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Turning to today’s Digest…
Our technology expert Luke Lango has been covering the two waves of the AI Boom in his services for the past few years. And his readers have benefited tremendously by spotting the AI Applier Boom long before it ever arrived.
For example, Luke recommended top AI Applier stocks like Axon Enterprise Inc. (AXON) and AppLovin Corp. (APP) — now both up 350%-plus — before the crowd caught on.
This is part of the reason why Eric Fry and Louis Navellier were excited to team up with Luke and build a portfolio of the best of the AI Applier stocks. Last week, they took to the “airwaves” to tell folks about it. (You can catch up on their broadcast together here.)
As the AI Boom accelerates, AI itself isn’t going to take over the world — but businesses using AI will. So, today, we’re handing the Digest over to Luke to give us the big picture on the AI Boom and what it means for the companies building new businesses on top of the AI superhighway (and eventually the AGI highway).
He’ll also explain how this Phase 2 of the AI Boom is creating a compelling opportunity in select AI Builder stocks ahead of the new wave of AI.
I’ll let Luke take it from here.
From all of us here at InvestorPlace, have a Merry Christmas and wonderful holiday season!
Have a good evening,
Jeff Remsburg
Are These AI Stocks Ready for a Comeback?
In 1990, Tim Berners Lee invented the World Wide Web, but the internet’s true “Day One” arrived five years later when Amazon.com Inc.(AMZN) made its first online sale, catapulting the disruptive technology into global consciousness.
Likewise, while the first Blackberry Ltd. (BB) smartphone was released in 1999, the smartphone’s Day One came eight years later with Steve Jobs’ iconic iPhone announcement in San Francisco, ushering in a new era. Now, as we approach 2025, another singular event is on the horizon that will ignite the most significant and rapid societal transformation in human history.
If you follow our research, you know that we have always seen the AI Boom playing out in two waves.
First, the buildout phase – or the AI Builder Boom – wherein companies spend billions upon billions of dollars to create new AI datacenters, buy new AI chips, build new AI fabs, and more.
In this stage, everyone is rushing to create the infrastructure necessary to develop new AI products, services, and applications. The AI Builder stocks – or the companies building those data centers, selling those chips, running those fabs, etc. – are the big winners.
Second, you have the application phase – or the AI Applier Boom – wherein companies spend billions upon billions of dollars to actually develop and deploy new AI applications on top of the new AI infrastructure. The AI Applier stocks – or the companies making those new AI applications – are the big winners.
Between these two waves, it’s only a matter of time before a “killer app” stuns the world and sends “new wave” AI stocks soaring. But before we get into this new wave, let’s try to understand the dynamics at play in the AI Boom…
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The Contrarian Approach to the AI Boom
In the first ~18 months of the AI Boom, we were in “phase one,” or the AI Builder Boom. AI Builder stocks – like Nvidia Corp. (NVDA) and SuperMicro Computer Inc. (SMCI) – were the big winners. They significantly outperformed AI Applier stocks from late 2022 to summer 2024.
But a few months ago, we shifted into “phase two,” or the AI Applier Boom. Since July 2024, top AI Builder stocks like Nvidia have struggled, while top AI Applier stocks like Axon (AXON) and AppLovin (APP) have absolutely soared.
This shift mirrors the evolution we’ve observed in the AI market, with AI Builder stocks like Nvidia initially dominating, followed by the recent surge of AI Applier stocks such as Axon and AppLovin.
AI Appliers have taken the baton from AI Builders, if you will.
Readers of our research have benefited tremendously from this phase shift.
We saw the AI Applier Boom coming long before it ever arrived, and as such, we owned top AI Applier stocks like AXON and APP in our model portfolio long before they ever took off.
In fact, in one of our research services, we recently booked partial paper profits on our AXON recommendation of over 350%. APP stock is also up more than 350% since we recommended it (as of this writing).
So… needless to say… we are happy about the shift to the AI Applier Boom that has transpired over the past few months.
But that doesn’t mean we have forgotten about AI Builder stocks.
In fact, we think AI Builder stocks are due for a big comeback.
The slowdown in AI Builder stocks over the past few months has been driven by a concern that spending on new AI infrastructure is slowing down. We think that concern is overstated.
Just look at what happened earlier this week, when the world’s largest tech investor – MasayoshiSon of SoftBank Group Corp. (SFTBY) – pledged to invest $100 billion into the U.S. over the next four years, with a bulk of that $100 billion going towards creating new AI infrastructure.
Or look at what Amazon did this week. They just said that they are going to invest another $10 billion to expand its data center infrastructure in the state of Ohio.
Or how about Meta Platforms Inc. (META)? They just announced that they are building a $10 billion AI datacenter – the largest they’ve ever built – in Louisiana.
And right next door, in Tennessee, ElonMusk and his xAI startup are building their own multi-billion-dollar supercomputer project.
Folks, the AI infrastructure boom in the United States is not slowing down. It is picking up speed, if anything, and that means there exists a compelling opportunity right now to buy beaten-down AI Builder stocks. They are primed to rebound strongly as the market realizes the AI Builder Boom remains alive and well.
We just ran a screener to look for top-notch AI stocks that have struggled recently… Names like Micron Technology Inc. (MU) came up, which is up almost 30% in 2024 but has fallen 30% over the past six months.
Qualcomm Inc. (QCOM) was a hit, too, because it is still up 9% this year but down about 30% over the past six months.
Same with Arm Holdings plc (ARM). It is up almost 90% this year, but down about 20% over the past six months.
Nvidia and TexasInstruments Inc. (TXN) also fit a similar billing.
We’d consider those stocks for an AI Builder rebound in the first half of 2025.
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The ‘New Wave’ of AI Is Here
Now, I wouldn’t be doing my job if I didn’t mention that, concurrently with the comeback of certain AI Builder stocks, AI Applier stocks will continue to shift into high gear.
In fact, we have less than 1,000 days before we witness a seismic shift in the global economy that will make the internet boom look like child’s play…
We have dubbed it “AI Day One.”
This isn’t just another tech trend. It’s a fundamental reshaping of our world that will create unprecedented wealth for those who see it coming – and leave everyone else in the dust.
Imagine being able to predict which companies will dominate the AI landscape before Wall Street catches on. Now you can.
That’s because we have identified a select group of “new wave” AI stocks poised for explosive growth in the coming months. These aren’t your typical tech giants – they’re the hidden gems of our AI-powered future.
Don’t be left behind in the greatest wealth transfer of our lifetime. Learn how to position yourself now, before it’s too late…
