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The Permian Basin Is a New Source of “AI…
The Permian Basin Is a New Source of “AI Fuel”
BY MICHAEL SALVATORE, EDITOR, TRADESMITH DAILY
In This Digest:
- The 75,000-square-mile stretch of U.S. land is now a major producer of “AI fuel”
- The GLP-1 pivot is paying off, and one beverage stock has Main Street and Wall Street on the same side
- Last call on Jeff Clark’s 12 Trades to $1 Million Challenge– enrollment closes at midnight tonight
The Permian Basin is becoming a major source of “AI fuel”…
As we covered yesterday, AI doesn’t just need faster chips. It needs more electricity than America’s power grid can deliver today.
That’s a powerful tailwind for any company that can help close the gap.
And one corner of the energy market that’s showing up on our trend-following screen right now is natural gas infrastructure stocks. These are the pipeline operators, processors, and storage companies that move gas from the wellhead to the power plant.
A big reason for that is the Permian Basin – the 75,000-square-mile stretch of West Texas and southeastern New Mexico that pumps out roughly half of America’s crude oil.
That’s the part of the story most people know. What often goes under the radar is that the Permian also produces enormous volumes of natural gas as a byproduct of all that drilling. And that gas is increasingly being routed straight to the data centers powering the AI boom.
That’s why, in April, Microsoft entered exclusive talks with Chevron and investment firm Engine No. 1 on a $7 billion natural gas power plant near Pecos, Texas.
Rather than tap the strained Texas grid, Microsoft plans to plug a massive AI data center directly into the plant – and the plant straight into Chevron’s Permian gas wells.
Just 200 miles east of the Permian, OpenAI’s flagship Stargate data center campus in Abilene is already up and running – powered not by the Texas grid, but by its own dedicated natural gas plant on site. The gas comes from the same West Texas supply network the Permian feeds.
Stargate is the $500 billion AI infrastructure project backed by OpenAI, Oracle, and SoftBank, designed to deliver 10 gigawatts of computing power by 2029 – nearly enough electricity to run a city the size of New York. And like Microsoft’s deal with Chevron, it’s a bet that the fastest way to power AI isn’t waiting on the grid. It’s drilling straight into the gas patch.
Also in April, LandBridge (LB) – a small Texas land company that collects rent from anyone wanting to build on its 315,000 acres of Permian dirt — signed a lease deal for a 2-gigawatt data center campus on its land. That’s enough power to run a mid-sized American city.
This morning, LB lit up on the new screen we’ve created to look at emerging trends and themes.
Given what’s happening in the Permian Basin, it’s no surprise. Big money is flowing into the handful of companies that control the three things every AI data center needs: the land near the gas, the gas itself, and the pipes that move it. And LandBridge controls the land.
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LB has also triggered a buy signal on our new Signals software…
We built this software based on the kind of market “signals” hedge fund legend Jim Simons pioneered.
Signals are often obscure, repeatable patterns buried in reams of market data that point to predictable moves.
Signals evaluates 2.09 million potential trades a day across 2,467 stocks, running each one through 847 individual calculations, hunting for the same kinds of signals Simons built his career on.
When the right combination of factors aligns, our system flags it as a high-probability trade setup.
The signals trade our system is flagging has a historical accuracy rate of 80.5% over 10 years. The average return on previous moves is 4.1% and has an average hold time of eight days.
That’s an 80% historical hit rate on a stock that’s breaking out to a one-month high… and with the largest tech companies in the world signing leases on its land.
If you like this trade, set yourself an alert to close it if the stock rises 8% or after 21 trading days. And keep an eye on LB, regardless.
The Permian isn’t done being an oil basin. But the next decade of growth in West Texas is set to be measured in gigawatts of natural gas power, rather than barrels of oil.
The GLP-1 Pivot is paying off…
In October 2023, Walmart’s CEO went on record saying the chain was seeing a measurable pullback in food purchases from customers on Ozempic and similar GLP-1 weight-loss drugs.
The comment set off a panic.
Wall Street decided the consumer staples sector was in trouble. By the close that same day, Coca-Cola was down 18% on the year. PepsiCo was down 11%.
Investment bank Barclays piled on, recommending that investors actively bet against “junk-food” companies like PepsiCo (PEP) and Coca-Cola (KO).
But since those dark days for the sugary soda companies, they’ve adapted.
Coca-Cola leaned harder into Smartwater, Topo Chico, and fairlife – its non-soda portfolio. Monster Beverage pushed zero-sugar variants. And Vita Coco – the coconut water brand – just kept growing, because GLP-1 users need more hydration and electrolytes, not less.
This morning, three beverage stocks lit up on our new trends breakout screen. This screen looks for stocks breaking out to one-month highs that also have high fundamental scores on our Quantum Edge system.
The three stocks are Coca-Cola, Monster Beverage (MNST), and Vita Coco (COCO).
COCO is the one to focus on. It’s up 62.3% over the past month and 120.2% over the past year. And it has the highest fundamental score of any beverage stock on our screen.
But the most interesting read on COCO comes from two of our anchor tools agreeing with each other.
The first is the Quantum Score – our 0-to-100 rating that combines a stock’s fundamental strength (earnings, revenue, profit margin growth) with its technical momentum and unusually heavy institutional buying volume. Anything above 75 is a buy.
COCO’s Quantum Score is 90.4 – with a fundamental score of 95.7 and a technical score of 86.7. Both are near the top of the scale.
Big institutional money is buying COCO, and they’re buying it because the underlying business is firing on every cylinder.
The second is the Social Heat Score– a 0-to-100 measure built by brothers Andy and Landon Swan, who run TradeSmith’s Megatrendsadvisory.
The Social Heat Score scans millions of online consumer signals every day – posts on X, Reddit, and YouTube, company web traffic, app usage, search trends – and distills them into a single number. The higher the score, the more buzz a company is generating before that buzz shows up in the share price.
COCO’s Social Heat Score is 76.9. That tells us Main Street is paying attention.
When the Quantum Score and the Social Heat Score line up that high on the same stock, you’re seeing a strong signal that Wall Street’s biggest institutional buyers and Main Street’s actual consumers like the company at the same time.
The first tells you the money is flowing in. The second tells you it has a reason to keep flowing.
Add COCO to your watchlist. The GLP-1 Pivot theme is in full swing, and the beverage stocks Wall Street wrote off in 2023 are leading the comeback.
COCO has the best read on our tools, but keep KO and MNST in view, too – when the slower stocks follow the leader, the trend has staying power.
The window on Jeff Clark’s $1 Million Challenge closes tonight…
If you’ve been following our coverage of master trader Jeff Clark’s first-ever trading challenge… and have been waiting for the right moment to take part… that moment is now. The enrollment window for Jeff’s 12 Trades to $1 Million Challenge closes at midnight ET.
Jeff has been trading options professionally for 43 years – starting in the early 1980s, managing money for some of the wealthiest families in Northern California, and eventually building and selling his own brokerage firm by 42.
Jeff is also a legend in the newsletter industry. He headed up Stansberry Research’s first short-term trading service, The Short Report. And for the past decade, he’s been sharing his decades of experience with his Jeff Clark Tradersubscribers.
Last week, Jeff launched the most ambitious project of his career: an attempt to turn a $5,000 stake into $1 million in no more than 12 trades, in real time, alongside readers.
Jeff is the first to admit that the odds of success are low. But we went back through nine years and 381 closed trade recommendations in his Jeff Clark Trader service and found two prior streaks long enough that rolling $5,000 from one trade to the next would have crossed seven figures.
The first was during the 2023 banking crisis. Nine trades took $5,000 to $1.3 million.
The second was during the Liberation Day volatility of 2025. Twelve trades took $5,000 to $2.6 million.
Both happened during major market disruptions like the ones we’re seeing today. And both windows closed within months.
More than 3,000 of your fellow readers tuned in to watch Jeff lay out the strategy last Thursday. And the first Challenge trade is imminent. So if you haven’t already considered joining him, here are a few things to know before you decide:
- The odds of hitting the full $1 million target are low. Jeff is the first to say so. Any trading carries real risk of loss, and the money you commit should be money you can afford to lose. But his track record shows it’s possible.
- Even short of the full target, a modest stake could turn into $50,000 or $100,000 – a result almost no buy-and-hold strategy can match in the same window.
- Jeff is a naturally conservative trader. He’ll be keeping one eye firmly on risk management all the way through.
If you’re still interested, you can catch this final replay of the launch event and let Jeff know if you’ll be joining him.
To building wealth beyond measure,
Michael Salvatore
Editor, TradeSmith Daily
Health Signal Tracker
Here, we track the day’s most recent Health shifts in our system. And today, we’re focusing on Short-Term Health.
Short-Term Health (ST) flags shifts in a stock’s recent momentum – Green for an uptrend, Red for a downtrend.
Long-Term Health (LT) does the same on a longer horizon, calibrated for buy-and-hold investors.
And VQ is our proprietary measure of how much a stock typically swings during a normal trend – higher VQ means a wider normal range, lower means tighter.
Most recent Short-Term Health Green signals:
Most recent Short-Term Health Red signals:
AI-Powered Trade of the Day
Our AI-powered price forecasting engine, Predictive Alpha, is signaling a 6.27% move lower in materials stock Boise Cascade (BCC) by June 17 – with a historical accuracy rate on this ticker of 88.28%.
Quantum Score Spotlight
Today’s top-ranked Quantum Score belongs to Flywire (FLYW).
Flywire is a $1.9 billion payments software company that handles cross-border payments for universities, hospitals, and global businesses. The stock currently trades around $16.
It holds the top Quantum Score in our system at 97.7 – with a fundamental sub-score of 94.3 and a technical sub-score of a perfect 100.0. That puts it in the top tier of every stock we track, with strong fundamentals and unusually heavy institutional buying volume confirming the same trend.
