The biggest gains often come after the scariest declines.
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Everyone wants to find the next Nvidia – legendary investor Louis Navellier thinks the better question might be: Can you keep it once you do?
On Friday digest After his acquisition of the company, Lewis explains why today’s AI boom reminds him of the Internet boom of the late 1990s. Not because he sees a bubble, but because he sees the same combination of massive infrastructure spending, rapid growth, and investors being shaken by volatility.
He highlights several companies that are benefiting from building AI beyond the usual headline names, and says the opportunity remains much broader than most investors realize.
Most importantly, Lewis says the biggest challenge is not identifying the trend, but staying invested when the market becomes volatile.
If you missed it, he expanded on these ideas in a presentation with TradeSmith CEO Keith Kaplan last Wednesday, where the two discussed a new AI-powered approach to dealing with volatility. You can watch the replay here.
The bottom line: If Lewis is right, the investors who benefit most from the AI boom won’t be the ones who find the trend first — but those who stick with it.
I’ll let Louis take it from here.
I wish you a good evening,
Jeff Remsburg
“How much will it cost me to buy you?”
This is the way Cisco Systems Inc. (cisco) CEO John Chambers received the founder of communications startup Cerent Corp. In 1999.
Not his company. You.
Cerent only had about $10 million in annual sales, but Cisco paid nearly $6.9 billion in stock because Chambers believed the technology and this founder were crucial to building the Internet.
At the time, Chambers had a simple solution whenever he found a bottleneck:
Buy it.
By the late 1990s, the Internet was growing so rapidly that Cisco couldn’t create products fast enough to keep up. So I started buying up competitors, technologies, and choke points all over Silicon Valley.
This strategy helped make Cisco the most valuable company in the world for a brief period in March 2000.
Most people remember what happened next. I remember what happened before.
The construction of the Internet was real. Networks were built, servers were installed, and infrastructure spending doubled. Investors who understood this trend made fortunes.
I’ve been thinking about Cisco lately because we’re watching the same movie again.
Building real AI. The S&P 500’s first-quarter earnings were up nearly 29% from a year ago — more than double what analysts expected. Analysts continue to revise estimates higher. The spending behind this is staggering and accelerating.
This is what I want to talk about today.
In this article, I’ll show you four thriving AI building stocks outside of Nvidia and Micron…
Why do I think this infrastructure boom is still early?
And why the hardest part of AI trading is not finding the right companies. It’s staying with them.
Everyone wants the next Nvidia
I have been investing through major technological transitions for nearly five decades. I was using computers to analyze stocks in the 1970s, long before they became popular on Wall Street. Over the years, my quantitative systems have helped identify winning stocks such as… Apple Inc. (Apple) and Nike company (to) -And Nvidia company (NVDA) and Microsoft Corporation (MSFT) – long before they became household names.
In the late 1990s, everyone wanted the next internet stock. Today, everyone wants the next AI stock.
This is understandable. Nvidia has become one of the most successful investments in modern market history.
But investors often focus so much on one company that they miss the broader trend unfolding around it.
AI is no longer just a story for Nvidia. There are a lot of AI-related stocks that are booming right now. Memory companies, networking companies, power generation companies (we used to call them “utilities”)… they all benefit.
Why? Because AI requires a huge amount of infrastructure.
The average investor sees ChatGPT or Claude on their browser and thinks about the software. I see hundreds of billions of dollars flowing into a completely new computing architecture.
To estimate the size, one proposed AI data center project in Utah would cover nearly three times the area of Manhattan. Similar projects are being planned across the country. These facilities will require thousands and thousands of chips, servers and networking systems.
That’s why you love companies Micron Technology Company (in) It has become extremely important.
Most investors still consider it a cyclical memory chip company from the middle of the country. But on May 26, Micron, a Boise company, became Idaho’s first trillion-dollar company.
Wall Street sees something different. Sales are expected to grow by more than 250%. Profits are expected to rise more than 900%.
Those are not normal numbers. It’s what happens when a major technological shift occurs and demand outstrips supply. Micron has reportedly sold much of its high-bandwidth memory production under long-term contracts, and analysts expect supply shortages to persist for years.
This is also why I want you to care about companies like Dell Technologies (Dale), Hewlett Packard Enterprise (HPE), Sina Company (hundred)…and yes Cisco. These aren’t the first names investors think of when they hear “artificial intelligence,” but they’re increasingly booming from the creation.
The opportunity has become greater. Not smaller. When a major investing theme spreads beyond a handful of stocks and starts lifting entire industries, it usually means the trend is becoming more sustainable and more profitable — not less.
This is what we see now.
The real risk is not what most investors think
I focus on a combination of fundamental and quantitative measures – sales growth, earnings growth, analyst reviews, and institutional buying pressure. This is my method Stock grader The system has identified winning stocks for over 40 years.
For now, these indicators continue to point in the right direction. I think many of the best AI and data center stocks still have significant upside ahead of them before the end of the year.
But being optimistic does not mean complacency.
The spending behind this boom is staggering. MicrosoftAmazon.com Inc. (Amzn), Alphabet Company (Google)and Meta Platforms Inc. (dead) It is expected to spend nearly $700 billion on AI infrastructure this year alone. These are data centers, networking equipment, chips, power generation, and everything needed to support the next generation of AI applications.
This is not a startup forecast. It is one of the largest and most successful companies in the world that is committing massive capital because it believes that artificial intelligence will reshape the global economy.
The biggest risk facing investors right now is not that AI has suddenly become less popular. This does not mean that companies stop spending on data centers. It is not that profits suddenly collapse.
The biggest risk is that investors unload fundamentally outperforming stocks during periods of perfectly normal volatility.
I’ve seen it happen throughout my career. The stock is falling. The headlines get scary. Investors become nervous. They sell. Six months later, the stock was much higher.
The late nineties were full of those moments. Even the biggest winners have seen sharp declines from time to time. Investors who remained focused on the long-term trend were rewarded. Investors who reacted emotionally often did not.
I believe we are approaching a similar period now. The market remains healthy, but the summer could get bumpy. Trading volume is declining. Volatility increases. Short sellers become more aggressive.
This is normal.
That’s one of the reasons I spent so much time with her Keith Kaplan And the team is in Want Smith. Over the past year, Keith and I have been exploring a new AI-powered approach that combines my Stock Grader system with TradeSmith’s pattern recognition technology. What interested me wasn’t the technology itself. And the results were.
More importantly, it showed how investors can stick with opportunities like Dell, HPE, Ciena, and Cisco when volatility inevitably arises. Because the hard part is not finding the promising one AI shares anymore. The trend is staring us in the face. The hard part is staying invested when the headlines turn negative and investors start questioning the same companies they loved a month ago.
This is exactly what Keith and I discussed earlier this week.
In our Special and free offerwe show investors how we use AI to become more tactical and amplify the gains you can make with the stocks I recommend.
You can watch a replay of the event here.
Whether it’s Micron, Dell, HPE, Ciena, or Cisco — or any other company that thrives on the creation of AI — the opportunity is still much greater than most investors realize.
The challenge is not to find direction.
The challenge is to stay with it.
sincerely,
Louis Navellier
Senior investment analyst, Investor location
