’s Masters in Trading class.

Luke Lango: Follow the technologies reshaping industries, from artificial intelligence to space and defense. FREE: Get Luke’s Hypergrowth Investing e-letter.

Defense Stocks FAQ

What are defense stocks?

Defense stocks are shares of companies that make or supply products and services used in national security, including military aircraft, missiles, drones, satellites and related technologies.

Which drone stocks did Luke Lango and Jonathan Rose discuss?

The analysts discussed AeroVironment (AVAV) and Kratos Defense (KTOS), among other aerospace, defense and space-related companies. Their discussion covered both potential growth and the volatility associated with smaller defense-technology stocks.

Are drone stocks a good investment in 2026?

Drone stocks offer exposure to one of the fastest-growing parts of the defense budget, but they tend to be more volatile than large defense contractors. Luke and Jonathan both see long-term potential in drone technology, though they differ on timing. Investors should weigh their own goals and risk tolerance before buying.

Is an aerospace and defense ETF a way to invest in the sector?

An aerospace and defense ETF can provide exposure to multiple companies through one fund. Jonathan discussed XAR in the episode. ETFs still carry market risk, and their holdings and sector exposures should be checked before investing.

The post 9 Defense Stocks to Watch Before the Next Big Rally appeared first on InvestorPlace.

Tom Yeung here with today’s Smart Money.

The computers that took Apollo 11 to the moon were a marvel at the time. 

To create each 70-pound machine, women hired from textile mills thread copper wire around thousands of tiny magnetic rings. Through a ring meant a “1”; around it meant a “0.” Engineers called it “LOL memory,” for the “little old ladies” who built it, and this mesh of rings formed the basis of the Apollo Guidance Computers. 

That meant each of these machines was extremely expensive. Each navigational computer cost NASA around $200,000 apiece, or $1.8 million in today’s dollars. Two flew to the moon, while many more were used on Earth. 

Barely three years later, the cost of computing plummeted. In 1972, Bill Hewlett dared his engineers to fit HP’s 40-pound desktop calculator into a handheld device. The result was the HP-35, the world’s first scientific pocket calculator. It cost around $3,100 in today’s dollars, and it could do almost everything the Apollo computers could. 

By the 1990s, a solar-powered Casio fx-260 could perform the same calculations for around $9. 

The falling cost of computing has also been true with AI.

That means the pricey AI infrastructure could lose value the same way the Apollo Guidance Computers did as more efficient chips and models emerge.

So, in today’s Smart Money, I’ll explain why the falling cost of AI computing could threaten today’s biggest AI investments – and what history’s $9 calculator can teach us about finding winners in the AI trade.

The Hidden Risk of Falling AI Costs

We can see how the cost of AI compute is falling by looking at a metric known as “cost per million tokens.” This measures how much it costs to have an AI model process or generate roughly 750,000 words, or the length of the King James Bible. 

In late 2022, it cost $20 to output a million tokens, according to research group Epoch AI. Dedicated AI chips were only starting to become available, so AI computing prices were still relatively high. 

By October 2024, that figure had fallen to 7 cents per million tokens thanks to the release of dedicated AI chips and more efficient AI models. 

Today, the cheapest mainstream AI models cost just 2.5 cents per million tokens, and analysts expect another 90% decline by 2030. 

That raises a thorny question for “neocloud” AI data centers like CoreWeave Inc. (CRWV). These companies must buy expensive AI chips today for roughly $90,000 apiece (once they include the other data center hardware) and recoup that investment by selling AI computing power before the chips either: 

It’s the same problem faced by bitcoin miners, where newer chips make older ones obsolete. (To their credit, many neoclouds have a safety net: contracts that require customers like OpenAI and Anthropic to pay for computing power, even if they don’t use it.)

That’s why companies like Citadel Securities are starting to warn that there is precious little margin for error if AI spending doesn’t pay off. Data center companies all know that AI use will go up… but they have not budgeted much breathing room for if AI computing costs come down. This is particularly alarming because so many of these projects are funded by debt. 

Put another way, today’s AI chips cost $90,000 each because they are so hard to build. But much like the computers of the 1970s, AI chip prices are coming down because we’re getting better at building them. That means today’s highest-end chips will seem quite ordinary in a couple of year’s time.

That spells trouble for the AI data centers buying $90,000 chips today. If competitors can buy the same chip for $50,000… $30,000… or $3,100 in a couple of years, they’re going to undercut today’s big spenders and drive a lot of incumbents out of business. In turn, competitors to those firms will buy even cheaper chips, creating a downward spiral.

In other words, falling AI costs could create a chain reaction. Data centers could struggle to earn back what they spend on infrastructure, leaving them less willing or able to pay top dollar for the next generation of chips. And that puts the chipmakers benefiting from today’s high prices in a potentially difficult position.

When AI Gets Cheaper, Who Wins?

Artificial intelligence will change the world… but computing is getting cheaper so quickly that the companies investing billions to build AI infrastructure may not earn enough money to justify their investments. And if computing prices keep falling, even kingmakers like Nvidia Corp. (NVDA) could get hurt.

It’s a big question mark that offers little room for error.

That’s why Eric and I have continued to sound so cautious about the AI trade, especially when every miracle machine eventually becomes a $9 calculator. The question for investors is who’s holding the $200,000 version when that happens. 

Now, we’re not arguing that AI is a bubble or that AI adoption will stall.

But benefiting from AI means looking beyond the chipmakers and AI data centers spending enormous amounts of cash today. We have no idea whether these infrastructure builders and chip suppliers will earn their money back.

That’s why knowing what to buy – and what to avoid – matters more than ever.

In Fry’s Investment Report, Eric Fry looks beyond the AI hype to find opportunities the market may be overlooking, while staying cautious about companies priced for perfection.

Click here to learn more.

Until next time, 

Thomas Yeung, CFA 

Market Analyst, InvestorPlace

The post What to Buy When AI Computing Gets Cheaper appeared first on InvestorPlace.

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The retailer announced tools that will let customers authorize AI agents to shop on their behalf at Walmart and Sam’s Club. Shoppers will be able to set spending limits, require purchase approvals, and track their agents’ orders separately. A new gateway, already in beta, gives those agents a dedicated connection to Walmart’s shopping systems.

Think about what that means.

A routine household chore is becoming something you can delegate to software. And Walmart is building the systems to make that delegation part of everyday commerce.

On the same day, Anthropic introduced a research preview of Claude Duet, an assistant designed to work across connected apps, continue tasks after users step away, and check with them before acting on their behalf.

These are early deployments that customers have yet to fully trust. But for investors wondering where the next wave of AI demand comes from, this is a concrete answer: software doing more of the work people currently do themselves.

Each additional task requires computing power. If agents become useful enough to handle recurring responsibilities for millions of people and businesses, their usage could extend well beyond today’s question-and-answer interactions.

That brings us to Monday’s Anthropic IPO filing.

The company behind Claude disclosed $11.6 billion in second-quarter revenue and its first GAAP operating profit: $974 million. Its rapidly expanding business is beginning to demonstrate the economics that could support this next phase of adoption.

Folks, that’s why I think this filing matters across the AI trade.

I’ve been bullish on Anthropic for a long time. Back in April, I said I thought it could become the most valuable company in the world within five years. That remains my long-term thesis.

Now we have a clearer view of the business behind that conviction — and, alongside fresh earnings from its infrastructure suppliers, stronger evidence of where the investment opportunities may be developing.

Let’s connect the dots.

AI’s Economics Are Improving

Early last year, Anthropic faced the problem that has haunted the entire AI trade: Its technology was impressive, but delivering it cost far more than customers were paying.

For every dollar the company spent on computing and infrastructure, it brought in about 40 cents in revenue. That left investors funding the difference, before accounting for the other costs of running the business.

The bears had a reasonable question: What happens when investors get tired of covering the bill?

Over the next five quarters, Anthropic began changing that equation.

More businesses put Claude to work. As usage expanded, revenue grew faster than computing expenses. By the second quarter of this year, every dollar of compute spending supported roughly $2.08 in revenue.

That’s a meaningful transition. Anthropic was generating enough revenue to cover its computing bill and contribute substantially toward the rest of the business. That quarter, it recorded its first GAAP operating profit: nearly $1 billion.

You wouldn’t necessarily recognize that progress from the headline-grabbing $80.7 billion first-half net loss. Most of that figure reflects noncash accounting adjustments tied to convertible financing. The distinction matters when assessing how the underlying business is developing.

There’s another revealing detail here: Anthropic is using Claude to help build Claude. The company says its AI generated more than 90% of September’s code contributions. Human oversight remains essential, but the product Anthropic sells is also helping its own employees get more work done.

Folks, that’s the economic progression we’ve been watching for: wider adoption, more revenue from each computing dollar, and tools that improve productivity inside the companies deploying them.

The next wave of capacity could pressure margins, and Anthropic’s results don’t establish that every AI company (or every customer) will earn attractive returns.

But they strengthen the case that useful AI can support a profitable business. And that gives the infrastructure build-out a firmer foundation.

Why I Think Anthropic Could Become the World’s Most Valuable Company

My thesis starts with AI becoming embedded in the work businesses perform every day: Writing software, analyzing information, supporting customers, etc.

A trusted provider of that intelligence could participate in an enormous amount of economic activity.

And Anthropic’s customer data makes that opportunity tangible.

Customers spending at least $100,000 annually nearly doubled in the third quarter to more than 11,900. Net revenue retention reached roughly 900%, signaling extraordinary spending expansion among existing customers.

More than half the Fortune 500 already spend at least $100,000 annually with Anthropic. Yet average spending among those customers remains below 0.1% of total expenses.

The next leg depends on agents becoming useful enough to handle more work and reliable enough that businesses keep expanding deployment.

That’s the foundation of my long-term thesis.

Follow the Computing Commitments

Anthropic still describes itself as compute-constrained. And our tally of fixed and minimum supplier commitments approaches $850 billion, with a broader potential total closer to $1 trillion. Treat those as estimates, as amended contracts may overlap, and the filing leaves the aggregate headline figure blank.

Even with that qualification, the scale is consequential.

Agreements span major chipmakers and infrastructure providers, while Anthropic is moving toward directly leased chips, dedicated data centers, and on-site power.

Google (GOOG, GOOGL) and Broadcom’s (AVGO) TPU ecosystem stands out. The expansion also supports demand for Advanced Micro Devices (AMD), high-bandwidth memory, Taiwan Semiconductor Manufacturing (TSM), and Nvidia (NVDA).

Our inference is that dedicated facilities should extend the opportunity into power, cooling, networking, and optics.

That’s one reason I continue to like Astera Labs (ALAB). Its connectivity technology helps AI systems work together, and its role in Amazon’s (AMZN) Trainium ecosystem provides exposure to Anthropic’s expansion.

You can participate in this build-out before ANT starts trading.

The Supply Chain Confirms the Demand

The latest earnings reports reinforce that view.

Cadence Design Systems (CDNS) posted a record $8.2 billion backlog. Rambus (RMBS) guided to accelerating product growth. Amkor Technology (AMKR) collected roughly $3 billion in customer prepayments. Corning’s (GLW) optical business grew 44%.

Celestica (CLS) guided to $40 billion in 2027 revenue, roughly 90% above its updated 2026 outlook, with customer demand forecasts pointing higher again in 2028.

These businesses span chip design, memory interfaces, packaging, connectivity, and finished systems.

That breadth strengthens the case that we’re still in the middle of a substantial build-out.

We remain bullish on Cadence, Celestica, and Corning. ALAB remains among our favored dip-buy opportunities.

Financing Will Separate the Winners

The bears have legitimate concerns.

Anthropic’s estimated supplier commitments far exceed its contracted future customer revenue. Supplier financing creates complicated relationships between buyers and sellers. And a massive IPO could draw capital away from other AI stocks.

But the strongest buyers continue to attract funding — and they’re putting that money toward additional computing capacity.

That leaves investors with an important distinction to make. Some infrastructure operators could struggle with financing even as demand for the equipment, power, and technology behind the build-out keeps expanding.

We expect company selection to matter more as that gap widens.

Anthropic’s filing helps explain why. Its economics are improving, customers are expanding usage, and the company still needs more computing power. Success creates another round of demand for infrastructure that already takes years to build.

Raising the money is only one step. Securing everything that money needs to buy is the harder challenge.

That’s where my research has been focused, including an ambitious project connected to Elon Musk that I believe could help address some of AI’s most consequential constraints.

The implications extend beyond the next generation of data centers. They reach into America’s ability to secure the technology its economy increasingly depends on.

In a special presentation, I explain the shift, outline three steps investors can take to position themselves, and reveal the name and ticker of one investment I believe is positioned to benefit, free of charge.

Watch my presentation to see where I believe the next wave of AI investment could flow.

The post Anthropic’s IPO Filing Just Strengthened the Case for AI Stocks appeared first on InvestorPlace.

First, the September inflation data was horrific, igniting concerns that the Federal Reserve will continue raising interest rates. But Treasury yields declined sharply, with the 10-year Treasury yield falling from 5.3% on October 5 to just below 5% today.

Now, Treasury yields could stop falling this week. The October Federal Open Market Committee (FOMC) meeting takes place today and tomorrow, with the Fed’s next interest rate decision set for Wednesday afternoon. The consensus is that the Fed will hold rates steady.

The FOMC statement should give us a better idea of where interest rates are headed. (Look for a Market 360 later this week on this.)

Second, AI- and data center-related stocks have started to report phenomenal sales and earnings growth. In fact, the Information Technology sector is expected to post 65.6% earnings growth, the second highest of any sector this quarter. But AI and data center stocks continue to be punished by concerns about how the massive AI buildout will be financed.

In my view, those fears have been overblown. The baby has been thrown out with the bathwater.

However, the third-quarter earnings season has made it clear that AI- and data center-related stocks are delivering some of the strongest sales and earnings growth. And my experience tells me that fundamentally superior stocks will bounce back as those results continue to roll in.

But technology isn’t the only sector where the fundamentals are impressive. In fact, there’s another area of the market that’s been demonstrating tremendous relative strength: energy.

More crude oil is finally being shipped from the Persian Gulf, including through the Strait of Hormuz. The Wall Street Journal reported that exports have topped 24 million barrels per day, above prewar levels.

But crude oil prices remain high, with Brent crude oil at about $115 per barrel and West Texas Intermediate crude oil at about $101 per barrel, due primarily to attacks on Saudi Arabia.

The elevated energy prices have been particularly painful for Americans at the pump. According to the Energy Information Administration (EIA), the average price of gasoline in the U.S. is $4.28 per gallon. That’s more than 40% higher than in October 2025. Diesel prices have surged more than 70% year-over-year to $6.28 per gallon.

But while those prices are squeezing consumers, they’ve also helped lift the outlook for energy companies. According to FactSet, the energy sector is expected to post average earnings growth of 127.6% in the third quarter, up from estimates of 114.8% just a few weeks ago.

And we’ve already seen that strength reflected in energy stocks.

In today’s Market 360, I’ll show you what investors are searching for in my Stock Grader AI tool, how to hunt for fundamentally superior energy stocks and why I believe America’s energy expansion could create an even bigger opportunity in the years ahead.

What Investors Are Searching for Now

To help offset the pinch at the pump, I’ve added several energy stocks to my premium Buy Lists this year. And I’m pleased to report that those positions have exhibited tremendous relative strength recently.

Judging by the latest activity in my Stock Grader AI tool (subscription required), plenty of other investors are also looking for fundamentally superior opportunities.

As longtime readers know, my proprietary Stock Grader system evaluates more than 6,000 stocks and assigns each a letter grade from A (Very Strong) to F (Very Weak). Stock Grader AI builds on that research by letting users search for highly rated stocks with simple questions in plain English.

And investors have been putting it to work.

During the week of October 19, subscribers submitted a total of 9,140 prompts to Stock Grader AI. The most popular requests included A-rated stocks across all sectors, A-rated small-cap companies and A-rated stocks involved in the AI infrastructure buildout.

Specifically, there were 362 searches for A-rated stocks, 333 searches for A-rated small caps and 295 for A-rated AI infrastructure and AI-related companies.

Digging a little deeper, there was something that caught my eye.

There was also interest in energy stocks. In fact, there were 118 searches that explicitly mentioned “energy” in one form or another. Many users wanted to look for A-rated companies in the Energy Minerals sector.

With the energy sector expected to report such impressive earnings growth, I think that’s a smart place to look.

Of course, that doesn’t mean every energy stock is worth buying. That’s where Stock Grader can help.

Let’s say you want to find companies that could benefit from higher energy prices. You could start by searching for:

“A-rated stocks in the Energy sector.”

Here’s what you’d find…

You could also narrow your search to a particular part of the energy industry. For example, I asked Stock Grader AI to find “A-rated energy transport stocks.”

Here’s what it returned:

As you can see, Stock Grader AI identified 43 energy transport stocks with A ratings.

Now, that’s a great starting point. But 43 stocks is still a lot to sort through. So, which ones would I actually recommend buying?

A strong Stock Grader rating is an important first step. But I also want to know how a company makes its money, what could drive its growth and whether it’s positioned to benefit from the trends I’m following.

That’s where my latest research comes in…

America’s Next Big Energy Opportunity

America is undergoing an energy transformation that I believe could be worth $31.5 trillion over the next 15 years.

As American oil and natural gas production is set to expand at an unprecedented rate. That means more “drill, baby, drill,” of course – but it also means more energy will need to move through pipelines, processing facilities and export terminals to reach customers around the world.

When you put it all together, I believe this could create some extraordinary opportunities for investors – including several that most folks haven’t even considered yet.

That’s why I’ve spent the past few months identifying the companies I believe are best positioned to profit from this historic shift.

I’m revealing the details in my latest presentation, America’s $31.5 Trillion IPO.

To discover the companies I’ve identified and how you can position yourself for what could be America’s next great energy boom, click here to watch my presentation now.

Sincerely,

Louis Navellier

Editor, Market 360

The post The Energy Stocks I’m Watching as Oil Prices Surge appeared first on InvestorPlace.

We’re on Day 2 of “the most important week of the year.”

That’s according to our technology expert Luke Lango, editor of Innovation Investor.

Let’s go straight to Luke’s Daily Notes from last Friday:

Microsoft (MSFT), Alphabet (GOOGL),and Amazon (AMZN) report [this] week, with the Fed’s Oct. 27–28 decision in the middle; October hike odds have fallen to about 9%. The midterms follow on Nov. 3.

For the hyperscalers, the questions are the ones the market asked [last] week: Is cloud growth accelerating? Are backlogs growing? Can they fund 2027 spending from their own cash flow?

Strong answers would also help settle the “capex growth slows” and “good news gets sold” signals on our Peak Watch Checklist. 

If you’re unfamiliar with Luke’s reference to the Peak Watch Checklist, we covered it in our Oct. 21 Digest. Luke has developed a checklist to track 13 warning signals across the three stages of a boom’s turn to a bust: Froth, Cracks, and Confirmation.

Each signal gets one of four ratings: Clear (green), Watch (yellow), Flashing (orange), or Triggered (red). Each also comes with a specific tripwire – a concrete event that would flip it to red.

For “Froth,” those signals are “debt-funded capex,” “vendor financing,” and “record stock issuance.”

For “Cracks,” we have “capex growth slows,” “good news gets sold,” “revenue lags spending,” “pricing power erodes,” “AI credit spreads widen,” “capital raises fail,” and “the Fed tightens.”

Finally, for “Confirmation,” there’s “chip orders digest,” “capacity sits idle,” and “projects get canceled.”

As of Luke’s update yesterday, 7 of 13 signals were either yellow, orange, or red. Luke’s overall interpretation is that we’re currently “Late Cycle.”

This checklist points toward why this week is so important

The hyperscaler earnings could have a dramatic impact on “debt-funded capex” (as Meta (META) did last week, announcing the issuance of a new class of non-voting Class C common stock to fund its aggressive AI initiatives), “capex growth slows,” and “good news gets sold.”

And, of course, hyperscaler spending is the revenue for the chip, power, networking, and data center names that have driven the AI trade. So, if they signal a slowdown, it ripples through the whole complex.

At the same time, excessive hyperscaler spending is likely to alarm Wall Street. The fear is that they’re over-allocating capital into a historic, debt-fueled infrastructure bubble that will ultimately explode, with the fallout reflected on their balance sheets.

It’s a fine balance – which has Luke cautious but leaning bullish.

But there’s more to these next two weeks than the hyperscaler earnings

Back to Luke for what he’s watching, and his game plan:

We still need to see how the next two weeks play out. If hyperscaler earnings, the Fed, the midterms, and the Iran situation all resolve positively, AI stocks should bounce strongly off major support, and this will turn into the best buying opportunity of the whole cycle.

If all four resolve negatively, we could break major support, and this could be the start of a bigger, uglier unwind…

For now, patience is our ally, and we’re ready to react over the next two weeks, whichever way things go.

We’ll start getting answers tomorrow with the Fed’s rate decision, followed by Alphabet and Microsoft after the closing bell. We’ll report back.

And for more directly from Luke – including his updates on his Peak Watch List and which stocks he’ll be recommending if the next two weeks break the way he’s leaning – click here to learn about joining him in Innovation Investor.

Why waiting – instead of jumping in early – could be warranted this time

Now, a bullish investor might look at this setup and ask why anyone would sit on the sidelines. After all, the fundamentals of the AI trade still look strong.

Earnings across the chip and infrastructure names continue to beat expectations, and after the recent pullback, many of these stocks trade well below the valuations they commanded just a few months ago.

For example, as of yesterday’s close, AI king Nvidia (NVDA) was down 10% from its recent high, but some smaller AI infrastructure names have fared far worse. Coherent (COHR) dropped 35% since early October, and 48% if measured from its June peak (it’s rallying as I write here on Tuesday). To a traditional value investor, that looks like a sale.

It’s a reasonable argument. But it misses something about AI stocks that doesn’t show up in a price-to-earnings ratio.

In the latest issue of the AI Revolution Portfolio, the investment newsletter helmed by Louis Navellier, Eric Fry, and Luke, the team starts with Benjamin Graham’s famous “Mr. Market,” the moody business partner from The Intelligent Investor who offers to buy your stock at a fortune one day and sell to you for pennies the next.

Value investors like Warren Buffett have long used that idea to argue that falling prices mean better deals. But while that might work for traditional companies that own physical assets whose value holds in a downturn, AI is different.

From last week’s issue:

AI has a strange property where confidence is king…

Like a bank run, a loss of confidence in an AI trade can prove disastrous.

An example of what that looks like

Let’s circle back to Coherent. Itmakes the optical components, such as lasers and transceivers, that carry data at high speed between chips in AI data centers.

In August, it reported the best quarter in its history. Revenue hit a record $2.05 billion, up 34% from a year earlier, while adjusted earnings per share jumped 74% to $1.74. Data center revenue alone climbed 66%.

Management then guided for even higher revenue this quarter and said it expects to post its first $3 billion quarter by the end of its 2027 fiscal year. Analysts raised their revenue estimates for fiscal 2027 by 11%.

And yet, as I write on Tuesday, COHR trades almost 50% below its June high.

So, what changed?

Not the business – the sentiment surrounding the business.

Hot inflation reports have pushed Treasury yields higher… worries about the sustainability of AI spending have spread across the sector… and investors have started asking tougher questions, including why Coherent’s cash flow hasn’t kept pace with its booming revenue.

All this has changed one thing – confidence. And when confidence slips in the AI trade, even record earnings can’t hold a stock up.

Which brings us back to this week…

Coherent’s growth ultimately depends on how much the hyperscalers spend building out their data centers. The same is true for most of the AI infrastructure trade.

If Microsoft, Alphabet, and Amazon reaffirm their spending plans and show that spending is paying off in cloud growth, they give the market a reason to believe again. If they wobble, today’s “cheap” AI stocks could get a lot cheaper.

That’s why buying early isn’t necessarily safe – despite the lower valuations.

As for Coherent, it reports next Wednesday, Nov. 4. We’ll circle back.

Now, Coherent isn’t the only AI-linked investment whose fortunes hinge on hyperscaler spending. That brings us to a surprising move from Eric Fry…

Why a longtime copper bull just sold Freeport

Few analysts have been more bullish on copper for longer than Eric, our global macro expert and the editor of The Speculator.

Back in April, we featured Eric’s case for the metal here in the Digest. As he put it then, copper has always been the wiring of the world, but the world now demands more wiring than at any point in history.

So, it caught our attention last Friday when Eric told his subscribers to sell their remaining shares of Freeport-McMoRan (FCX), one of the world’s largest copper producers.

To be clear, this isn’t a case of a trade gone wrong. Eric first recommended Freeport in January 2020. He took profits on two-thirds of the position in 2021, and the final third has gained about 454% including dividends.

So why sell now? Here’s Eric:

Back then, AI was a production story… Today, AI is a demand story, and the market trades FCX like a data-center stock…

Although AI demand only accounts for a modest share of total copper demand, it accounts for a huge amount of the incremental demand that supports copper prices. Therefore, if that source of demand weakens, which recent trends suggest it might, the copper price could come under pressure.

That idea of weakening demand might raise an eyebrow. After all, we’ve reported many times here in the Digest on copper’s looming supply shortage.

But Eric notes that the International Copper Study Group has swung its 2026 forecast from a deficit to a surplus. And Comex warehouses hold 713,000 tonnes of copper, much of it stockpiled ahead of possible U.S. tariffs.

Meanwhile, Freeport’s earnings magnify every move in the metal. By the company’s own math, each 10-cent change in the copper price shifts its annual EBITDA (earnings before interest, taxes, depreciation and amortization) by about $390 million.

Finally, the cost of its Arizona mine expansion has climbed by about 30%, while the stock trades at roughly 35 times trailing earnings – not exactly a discount.

Eric’s conclusion:

Freeport remains a well-run company. But the reasons I bought it have mostly played out, and the reasons that remain depend on someone else’s capital spending.

That last line should sound familiar. As with Coherent, Freeport’s next leg depends on whether the hyperscalers keep spending and whether investors keep believing they will.

It’s one more reason this week’s earnings matter well beyond the cloud.

Before we move on from Eric, today is the last call to access his latest research in which he warns investors about AI Builders – like Coherent – that could fall 50% or more. He’s urging a rotation into AI Appliers – overlooked companies using increasingly cheap AI computing power to improve their businesses.

In his free research video, Eric gives away the name of one of his favorite AI Appliers and explains why next week’s elections will fuel the separation between these two corners of the market. But the video is coming down tonight, so this is last call – click here to watch it.

One last thing before we sign off today…

33 things hiding in Anthropic’s IPO filing

Yesterday, Anthropic, the company behind the Claude AI models, made its IPO paperwork public, filing its Form S-1 with the U.S. Securities and Exchange Commission (SEC). It runs hundreds of pages, and it reveals far more than the headline numbers.

Earlier today on Masters in Trading Live, our trading expert Jonathan Rose counted down the 33 things he believes every investor needs to know from it.

A few of them surprised me: an $80 billion “loss” that isn’t what it looks like… a single share of stock that controls more than half the vote… and one big AI name you’d expect to find in the filing that never shows up.

And Jonathan’s No. 1? It ties directly to the hyperscaler earnings we’re watching this week.

Click here to watch the free replay.

Have a good evening,

Jeff Remsburg

(Disclosure: I own MSFT,  GOOGL, AMZN, COHR)

The post The “Most Important Week of the Year” is Here appeared first on InvestorPlace.

On Sept. 15, I shared my first cybersecurity presentation on Masters in Trading LIVE. The sector is up 10% to 15% since then. The gains caught my attention less than the way they happened. When the Nasdaq got hit, cyber stocks rallied. When the Nasdaq bounced, they rallied again. That kind of relative strength tells you where the money is going.

Below are five cybersecurity stocks under $10 billion that I’m following, plus the larger name that remains my favorite in the whole space.

Why Cybersecurity Stocks Keep Getting Bought

AI is arming the attackers. Attacks now scale like software, and every board meeting asks the same question: what are we doing about security? Right now the answer is always to spend more. A company can trim almost any budget, except the one that keeps it online.

The forecasts back that up. Gartner expects worldwide information security spending to reach $247.5 billion in 2026, up 12.7% in constant currency. Its latest forecast has spending climbing from $192.9 billion in 2024 to $372.8 billion by 2030, roughly double.

Securing AI itself is one of the fastest-growing pieces. Gartner sizes it at about $3 billion in 2026 and $16 billion by 2030. Companies are pouring money into AI tools, models, agents and copilots, and every one of them needs protecting.

My Favorite Cybersecurity Stock: Rubrik

Rubrik Inc. (RBRK) is still my absolute favorite name in cybersecurity. Most security companies try to stop the breach. Rubrik assumes some attacks will get through, and it gets paid on recovery. When defense fails, Rubrik cleans it up.

I shared Rubrik with Stansberry Alliance members at a live conference in Las Vegas when it traded around $112. When I went live on Oct. 26, it was near $135. Most of the other stocks shared at that event were down, and the Nasdaq had been getting hit.

Rubrik has grown past my small-cap cutoff, with a market value of roughly $28 billion. That’s why it isn’t on the list below. If you want the after-the-breach angle in a smaller package, keep reading.

5 Small-Cap Cybersecurity Stocks Under $10 Billion

Market values below are approximate, as of late October 2026. For each name, I lay out what has to go right for a 5x move over the next three to five years. That is a scenario with conditions attached, not a forecast.

Rapid7 Inc. (RPD) is a higher-beta turnaround with the most torque if the market rerates it. At about $1.1 billion in market value, it generated roughly $145 million in trailing free cash flow, a free cash flow yield of about 13% based on its price late in the Oct. 26 session. When I first started talking about RPD, it traded around $12.

The weakness is the top line. Second-quarter revenue slipped 1.5% from a year earlier, though the company beat earnings estimates and raised its profit outlook.

What has to go right: revenue stops shrinking, margins expand, and the market stops pricing Rapid7 like a melting ice cube. RPD is one of my two favorite small caps on this list, and also the riskiest.

Qualys Inc. (QLYS) runs cloud vulnerability scanning and has one of the best cash margins in software. It earned an A for free cash flow on my report card. Its free cash flow margin is about 45%, on a market value near $7.9 billion.

What has to go right: growth keeps climbing toward the high teens while Qualys holds that cash margin. If it does, 5x isn’t a stretch, and Qualys likely becomes a steady compounder. QLYS and RPD are my two favorite small caps, with Rubrik still my top pick overall.

Tenable Holdings Inc. (TENB) sells exposure management. It finds what’s exploitable before threat actors do. Its market value is about $5.2 billion.

What has to go right: growth reaccelerates into the mid-teens as AI floods the world with new vulnerabilities.

Commvault Systems Inc. (CVLT) plays cyber resilience and recovery, the same lane as Rubrik, at about a quarter of the size (roughly $7 billion). The stock is still below its 2025 highs.

What has to go right: software-as-a-service annual recurring revenue keeps pulling growth higher, and the market starts pricing Commvault more like Rubrik.

SentinelOne Inc. (S) is the direct challenger to CrowdStrike Holdings Inc. (CRWD) and the cheapest of the sector leaders on sales. Its market value is about $8.9 billion, and it’s getting close to its 2025 highs.

What has to go right: SentinelOne keeps growing around 20% a year for five years and turns thin cash flow into CrowdStrike-like margins. A takeover is the wild card that could deliver a 5x-plus return faster.

Other Ways to Invest in Cybersecurity Stocks

If small caps are too volatile for you, the large-cap pure plays are CrowdStrike Holdings Inc., Palo Alto Networks Inc. (PANW), Fortinet Inc. (FTNT) and Zscaler Inc. (ZS). They’re steadier, but they probably won’t get you a 5x return in three to five years. For a basket approach, the First Trust NASDAQ Cybersecurity ETF (CIBR), Amplify Cybersecurity ETF (HACK) and Global X Cybersecurity ETF (BUG) all give you sector exposure.

How to Trade Cybersecurity Stocks Around Earnings

Most of these companies report in the next few weeks. Rapid7 reports Nov. 4 and Qualys reports Nov. 9, both after the close. When the numbers come out, check them against the thesis. Is revenue growing? Are margins expanding? If yes, great. If not, that’s a red flag and a reason to de-risk.

A simple trick: drop the earnings release into ChatGPT or Claude and ask those two questions directly.

These names will pull back. When they do, that’s when you need to believe in the story. Don’t get scared out of a position just because it got volatile. I’d rather build a position in tranches than go all in at once, so a pullback becomes a chance to add. If you own upside calls and get a big move, taking some money off the table is fine. You can get back in on the next dip. If you use options, these are longer-term plays, so I’d look 12 to 24 months out.

Small-Cap Cybersecurity Stocks: Frequently Asked Questions

What are small-cap cybersecurity stocks? They are shares of publicly traded security companies with smaller market values. In this list, that means under $10 billion. Examples include Rapid7 (RPD), Qualys (QLYS), Tenable (TENB), Commvault (CVLT) and SentinelOne (S).

Why are cybersecurity stocks rising in 2026? AI-driven attacks are pushing companies to spend more on defense, and security budgets are hard to cut. Gartner forecasts worldwide security spending of $247.5 billion in 2026, up 12.7% in constant currency.

What is the best cybersecurity stock to buy now? My favorite overall is Rubrik (RBRK), the after-the-breach recovery play. Under $10 billion, I like Rapid7 (RPD) and Qualys (QLYS) best. Always size small-cap positions for volatility.

The Bottom Line

Cybersecurity is the budget nobody can cut, and the stocks are acting like it. Rubrik is my top pick, and Rapid7 and Qualys lead my small-cap list. Let earnings tell you whether each thesis is on track.

I’ve been tracking cybersecurity on Masters in Trading LIVE for a couple of months, and I’ll keep following these names as earnings come in. Join me at 11 a.m. ET for the free show, where I break down sectors like this one and take your questions live. Sign up free here.

This article is for educational purposes only and is not investment advice.

The post 5 Small-Cap Cybersecurity Stocks With 5x Potential (and My Favorite Overall) appeared first on InvestorPlace.

For the past two years, we’ve spent a lot of time talking about the AI Boom as a semiconductor story.

First, the world needed more GPUs.

Then it needed more memory.

Then networking.

Then cooling.

Then power.

Then data centers.

And now? Apparently, AI needs space. Literally.

Google (GOOGL) is exploring what may sound like science fiction at first glance: putting AI computing infrastructure in orbit. The company’s Project Suncatcher prototype is already operating in orbit, testing whether AI hardware can survive in the environment where a future space-based computing system would actually run.

And Google isn’t alone.

Redwire (RDW) recently announced a partnership with Sophia Space to develop orbital data-center infrastructure. Honda is working with Redwire on robotic systems for future commercial space stations. Meanwhile, terrestrial data-center developers are increasingly confronting power shortages, grid constraints, community opposition, and demands for enormous new sources of electricity.

At first glance, all these developments look unrelated.

We don’t think they are. We think they’re different manifestations of the exact same underlying trend:

The AI infrastructure boom is getting so big that the industry’s biggest challenge is increasingly becoming physical scarcity.

Not a lack of demand. But a lack of everything needed to satisfy that demand. And that has enormous investment implications.

AI Infrastructure Demand Is Still Outrunning Supply

Let’s start with the demand side because the numbers there have become almost difficult to comprehend.

Bloomberg Intelligence recently raised its forecast for the annual AI accelerator market in 2030 from about $560 billion to $1.4 trillion.

That’s a 150% increase.

The firm now expects accelerator revenues to grow roughly 38% annually through the end of the decade, with the market approaching $1 trillion as early as 2028. Importantly, that forecast isn’t simply assuming Nvidia keeps selling more expensive GPUs. Bloomberg increased its expected accelerator unit shipments by 50% while also raising its expected blended selling prices by 65%.

In other words:

We’re going to need far more AI chips, and each AI system is going to contain far more valuable hardware.

And we’re already seeing evidence that demand is outrunning supply.

Amazon Web Services is raising pricing on reserved GPU capacity by about 15%.

Micron (MU) just said more than 75% of its fiscal 2027 shipments are already committed, with allocation discussions moving into 2028 and some customer agreements stretching beyond 2030.

Management still can’t identify when DRAM supply will catch up with demand.

And Micron is responding by dramatically increasing investment. After spending $27.37 billion in fiscal 2026, its current plans imply more than roughly $50 billion of capex in fiscal 2027.

Meanwhile, Anthropic has reportedly committed roughly $518 billion to compute and infrastructure over approximately the next decade, with about 80% of those obligations reportedly noncancelable or payable regardless of usage.

This doesn’t look like an infrastructure cycle that’s nearing its peak. On the contrary, it looks like the cycle is running into the physical limits of its supply chain.

AI’s Bottlenecks Keep Moving Down the Stack

The AI Boom started with a chip shortage. But as more accelerators came online, another bottleneck emerged: memory.

Today’s leading AI systems require enormous amounts of high-bandwidth memory, or HBM, because the chips need to constantly move massive datasets into and out of the processors.

That requirement is growing rapidly.

Bloomberg expects HBM contract pricing to rise 70% to 80% in 2027, while next-generation accelerators are incorporating significantly more memory per chip. The result is that memory is becoming an increasingly large portion of the value of an AI system.

Then comes power delivery.

Vicor (VICR) raised its quarterly growth outlook twice in a matter of weeks heading into its Oct. 20 report – then beat its own raised bar. Revenue surged 37.5% sequentially and 78.5% year-over-year to a record $197.1 million, royalty revenue tied to its Vertical Power Delivery technology more than doubled from the prior quarter, and backlog hit $406 million – up 166% from a year ago.

Why?

Because supplying enormous amounts of electricity efficiently to increasingly powerful AI processors is itself becoming a valuable technology problem.

And once that problem is solved inside the server, the same issue appears one level higher.

The data center needs electricity.

A lot of it.

That’s why Amazon (AMZN) just signed a long-term agreement supporting more than $3 billion of investment at Maryland’s Calvert Cliffs nuclear plant.

It’s why governments around the world are rethinking how giant data centers connect to their electricity grids.

Finland, for example, is considering rules that would prioritize smaller grid connections while requiring certain large electricity users to bring substantially more local generation and flexibility to the system.

And CoreWeave (CRWV) CEO Mike Intrator recently made what we think is one of the most important comments of this entire debate.

Asked about growing regulatory pushback against data-center development, he said the company has seen “absolutely not” any reduction in orders. (And note: even as credit markets punished CoreWeave’s own leveraged balance sheet in the weeks since, nobody has disputed the order book.)

His point was simple: Restrictions aren’t reducing demand. Rather, they’re changing where the infrastructure gets built.

That is the key.

AI Infrastructure Is Becoming a Geography Problem

For decades, computing became progressively less constrained by geography.

Software moved to the cloud.

Applications became accessible everywhere.

Data moved instantaneously.

AI is partially reversing that trend. Because the intelligence may be digital, but the infrastructure producing it is extremely physical.

A modern AI data center requires chips manufactured in billion-dollar fabs, HBM produced in highly specialized facilities, advanced networking, transformers, cooling equipment, enormous amounts of land, and gigawatts of reliable electricity.

Those resources aren’t available everywhere. And increasingly, they aren’t available fast enough anywhere.

So companies are adapting.

Some are moving data centers closer to available energy. Some are financing new power generation themselves. Some are pursuing nuclear plants. Some are exploring natural gas. Some are moving infrastructure across national borders.

And now Google is asking an even more radical question: Why build all the AI infrastructure on Earth at all?

Project Suncatcher Is Testing the Orbital Data Center Thesis

Google’s Project Suncatcher research starts with an observation that is both obvious and surprisingly powerful.

The Sun is the largest energy source in the solar system.

On Earth, solar generation has to deal with nighttime, weather, land constraints, and the cost of transmitting electricity from where it is generated to where it is consumed.

In orbit, sunlight can potentially be accessed much more consistently.

So Google researchers are studying a system in which satellites carry TPUs and solar arrays and communicate with one another using free-space optical links.

There are obviously enormous engineering challenges.

Launch costs.

Heat dissipation.

Radiation.

Networking.

Servicing.

Reliability.

Google is now testing those assumptions with actual hardware in orbit.

Its researchers found that Trillium TPUs survived radiation exposure equivalent to roughly a five-year mission without permanent failure. And Google’s analysis suggests that if launch costs to low-Earth orbit eventually fall below roughly $200 per kilogram – something its learning-curve analysis suggests may become possible in the mid-2030s – amortized launch costs could become roughly comparable to terrestrial data-center energy costs on a per-kilowatt basis. Pasted text

We’re not saying Google is about to replace Virginia data centers with orbital TPU farms next year.

Obviously not.

This is a moonshot.

But the fact that one of the largest computing companies on Earth is seriously studying this idea tells us something very important about the magnitude of the problem.

The industry isn’t searching for less compute.

It’s searching for dramatically more places to put it.

Why AI Infrastructure Stocks Can Benefit From Scarcity

This is why we’ve consistently argued that investors shouldn’t think about the AI Boom as simply an Nvidia story. The opportunity keeps broadening.

First there were accelerator winners. Then memory winners. Networking winners. Power-management winners. Equipment winners. Utilities. Nuclear. Data-center developers. And potentially, eventually, space infrastructure.

The common thread isn’t any one technology, but scarcity.

Whenever AI demand runs into a bottleneck, an enormous economic incentive emerges to solve that bottleneck.

Not enough GPUs? Build more GPUs.

Not enough memory? Build more fabs.

Not enough power? Restart nuclear plants.

Not enough grid capacity? Build generation directly beside the data center.

Not enough suitable terrestrial infrastructure? Maybe start looking up.

And as AI agents become increasingly capable, these demands should only intensify.

OpenAI’s Dots and Meta’s (META) Muse point toward a world where AI doesn’t simply answer one prompt and stop. Agents can continue working after users leave, operating browsers, executing code, retrieving information, and performing multistep assignments.

That means one human request can trigger dozens (eventually perhaps hundreds) of computational actions.

More inference, CPUs, and memory. More networking, storage, and electricity. And, last but not least, more infrastructure.

That’s why we remain convinced the AI infrastructure cycle has years left to run. The bottlenecks are evidence of how quickly it’s expanding.

The Bottom Line: AI Infrastructure Is Becoming a Scarcity Trade

Markets remain noisy.

The 10-year Treasury yield touched its highest level since 2002 earlier this month before whipsawing lower as investors fled an AI-led stock selloff. Oil has pushed back above $100 a barrel. And Wall Street has started asking hard questions about the mountain of debt being raised to finance the AI buildout.

Those forces have kept AI stocks trapped in the tug-of-war we’ve been discussing for months: fundamentals pulling stocks higher while macro anxiety pushes valuations lower.

But underneath that noise, the fundamental AI story continues to strengthen.

Infrastructure commitments are stretching into the 2030s. Memory supply is tight. Data-center developers are searching for electricity. Nuclear power is attracting renewed interest. This week, the hyperscalers will put fresh numbers on all of it. And their capex guidance will tell us just how much bigger this buildout is about to get

All the while, Google is investigating whether some of the computing should simply leave the planet.

Put it all together, and a bigger picture emerges.

The AI boom’s next chapter may depend on who can build the infrastructure fast enough to keep up.

More chips. More power. More computing capacity… potentially even in orbit.

That’s where our research is taking us.

It centers on an ambitious shift taking shape around Elon Musk’s businesses… one that I believe could connect several of the opportunities we’ve been tracking, from AI infrastructure and advanced manufacturing to the emerging space economy.

The question that interests me most is… which companies could get paid to help build it?

Even the most ambitious vision needs suppliers. Someone has to provide the specialized equipment, critical materials, and essential components that turn an idea into something that works.

The infrastructure constraints we’ve discussed aren’t going away overnight. For the companies that help solve them, that could mean years of opportunity.

Click here to see where I believe that opportunity is taking shape.

The post What a $1.4 Trillion AI Chip Market Means for Everything Around the GPU appeared first on InvestorPlace.

The Persian Gulf is now exporting more oil than it did before the Iran war began.

Most investors assume the war has choked off the region’s oil, as it did for months. But according to the ship-tracking service Kpler, as reported by The Wall Street Journal last week, Middle East oil flows averaged more than 24 million barrels a day in the week through Oct. 18. That’s above the prewar level of 23.3 million barrels a day.

So, why are oil prices climbing?

On Friday, Brent crude surged to a six-month high, settling at $116.72 a barrel to secure its third straight weekly gain. Meanwhile, West Texas Intermediate crude followed the rally upward, pushing past the century mark to close at $103.27. As I write on Monday, both are only slightly lower.

Legendary investor Louis Navellier, editor of Growth Investor, flagged this disconnect in his Flash Alert last Thursday:

[E]nergy prices are very firm even though more ships are going through the Strait of Hormuz now than before the Iran war started.

Furthermore, the Persian Gulf is exporting more oil than before the war started. So why are oil prices so high?

Why more oil isn’t translating into cheaper oil

Louis’ answer starts with the Houthis, the Iran-backed rebel group in Yemen, which has sharply escalated its attacks on Saudi Arabia.

In recent weeks, Houthi missiles and drones have targeted Saudi oil facilities and repeatedly struck Riyadh’s main international airport. An Oct. 10 strike there killed 12 people and wounded more than 300.

Last Thursday, Brent hit a then-five-month high after another round of Houthi attacks inside the kingdom.

Here’s Louis:

So, as long as that’s going on, oil’s going to remain high.

The second piece of the puzzle is the cost of extracting the oil from the region. Iran can no longer stop the tankers, but it can make every trip dangerous and expensive. The WSJ tallied about 30 attacks on ships around the strait this month alone.

In the wake of these attacks, war-risk insurance has climbed to as much as 10% of a vessel’s value, up from less than 3%. And freight for a supertanker carrying Gulf crude to China hit a near-record $37.37 a barrel.

Here’s the WSJ quoting Natasha Kaneva, head of global commodities strategy at JPMorgan:

In April, the problem was a shortage of crude. In October, it is the cost of moving it.

There’s also a wildcard issue on the calendar…

The Financial Times reports that a planned Israeli offensive on Iran is on hold until after the Nov. 3 midterm elections. And there’s real anxiety around this – JPMorgan’s trading desk cited renewed Iran risk after the election as one reason why last Thursday turned into such a bloodbath for much of the AI trade.

So, what’s the takeaway from all this in your portfolio?

Simple – energy still deserves a place there.

Energy zigs when tech zags

Last Thursday was a good example of why Louis has been pounding the table on energy.

As we covered in the Digest, after Meta (META) earnings reignited worries about the staggering cost of the AI buildout, its stock fell about 7%, and the Nasdaq dropped 2.6% – its worst day since early June.

However, in the same session, oil jumped to that five-month high I noted a moment ago.

Here’s Louis from that same Flash Alert:

All my top stocks right now are energy. Shipping, refining – those are the top stocks, and we own a lot of them.

So, you need to have the energy stocks because they zig when the tech stocks zag, and that’s my main message.

The chart below shows how the sector has rewarded investors this year. As I write on Monday, the Energy Select Sector SPDR Fund (XLE) (in black) is up about 58%, well ahead of the 29% return for the Technology Select Sector SPDR Fund (XLK) (in green) and the S&P’s 12% gain (in orange).

Source: StockCharts.com

We’ve familiarized our Digest readers with both of Louis’ favorite corners of the oil patch here in recent weeks. On shipping, we noted in our Oct. 13 Digest that supertanker day rates on the Middle East-to-Asia route had soared from roughly $30,000 at the start of the year to $1.3 million.

One of Louis’ favorites is Okeanis Eco Tankers Corp. (ECO), up 86% since he added it to his Accelerated Profits Buy List on June 22.

On refining, we profiled HF Sinclair Corp. (DINO) back on Sept. 23. It’s a pure-play refiner that benefits from the global diesel shortage. Diesel still averages about $6.18 a gallon, near its record high of $6.53 set in late September.

Here’s Louis on why that shortage isn’t going away quickly:

You just can’t bomb the Russian refineries. You can’t attack the Saudi Arabian refineries and expect that diesel prices are going to drop. There is a supply chain problem.

As I write on Monday, Louis’ Growth Investor subscribers are up 92% in DINO in about four months.

Now, the same oil prices powering ECO and DINO are giving someone else a major headache this week…

Can the Fed look past $100 oil?

This coming Wednesday, the Federal Reserve announces its latest rate decision. Then, the very next morning, we get the September Personal Consumption Expenditures (PCE) report.

Normally, central banks “look through” an oil spike. The thinking is that a jump in energy prices is a one-time shock, not an ongoing inflationary process. So, hiking rates to fight it would do more harm than good.

But that logic only holds if the answer to three related questions is “no.”

First, will high oil prices last?

The futures market increasingly says yes. According to Axios, oil for delivery in January 2027 has climbed 17% since early September to more than $97 a barrel.

One reason for this is something Louis flagged a couple of weeks ago – global oil inventories have been drained during the war, and countries need to refill their stockpiles, which puts a floor under prices.

Here’s how he put it a couple of weeks ago:

So, crude oil prices aren’t likely to fall below $90 per barrel.

Sure enough, that floor has held with room to spare. Brent hasn’t closed below $100 all month.

Second, is energy spreading into everything else?

The early signs suggest this could be beginning. September’s core CPI, which strips out food and energy, rose 0.3%, topping the 0.2% economists expected. And airfares are the clearest example of fuel costs bleeding into core prices – they’re up 22.4% from a year ago. With many airlines’ cheaper fuel hedges nearing expiration, more increases may be coming.

Then there’s diesel, the same shortage powering DINO. KPMG calls it “the sleeper threat” because it raises the cost of moving nearly everything, with a lag.

Third, are Americans starting to expect higher inflation?

This is the one the Fed fears most, and it’s moving the wrong way. In the University of Michigan’s latest survey, long-run inflation expectations rose to 3.5%, well above their 2024 range of 2.8% to 3.2%.

Meanwhile, inflation has now run above the Fed’s 2% target for nearly six years. That leaves the Fed with little credibility for telling Americans this spike is temporary.

Put it together, and you can see why markets expect the Fed to hold on Wednesday but hike in December. As I write on Monday, the CME FedWatch Tool puts the odds of a hike this week at 9.4%, and the odds of at least a quarter-point raise in December at 81.5%.

Here’s Louis on the timing:

The one positive is that the Fed doesn’t like to raise interest rates ahead of an election.

The midterm elections will be held on Tuesday, November 3, just one week after the October FOMC meeting.

So, the Fed will most likely wait until December to hike rates again.

Fed Chair Kevin Warsh rarely tips his hand, so at his post-FOMC-meeting press conference, we’ll be listening for any hint of where he stands on those three questions.

Turning to Thursday, look past the headline PCE number, which will reflect lots of higher gasoline prices. Instead, watch core PCE, which Wall Street expects at about 3.1%. That number will show whether energy is spreading into the rest of the economy.

Who gets paid no matter where oil goes

Here’s the irony: the same stubborn energy prices that are the Fed’s problem are the reason energy deserves a place in your portfolio.

But which part of energy? If the fear premium fades, oil prices could pull back. If the futures market is right, they stay high.

The good thing is that we don’t have to guess correctly. One corner of the energy patch can win either way: the companies that get paid to move it.

Remember Kaneva from the WSJ article: the problem now is the cost of moving oil. And that cost is reshaping energy far beyond the Gulf.

Before the Iran war, only about 17% of non-Iranian crude leaving the Gulf bypassed Hormuz entirely, going through pipelines across Saudi Arabia and the UAE. According to Kpler, that percentage had jumped to about 40% in September.

The lesson for the world’s energy buyers is clear: avoid depending on a single chokepoint. And increasingly, that’s a boost for American energy.

According to the U.S. Energy Information Administration, the Hormuz disruption helped double U.S. LNG shipments to Asia in the first half of 2026. Overall, U.S. LNG exports topped 73 million tonnes in the first seven months of the year, up 23% from a year earlier.

This American energy boom is what has Louis’ attention now – and is shaping his energy recommendations

He believes the U.S. is becoming the place the rest of the world must come to for energy. He calls it “America’s IPO.” And one of his favorite ways to play it borrows the same logic behind the tanker boom: own the companies that get paid to move the energy.

He calls them the “toll roads.” These are four pipeline and infrastructure companies that collect fees as American energy flows to data centers, Gulf Coast export terminals and customers overseas. Those fees depend largely on how much energy moves, not what it sells for.

Louis lays out the full story, including his toll-road picks, in a new free presentation. Click here to watch it.

We’ll circle back on the Fed decision and the PCE report after we get the outcomes.

Have a good evening,

Jeff Remsburg

The post Why Oil Prices Are High Despite Persian Gulf Supply Recovery appeared first on InvestorPlace.

With earnings season underway and a historically favorable stretch for stocks ahead, it’s a good time to take a fresh look at what you own.

The recent swings in AI stocks have made that decision more urgent. A pullback can offer a chance to buy a fundamentally superior business at a better price. But I want to see the numbers before putting my money to work.

Among other factors, I’m looking for strong sales and earnings growth, rising analyst estimates and positive earnings surprises. And I want management’s guidance to show that the business has more room to grow.

That’s especially important with AI stocks right now.

My focus is on companies already earning money, with solid fundamentals behind their growth. I believe strong quarterly results could help those stocks regain momentum over the next several weeks.

That’s why, on this week’s Navellier Market Buzz, I’m answering your questions about the AI stocks on your radar.

I explain why I’d buy Micron Technology, Inc. (MU) on a dip and what I’m watching in Western Digital Corporation (WDC) as earnings come into focus.

We also look at the power and cooling opportunity in GE Vernova Inc. (GEV), Vertiv Holdings Co. (VRT) and Modine Manufacturing Company (MOD), including what order backlogs can tell us about demand ahead.

And I share why Adobe Inc.(ADBE), despite its familiar products, doesn’t currently make the cut for my portfolios.

Before you decide what to buy, hold or sell, take a look at what the fundamentals are telling me.

Click the image below to watch this week’s Navellier Market Buzz.

Finding the Next Stocks Worth Buying

In addition to strong sales and earnings growth. I also want to know whether institutional investors are picking up shares.

That’s where my Precursor Intelligence, or P.I., system comes in.

P.I. analyzes roughly 6,000 stocks, combining eight fundamental signals with one quantitative money-flow signal. It helps me look for companies with both business strength and signs of institutional buying.

As new earnings reports arrive, that gives me a way to look beyond the familiar names making headlines and focus on promising stocks that other investors may be overlooking.

In my latest presentation, I explain how P.I. works, why institutional buying matters and what the system is flagging right now.

Click here to watch my Precursor Intelligence presentation and see what P.I. is flagging today.

Sincerely,

Louis Navellier

Editor, Market 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:

Micron Technology, Inc. (MU), Western Digital Corporation (WDC), GE Vernova Inc. (GEV) and Vertiv Holdings Co. (VRT)

The post Buy, Sell or Hold? My Take on Your Stocks appeared first on InvestorPlace.

In Sunday’s close runoff election, Brazil’s incumbent president, Luiz Inácio Lula da Silva, defeated Flávio Bolsonaro, winning about 52% of the vote.

The problem? The election didn’t go as investors expected.

Bolsonaro had edged Lula in the first round three weeks ago, and the final polls showed him holding a narrow lead. Investors piled in. The iShares MSCI Brazil ETF (EWZ) jumped 12.5% the day after the first-round vote, its best day since March 2020. Over the next three weeks it took in $4.1 billion of new money, nearly 30% of the fund’s total assets.

Those investors were betting that a Bolsonaro presidency would favor business, rein in government spending, and pave the way for lower interest rates.

Instead, they got Lula.

And he faces a tough road ahead. Lula will need to address Brazil’s public debt, which has risen above 82% of GDP, the highest level in five years, and interest payments alone now consume more than 8% of the nation’s economic output. Bolsonaro’s Liberal Party emerged from this month’s voting as the largest party in both houses of Congress.

Investors fear that government spending and debt will stay high. That would keep interest rates elevated and make borrowing more expensive for businesses and consumers alike.

As a result, Brazil’s stock market is taking a big hit today as investors unwind their bets on a Bolsonaro victory:

• The iShares MSCI Brazil ETF (EWZ), which tracks Brazilian stocks, plunged as much as 27% in premarket trading and is still down about 20% this afternoon. If that loss holds through the close, only one day in the fund’s 26-year history will have been worse: March 16, 2020, when it fell 23.1%.
• Nu Holdings Ltd. (NU), one of the world’s largest digital banks and Latin America’s largest fintech, has fallen about 18%. Investors worry about tax increases and tighter regulation of Brazilian financial companies. The old-line banks are faring even worse. Itaú Unibanco (ITUB) and Banco Bradesco (BBD) each dropped more than 26% in premarket trading.
• Petróleo Brasileiro S.A. (PBR) is faring slightly better, but still down 14%. Because the Brazilian government controls the oil company, investors worry that political decisions could affect its prices, taxes, and dividends.
• MercadoLibre Inc. (MELI), the largest online commerce and technology company in Latin America, is down 9%.

I recommended PBR just last week, so this morning stings. But I consider the selloff a buying opportunity. Petrobras remains an exceptionally strong oil company with an exceptionally strong growth profile. Furthermore, it sells oil priced in dollars, and a weaker real fattens those dollar revenues once the company converts them into reais.

While everyone wonders about what happens next, I want you to consider a broader lesson the Brazilian election offers: Loaded political terms like “socialist” and “populist” can sometimes distort political realities.

Lula’s critics apply both labels to him, and they have a point. But when it counts, Lula has also chosen pragmatism over ideology.

We’ve seen this movie before. In October 2002, Brazilian markets collapsed on fears that Lula would win his first presidential election, and the real sank to record lows. Then Lula installed an orthodox finance team, and investors spent the next several years unwinding their “Lula discount.”

His naysayers would probably be shocked to learn that the Bovespa Index soared nearly 1,200% in U.S.-dollar terms during Lula’s first two terms, from 2003 through 2010. To be fair, Lula had help. A global commodity boom lifted Brazil’s economy, and the real roughly doubled against the dollar. Brazilian stocks have also produced a positive return during his current term, even after today’s selloff.

By contrast, the Bovespa lost about 7% in dollar terms during the four years of Lula’s “business-friendly” predecessor, Jair Bolsonaro, father of the Bolsonaro who lost on Sunday. The pandemic deserves some of the blame for that.

Markets often fixate on narratives over substance. I believe today’s selloff is an overreaction and a buying opportunity.

To be sure, today would have been a lot more fun for holders of Brazilian stocks if Bolsonaro had won. But next year might not have been. Lula is a populist, but he is also a pragmatist. Center-right parties will control roughly 57% of the lower house and 62% of the Senate. That congressional map cuts both ways: it could stall the spending reforms investors want, but it also puts a firm ceiling on any populist adventures. I expect to see a lot more of the pragmatic Lula over the next four years than the populist one.

The stock market doesn’t react to whether news is good or bad. It reacts to the gap between what happens and what investors expected. A portfolio built around one anticipated outcome can unravel in a single session when that outcome never arrives.

A similar risk looms over the U.S. market as investors look ahead to next week’s midterm elections. Political shifts can change investor sentiment, but the bigger danger lies in overcommitting to one popular market narrative.

The good news is that best investment opportunities may emerge when expectations collide with reality.

And there may be a big opportunity taking shape in the AI market ahead of America’s midterms.

I’ll share what this all means below. But first, let’s take a look back at what we covered here at Smart Money last week…

Smart Money Roundup

October 21, 2026

Stop Looking at Who Builds AI – Look at Who Puts It to Work

Here’s one of the great, underappreciated lessons of investing in a technological revolution: The companies that build the infrastructure aren’t usually the ones that make the most money from it. Sometimes, the biggest winners are the businesses that put that infrastructure to work. I’ll explain how financial pressures are threatening today’s AI giants, and where investors might find the next generation of winners.

October 22, 2026

As the Market’s Party Shrinks, Here’s One Stock to Buy

I like to compare the stock market to a cocktail party. A healthy party has people mingling, laughing, and generally enjoying themselves. But when a handful of guests are laughing in the corner while most of the room is plotting an escape, the festivities have taken an unpleasant turn.

Lately, that’s been the stock market. So, I’ll show you why this market deserves caution – and give you the name of an overlooked healthcare stock that I believe offers substantial upside, even if the market’s party keeps shrinking.

October 24, 2026

As the AI Buildout Slows Down, Here’s What to Do Next

Would-be data center builders face a growing list of obstacles and expenses: New projects will take longer, face continuous permitting roadblocks, and incur rising costs. And in an industry committing hundreds of billions of dollars to infrastructure and running on borrowed money, time is expensive. So, here’s how to position your portfolio for the next phase of the AI trade.

October 25, 2026

Anthropic Could Be the Next Amazon, and That’s the Problem

There’s a lesson from the dot-com boom that most investors have forgotten: Even when you correctly identify the next revolutionary company, the price you pay can make it a terrible investment. I’ll show you why even the next Amazon might be a lousy investment at Anthropic’s rumored valuation, and where I’d look for better opportunities as AI reshapes the market.

The Election That Could Shake Up AI

The Brazilian election is a reminder of how quickly market expectations can change – and how that can create opportunities for investors willing to look beyond the headlines. Now, a similar shake-up could be coming to the U.S. market…

And AI could be at the center of it.

The morning after the midterm elections could mark the beginning of a major shift in the AI market. Some of America’s biggest technology stocks could plunge, while a different group of overlooked companies takes off.

And it has to do with what happens the week before the election.

Microsoft Corp. (MSFT), Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), and Amazon.com Inc. (AMZN) are all expected to report earnings. I expect them to raise their spending plans for 2027, because that’s what they have done nearly every quarter for the past two years. By the end of the week, the four tech giants could be planning to spend about $1.3 trillion.

Then, America votes.

Thirty-six states will elect governors, and most state legislatures and thousands of local officials are up for election. Nine states will also choose utility regulators who help determine who pays for power.

So, the morning after the election, Wall Street could face $1.3 trillion in planned AI spending – and a new wave of elected officials pushing AI companies to shoulder more of the costs.

That could put pressure on the companies building the AI boom, just as investors are questioning how much those investments will pay off. And if the AI trade turns, you’ll want to know which stocks could fall – and which could rise.

In my free, special presentation, I’ll show you what to watch ahead of the midterms, and where I believe the next AI opportunities could emerge.

Remember: When the crowd bets on one outcome, the biggest opportunities can emerge when reality takes a different turn.

My publisher is taking this presentation down midnight tomorrow. So this may be your final opportunity to click here in order to learn how to position your portfolio for what comes next.

Regards,

Eric Fry

The post Brazil’s Market Selloff Offers a Warning Ahead of U.S. Midterms appeared first on InvestorPlace.

This Week’s Ratings Changes:

Upgraded: Strong to Very Strong

Downgraded: Very Strong to Strong

Upgraded: Neutral to Strong

Downgraded: Strong to Neutral

Upgraded: Weak to Neutral

Downgraded: Neutral to Weak

Upgraded: Very Weak to Weak

Downgraded: Weak to Very Weak

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.

To learn more about my premium service, Growth Investor, and get my latest picks, go here. Or, if you are a member of one of my premium services, you can go here.

Sincerely,

Louis Navellier

Editor, Market 360

The post Hasbro Upgraded, General Motors Downgraded: Updated Rankings on Top Blue-Chip Stocks appeared first on InvestorPlace.

Single-number roulette is one of the worst bets you can make in a casino.

The player picks a number between 1 and 36 and hopes the little white ball drops into that slot. If it does, the house pays you 35-to-1. If it doesn’t, the chip disappears into the casino’s pocket.

Those odds sound almost fair… until you notice the two green slots labeled “0” and “00.” Those numbers belong to the house. If the ball lands on a house slot, the casino sweeps everything off the table for themselves, except any random bet a player might have made on one of those single numbers. Those two extra slots give the house an advantage on every spin. The longer you play, the harder that advantage is to overcome.

It’s why novelist Mario Puzo, of The Godfather fame, once said, “If you are looking to cheat the house or beat it legitimately, forget about roulette. It’s basically a sucker’s game.”

Better luck next time!

I bring this up because next month, Wall Street plans to spin the wheel on one of the most-watched roulette bets in its history.

That’s when Anthropic, the maker of the Claude AI models, is expected to go public. Bankers have floated price tags at around $1.5 trillion, with some calling for valuations as high as $2 trillion. That would make Anthropic one of the most valuable companies on Earth starting on Day 1.

Millions of investors will place a chip on that high-risk, but I would caution against doing the same. Because there’s a lesson from the dot-com boom that most investors have forgotten: Even when you correctly identify the next revolutionary company, the price you pay can make it a terrible investment.

Today, I’ll show you what happened to 48 of the hottest internet stocks of that era, why even the next Amazon.com Inc. (AMZN) might be a lousy investment at Anthropic’s rumored valuation, and where I’d look for better opportunities as AI reshapes the market.

One Winner Out of 48

In December 2000, three professors at the Wharton School examined the fortunes of 48 publicly traded e-commerce companies that had captured investors’ imaginations during the dot-com boom.

The results were grim.

• Six had filed for bankruptcy…
• Fifteen were trading below $1…
• Amazon was down 90% from its peak…
• And only one company was trading above its IPO price: 1-800-contacts.

That’s 1 winner out of 48. Suddenly, picking the right number on a roulette wheel doesn’t sound quite so difficult.

It gets even worse if you look at the private dot-com firms. In a separate analysis at Wharton, a researcher attempted to estimate the number of all reasonably large e-commerce companies operating during the internet bubble. He counted around 1,100.

Of roughly 1,100 e-commerce businesses, only 20 remained by 2015. And two companies — Amazon and eBay Inc. (EBAY) — had come to dominate the industry.

The internet changed the world, just as its most enthusiastic promoters had predicted. But the overwhelming majority of companies chasing that opportunity disappeared along the way.

“But This One Is Amazon”

I know what many of you are thinking: Anthropic isn’t Pets.com. Its revenue hit $16.8 billion in the third quarter, up from almost nothing two years ago. Surely, it’s the Amazon of this cycle, not one of the other hundreds of flops.

Perhaps. Anthropic has a legitimate shot at becoming one of the dominant technology companies of the next several decades. But even if it does, that doesn’t tell us whether its stock will be a good investment. For that, we need to consider the price.

And here’s where the Amazon comparison gets interesting.

Most people forget that Amazon during the dot-com boom was not particularly expensive by today’s standards. Even after adjusting for inflation, the online retailer’s market value topped out at $36 billion in December 1999. That’s about as much today as Dassault Systèmes SE (DASTY), a French software company, or Okta Inc. (OKTA), a San Francisco-based cybersecurity company.

That meant even if an investor had the misfortune of buying Amazon at the very top of the bubble, there was still room for 80X returns over time. The online retailer is now worth almost $3 trillion today.

If Anthropic were going public at $36 billion, I’d be grabbing my checkbook. I might even take a flyer at a $100 billion valuation.

But that’s not the case. The AI lab is going public closer to a $1.5 trillion to $2 trillion price tag. To earn an 80X return, Anthropic would have to reach a valuation of $120 trillion to $160 trillion, depending on its IPO price.

That $160 trillion is twice the value of the entire U.S. stock market today. It’s twice the value of all real estate in America, including housing, office space, and farmland. In fact, $160 trillion would make Anthropic more valuable than the combined net worth of every American household.

That’s the uncomfortable truth about Anthropic’s rumored IPO valuation. The company might succeed beyond anyone’s expectations, yet its investors could still earn disappointing returns.

When you pay a price that already assumes a spectacular future, there’s precious little room for anything less.

You might as well play roulette. At least there, you’re guaranteed a 35-to-1 payout if you win.

So, Where to Invest?

Here’s my secret to investing:

I explore for opportunity in areas of the market that most investors are ignoring. 

The lesson I took from the dot-com boom wasn’t to avoid technology stocks. It was to avoid paying prices that already assumed a company’s wildest dreams would come true.

That’s why I spent much of 2000 looking beyond the obvious internet winners.

In fact, Barron’s published my warning about Corning Inc. (GLW), one of the hottest stocks of the dot-com boom. Within a year, it had fallen 87%.

Instead, I recommended Humana Inc. (HUM), a health insurer that was putting the internet to work to make its existing business more efficient. That recommendation eventually gained more than 4,000%, even as many of the internet’s infrastructure builders struggled.

I’m applying that same discipline to AI today.

And I see a similar split on the horizon for AI companies: the AI Separation.

On one side are the AI Builders — companies spending enormous sums developing the technology and infrastructure behind the AI revolution. Some will become extraordinarily successful businesses. But investors paying extravagant valuations for them may discover that even spectacular business growth produces disappointing stock returns.

On the other side are the AI Appliers: established businesses using AI to lower costs, improve productivity, and increase profits. Some of these companies are still trading at valuations that leave room for pleasant surprises.

I believe this AI Separation will begin on November 4, the morning after the midterms. It will happen just weeks before Anthropic’s shares start trading.

I’ve put together a free presentation explaining exactly how this happens, which household names are caught in it, and the first AI Applier I’d buy – absolutely free. You can watch it here.

Anthropic may become one of the great companies of the 21st century. I wouldn’t bet against that possibility.

But at a $1.5 trillion or $2 trillion valuation, investors would be paying an enormous amount for a future that hasn’t happened yet. I’d rather look for companies where the future doesn’t have to be quite so spectacular for the investment to work.

Mario Puzo had the right idea about roulette. Sometimes the smartest bet is to find a different game.

Regards,

Eric Fry

Editor, Smart Money

The post Anthropic Could Be the Next Amazon, and That’s the Problem appeared first on InvestorPlace.

Jay Cooke was a household name at the time. He was the man whose firm had financed the Union’s war effort by selling bonds to ordinary families across the North. If any institution in the country was safe, it was Jay Cooke & Co.

When it collapsed, the panic was so violent that the New York Stock Exchange shut down for 10 days.

Afterward, investors swore nobody could have seen it coming. Except the warnings had been visible for a year. Cooke’s great project – the Northern Pacific Railway – couldn’t sell enough bonds to the public, so his bank quietly absorbed them itself, financing its own customer. Money had been getting tighter all summer. Good railroad news had stopped lifting railroad stocks.

Nobody rang a bell at the top. Nobody ever does. But the signals were there.

We’re staying bullish on AI today – but we’re not blind. Every great boom ends. The railroads proved it in 1873. The dot-coms proved it in 2000. And someday, the AI buildout will prove it, too. 

Most investors find out about a peak the hard way, months after it’s passed, while watching their gains evaporate. We don’t intend to be those investors. 

That’s why we’re introducing a new tool we’ll be tracking closely: Luke Lango’s Peak Watch Checklist.

How We’ll Know When the AI Boom Is Peaking

Booms don’t die all at once. They usually fail in a predictable order, and the checklist tracks 13 warning signals grouped into the three stages a boom goes through on its way down. 

Stage 1 is Froth: money gets cheap, plentiful, and a little circular – late-boom behavior that can last a long time. 

Stage 2 is Cracks: the top forming, as good news stops moving stocks and money gets harder to raise. 

And Stage 3 is Confirmation: the top is in, as chip orders, data-center occupancy, and project pipelines start rolling over.

Each signal gets one of four ratings: Clear (green), Watch (yellow), Flashing (orange), or Triggered (red). Each also comes with a specific tripwire – a concrete event that would flip it to red. No vibes, no guesswork. When a tripwire hits, we’ll know it, and you’ll know it. We roll it all into a single number – the Peak Watch Score – which counts how many of the 13 signals are lit (orange or red).

Today’s Peak Watch Score: 7 of 13 signals are lit.

That puts the AI boom firmly in late-cycle territory. But with most of the fundamental confirmation signals still clear, it does not yet tell us the top is in.

Let’s walk through the board, stage by stage.

The 13-Signal AI Bubble Checklist

Stage 1: Froth – All 3 Signals Are Flashing

Debt-funded capex: Flashing. Big Tech is now spending roughly all of its cash flow on AI and borrowing to cover the rest. Alphabet’s (GOOGL) $180-190 billion 2026 capex plan roughly equals its operating cash flow, and hyperscaler bond issuance passed all of 2025’s total by June. 

Vendor financing: Flashing. This is when a supplier finances its customer’s purchases of its own products. Broadcom (AVGO) agreed to provide Anthropic up to $42 billion in financing tied to a $125 billion chip lease, and it’s reportedly arranging roughly $50 billion more for OpenAI. That’s a classic late-cycle tell. 

Record stock issuance: Flashing. Smart companies sell stock when it’s expensive. Alphabet’s $85 billion share sale and SpaceX’s (SPCX) $75 billion IPO both set records, and Anthropic has filed to go public. 

Stage 2: Cracks – 4 of 7 Signals Are Lit

Capex growth slows: Clear. AI spending isn’t just growing; it’s still accelerating. Alphabet’s capex jumped from $35.7 billion in Q1 to $44.9 billion in Q2. It turns red if two or more of the big four guide to slower capex growth in the same quarter. This is the one to watch this week, when Microsoft (MSFT), Alphabet, and Amazon (AMZN) report.

Good news gets sold: Flashing. When stocks fall on great earnings, the market is telling you the good news is already priced in. Nvidia (NVDA) fell after four straight earnings beats before breaking that streak in August. Last week, Nvidia and Broadcom slid after a report put OpenAI’s annualized revenue near $50 billion rather than the higher figure that had been widely cited – a gap that comes down to gross-versus-net accounting. Taiwan Semiconductor (TSM), Meta (META), and Lam Research (LRCX) have all now slid after strong reports this month as well. 

Revenue lags spending: Watch. AI revenue is ramping fast – but spending is ramping faster. The big five are tracking roughly $750 billion in capex this year. 

Pricing power erodes: Watch. The price of AI tokens – the units AI models charge by – hit a record low in early September, down by more than half from its summer peak. GPU rental prices, though, are still rising, with H100 rents at $3.49 an hour, up 4.5% in four weeks. 

AI credit spreads widen: Flashing. A credit spread is the extra interest a borrower pays over safe government debt, and it’s how lenders price risk. Bond markets tend to sniff out trouble before stock markets do. CoreWeave’s (CRWV) bonds yield near 14%, and its latest loan priced a full point wider than the one before. 

Capital raises fail: Triggered (selectively). Australian AI cloud firm Firmus pulled its roughly $5 billion IPO last week after weak investor demand. Now, that’s one company, not a system-wide freeze; but it’s a real crack. It goes system-wide if a second AI infrastructure raise gets pulled or slashed. Upcoming IPOs from Nscale and Lambda are the next tests.

The Fed tightens: Flashing. Booms end on interest rates more often than on demand. The Fed hiked in September for the first time since 2023, and its projections point to one more hike this year. 

Stage 3: Confirmation – The Fundamental Signals Remain Mostly Clear

Chip orders digest: Clear. Micron (MU) just posted a record $54 billion quarter and guided higher, and Broadcom guided its AI chip revenue up again. 

Capacity sits idle: Clear. North American data-center vacancy is just 1.4%, even with supply up about a third. Every rack being built is getting filled. 

Projects get canceled: Watch. Firmus and its partner scrapped a planned 1.6-gigawatt Australian buildout. It’s the same company that pulled its IPO, so this isn’t yet a trend. But it could become one if several developers cancel or a hyperscaler walks away from signed leases.

The AI Boom Looks Late Cycle, Not at a Confirmed Peak

In summary, the froth is fully lit, and cracks are starting to show in financing, credit, and rates. But the confirmation signals are clean. Chips are still selling out, data centers are still full, and Big Tech is still accelerating its spending.

That’s late-cycle behavior, not a confirmed peak. A late-cycle reading isn’t a sell signal either – some of a boom’s biggest gains historically come late. What it means is that we’re no longer flying blind.

What Moves the Board Next

We’ll update the Peak Watch Checklist every week – and the next two weeks should move it.

Microsoft, Alphabet, and Amazon report third-quarter earnings this week: a direct test of “capex growth slows.” The Fed also meets Oct. 27-28, though hike odds have collapsed to around 8% since the latest CPI report – good news for the “Fed tightens” signal. The Nscale and Lambda IPOs will tell us whether Firmus was a one-off or the start of something system-wide. And this week’s news split the difference: Meta’s plan to raise potentially hundreds of billions through a new share class nudges “record stock issuance” the wrong way, while Nebius (NBIS) closing a $3.5 billion facility at reasonable rates is a point for the bulls. 

All of which raises the question sitting behind all 13 signals: will this spending ultimately pay off?

Our math says the odds favor yes. But patience is the price of that payoff.

A Long Payback Period Leaves Plenty of Room for Scares

In our base case, revenue doesn’t clear the required-return threshold until 2035, with full payback around 2039. That leaves nearly a decade of room for financing scares, disappointments, and sharp selloffs between here and there.

Which is exactly why this checklist exists. Late-cycle booms reward the investors who stay. Some of history’s biggest gains come in a boom’s final innings; but they go only to the investors who can suss out a shakeout from a top. 

The AI trade has clearly moved beyond the clean early innings. Capital is getting more expensive, some investors are pushing back, and credit markets are separating strong borrowers from weak ones.

However, the signals that would confirm a fundamental peak have not arrived together. That’s why we’re watching instead of running.

We’re staying bullish and keeping our eyes on the scoreboard.

We update the full Peak Watch checklist – every signal, rating, and tripwire – each week inside Innovation Investor and Early Stage Investor. The easiest way to start getting it is through my free XPANSE briefing. It lays out the Musk-centered buildout we believe drives this boom’s next leg, the three moves I’d make today, and one lesser-known stock I believe sits at the center of it all. It also shows you how to join us as a member, so the Peak Watch Score lands in your inbox every week before the crowd notices the music changed.

Nobody rings a bell at the top. We built the next best thing.

Watch the XPANSE briefing right here.

The post Our 13-Signal AI Bubble Checklist Says the Peak Isn’t Here Yet appeared first on InvestorPlace.

Most of us know the story of Silicon Valley.

In 1939, Bill Hewlett and Dave Packard started their electronics company in a garage in Palo Alto. That little operation helped give rise to one of the greatest concentrations of technological innovation the world has ever seen.

But there’s another localized American technology story that never attracted as much attention.

It’s been taking place about 3,000 miles east, in the suburbs of Washington, D.C.

Back in the 1990s, an early internet exchange called Metropolitan Area Exchange-East, or MAE-East, helped turn Northern Virginia into one of the busiest crossroads of the young internet. Internet companies such as UUNET and America Online established major operations in the area, drawn by its communications infrastructure, proximity to the federal government, and growing concentration of technology businesses.

As more companies arrived, the region became an increasingly attractive place for still more companies to build. Internet connections were plentiful, skilled workers were nearby, and local officials welcomed the development.

Over the following decades, the area became known as Data Center Alley — one of the world’s largest concentrations of data centers.

But today, Data Center Alley is looking more like cul-de-sac. Growth is coming to a halt.

Just west of Data Center Alley’s heart in Loudoun and Prince William counties sits Fauquier County. With AI’s enormous appetite for computing power, Fauquier seemed a natural place for the next wave of development.

Developers introduced nine business-park data center proposals to Fauquier. But only one gained approval. The other eight did not.

Then, on October 8, the Fauquier County Board of Supervisors voted to adopt new zoning rules that make data center construction even more restrictive.

Not exactly the welcome mat developers were hoping to find.

And the obstacles don’t end with local opposition. Developers are also discovering that securing enough electricity can be just as difficult as securing permission to build.

Now, Fauquier hasn’t stopped the AI buildout completely. But its new zoning provide a glimpse of the future. Would-be data center builders face a growing list of obstacles and expenses: New projects will take longer, face continuous permitting roadblocks, and incur rising costs. And in an industry committing hundreds of billions of dollars to infrastructure and running on borrowed money, time is expensive.

In today’s Smart Money, I’ll walk you through what’s happening in this Virginia county, why it matters beyond the county itself, and how to position your portfolio for the next phase of the AI trade.

When Building Becomes the Hard Part

The obstacles facing developers in Fauquier fall into three categories. And each one creates a financial problem for the companies trying to build the infrastructure behind AI.

First, localities are cancelling projects before they ever get off the ground. One of the eight withdrawn business-park proposals in Fauquier featured a 2.2-million-square-foot campus near Remington. Another developer abandoned its data center plans and will build homes instead.

Second, projects face mounting delays. Amazon.com Inc. (AMZN) won approval for a $550 million data center in Warrenton in February 2023. Residents sued to block the project, and more than three years later, it remains tied up in court.

Third, projects are incurring rising costs. Remington Technology Park, approved back in 2018, still can’t get enough electricity from the local grid. In July, county supervisors approved a plan for hundreds of natural gas fuel cells and backup diesel generators. Without that workaround, the development could face delays until at least 2030.

Think about that. In the region that helped build the modern internet, developers are struggling to secure the land, legal approvals, and electricity needed to build its next generation of infrastructure.

Delays Cost Money, and Debt Doesn’t Wait

In my recent work, I’ve described how a two-sided vise squeezes the life out of every major tech boom…eventually .

One side is the Revenue Jaw: technological advances that make services cheaper to provide, pushing down what companies can charge.

The other side of the vise is the Expense Jaw: the rising cost of building and operating the infrastructure behind the boom.

And we’ve just seen three examples of that Expense Jaw tightening in Fauquier County.

Every year spent in court can mean another year before a project starts generating revenue. Every permitting hurdle also adds time and expense. Every dollar spent generating electricity on-site adds to the cost of construction. And every project that developers must redesign, or abandon completely, impairs the prospective return on investment.

Now, Fauquier isn’t an outlier. More than 300 towns, cities, and counties across America have adopted data center moratoriums or bans, according to research firm SemiAnalysis. And according to Gallup, 7 in 10 Americans oppose building a data center in their area.

A big reason is electricity bills. People understandably worry they’ll pay more for power to support a boom whose benefits they may never see.

Residents aren’t the only ones facing higher bills. The tech giants first funded the AI buildout from their considerable cash reserves. Increasingly, they’re borrowing to keep it going, and every delay makes that debt more expensive to carry.

And debt doesn’t wait. As the late Charlie Munger, longtime associate of Warren Buffett, bluntly said: “The liabilities are always 100% good; it’s the assets you have to worry about.” Debt shows up every day, rain or shine, and demands its payment on schedule.

In other words, the money you owe is real and unavoidable. The money you hope to earn from your investment is another matter entirely.

That’s an uncomfortable distinction when you’re spending billions on infrastructure that might not begin generating revenue for years.

To be fair, the buildout continues. Remington Technology Park got its power plan approved. The hyperscalers keep raising their spending budgets. And as AI becomes more efficient, demand for computing power will likely increase.

The demand for AI isn’t imaginary. Neither are the obstacles to supplying it.

But the Expense Jaw alone doesn’t end a boom…

Positioning Before the Vise Closes

There’s more danger ahead if the Revenue Jaw closes, too, As AI becomes cheaper to provide, competition could push down what companies can charge, even as construction costs keep climbing and debt payments come due.

Again, the AI buildout isn’t stopping. But it’s encountering delays and growing more expensive in places like Fauquier County. And those costs can fall hardest on the companies financing the infrastructure at the center of the boom: the “AI Builders.”

History suggests that even excellent companies can become disappointing investments when they spend too much building infrastructure that eventually becomes cheaper and more plentiful.

The internet was a tremendous success. That didn’t prevent investors in some of its most important infrastructure companies from losing fortunes.

The companies that come out ahead are often the “Appliers,” businesses that put the new technology to work once it becomes cheap and abundant. They don’t need to own the infrastructure. They just need to find profitable ways to use it.

That’s why I urge you to watch my recent presentation.

In it, I explain all this in more detail, reveal which companies sit within AI’s “vise,” and where I believe investors should look instead. I also name the No. 1 AI Applier to buy right now.

Click here to check it out.

When the first internet companies arrived in Northern Virginia, few could have predicted that the region would become the world’s data center capital.

I believe the AI Revolution will prove every bit as consequential. But as the developers in Fauquier County are discovering, building the next technological empire can be a lot more expensive and complicated than anyone anticipated.

The technology may succeed spectacularly. That doesn’t guarantee that everyone financing its infrastructure will.

That’s why I’m paying close attention to who’s footing the bill… and who’s positioned to enjoy the benefits.

Regards,

Eric Fry

The post As the AI Buildout Slows Down, Here’s What to Do Next appeared first on InvestorPlace.