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Tom Young is here with your Sunday digest.
When people talk about “1999,” most investors will immediately tense up. That year marked the beginning of a terrible stretch for the value-focused buy-and-hold crowd. The bursting of the dot-com bubble meant that anyone who bought the Nasdaq Composite Index in January of that year would have remained in the red until 2006… just in time for the global financial crisis two years later.
Experienced growth investors will also shudder at the thought of 1999. Several Internet companies saw their stock prices soar early that year, including Lycos (March), Priceline (April), and TheStreet.com (May). In fact, many smaller dot-com companies were on their way out by the time 1999 rolled around.
This means that when Louis Navellier says that he thinks the market today is very similar to 1999, he is actually saying two things:
- rising. Much like the Internet and artificial intelligence He is Justify more gains in the future. Consumers and businesses are paying big for the best AI models, and industry leaders are seeing record profits as a result. Anthropic, an AI startup that lost nearly $5.2 billion last year, expects to turn to an operating profit this quarter.
- bearish. However, today’s high valuations make the bull market very fragile. Small AI laggards are already fading, as are debt-laden companies Oracle Corporation (ORCL) Cracks are showing in their balance sheets. Lewis expects a very volatile summer and the possibility of a major downturn.
After all, if there are many AI shares They’re starting to look like hockey stick diagrams like the ones in Intel Corporation (Intech) Below, it’s easy to see how ugly the sell-offs are.
INTC stock price
Source: LSEG
To ride out this increasingly fragile rally, Lewis has become much more selective in the stocks he recommends. To do this, he partners with… TradeSmith CEO Keith Kaplan To build a new investment system based on and combined with artificial intelligence Stock grader Research using TradeSmith’s market timing technology.
The result is new Tactical Dividend Portfolio Which selects the best AI-focused companies that have strong fundamentals that can withstand drawdowns. It also helps identify weaker players who are at risk of losing ground.
On Thursday, June 10, Lewis will sit down with Keith and explain the work they’ve done with their system and how their stock picking tools have helped investors ride out past volatility.
You can sign up to view them here.
Today, I’d like to give a sampling of five stocks that exceed this threshold, and three others that fail to do so. And if you’re concerned about the stocks in your portfolio, you can do this Register for their event and use their free bar tool for a limited time to validate them in the short term.
Five quality names for a volatile summer
Readers will immediately notice that the five companies on this list are broad-based companies that trade at surprisingly reasonable prices. They all operate as quasi-monopolies, giving them the strength to withstand market sell-offs. They have all recently been rated well by Lewis Stock grader TradeSmith’s market timing system.
1. Nvidia Company (NVDA). The “king of artificial intelligence” continues to expand its reach. Last week, at Computex 2026, CEO Jensen Huang revealed that the chipmaker plans to move into personal computers (PCs) with a new chip called the RTX Spark that combines artificial intelligence with traditional computing power.
His reasoning is straightforward: PCs are a lot like the “dumb phones” of the 1990s. Their purpose has not changed in decades, even though technology has moved forward. Today, smartphones are used for everything Excludes Make calls. Why couldn’t the same happen for a reinvented laptop?
Plus, Nvidia continues to surprise even its greatest fans. Last month, the company announced its fourteenth consecutive profit. EPS rose 95% to $1.87, beating consensus by 6%. The company expanded its supply chain faster than Wall Street expected and maintained its leadership in artificial intelligence chips. At Computex 2026, the company also announced that its next-generation Vera Rubin AI supercomputer has already entered full production – fulfilling a promise Nvidia made in 2024.
By my calculations, this means Nvidia’s fair value is close to $300 per share today, up 40% from its current stock price. The company dominates its industry, earning a strong “B” rating in Lewis. Stock grader He points out that it is an excellent company to buy, even after operating it for several years.
2. Alphabet Company (Google). Meanwhile, Google’s parent company is the only major AI data center company whose cash flows are expected to remain positive all quarter this year. Analysts expect net cash Inflows $18 billion in 2026 (despite spending $185 billion on data centers). Thanks to a combination of:
- Dominant research works. Search revenue growth grew 19% last quarter, and the remainder of 2026 is expected to see a windfall from record political ad spending for the midterm elections.
- Efficient data center chips. Alphabet began building custom TPU chips as early as 2013 to handle the voice-to-text conversion system on Android phones. These specially designed chips have allowed the company to run its AI models much more efficiently than competitors. Studies show that Alphabet’s TPUs deliver between 1.6X and 4X the performance per dollar compared to general-purpose GPUs.
- Winning AI model. Google’s Gemini 3.5 AI model proved exceptionally capable, and began stealing consumer market share from OpenAI. Betting markets expect Google to have the No. 2 model behind Anthropic by the end of 2026.
This suggests Alphabet’s fair value is somewhere in the mid-$400 range, according to my calculations. The company’s vertical integration has proven to be an enduring competitive advantage, and this advantage appears set to expand over time. Louis System and TradeSmith agree.
3. Advanced Precision Devices Company (AMD). Over the past several years, AMD has taken advantage of Intel’s stumbles to establish itself in the CPU market. They’ve gone from less than 10% market share to about a third overall — supplying nearly half of all server CPUs. Its evolution from a near-bankrupt company to a world-beating company led to the naming of CEO Lisa Su time Magazine CEO for 2024.
The markets may still be underestimating AMD’s potential.
On a recent earnings call, Su noted that the CPU to GPU ratio should go from a ratio of 1-4 or 1-8 today to 1-1 in the coming years. She joins the heads of Intel and Arm Holdings PLC (arm) in predicting CPU return.
I think they’re right (even though they’re all CEOs of CPU companies).
This is because AI is shifting from mostly simple training and reasoning to artificial intelligence Proxy inference. This new type of AI requires more “thinking,” as AI models will plan, call tools, run code, examine results, and sometimes run in circles before asking for help. GPUs are still needed to run the AI models, but CPUs are then used to coordinate and analyze the results.
This would put AMD on a much faster growth path than people expect. Analysts currently expect growth to taper off by the end of 2027, but I expect demand to continue into 2030. Both the Lewis and Keith systems agree, giving AMD its highest bullish score.
4. Taiwan Semiconductor Manufacturing Co., Ltd. (TSM). Taiwan Semi Corporation (also known as TSMC) is the world’s largest contract chip manufacturer. The company controls nearly 70% of the market and is the only chipmaker capable of manufacturing the advanced 2nm process at a profitable scale. It now runs on nodes A16 and A13.
The outlook for the company is surprisingly modest. TSMC trades at just 28 times forward earnings and 21 times forward cash flow — far lower than less established companies like Intel and China Semiconductor Manufacturing International (SMIC). Investors have become conditioned by years of boom-and-bust cycles in “hot” chip businesses and typically view established companies with suspicion. (Startups usually get a free pass during boom times.)
However, skeptics will ignore the Taiwanese company at their peril. Like Nvidia, TSMC has been able to raise prices thanks to insatiable demand for AI. The company expects capacity to rise by just 7% in 2026, meaning more than two-thirds of its 31% revenue growth comes from price increases. Its monopoly position means that further price increases are likely.
Mergers among semiconductor companies have also created demand for more complex chips. Larger companies like Nvidia and AMD are integrating GPUs, CPUs, and memory components into integrated products, and these complex chips require the kind of cutting-edge nodes that TSMC produces. Although Taiwan Semi is a “developed” company due to its capital investment needs, it is still a strong enough company to withstand a sell-off. The company received the highest scores in the Lewis and Keith system.
5. Analog Devices Company (Addy). Finally, we have Analog Devices, one of the largest manufacturers of analog and mixed signal chips in the world. The company has a particularly broad lead in high-performance signal processing chips – devices that convert real-world information (light, sound, temperature, voltages) into the usable “0s” and “1s” that digital chips need.
Profits are high thanks to years of investments and high customer switching costs. Operating margins have hovered around 40% since 2020. Growth is also very reasonable, thanks to the rise of electric cars, robots, and “Internet of Things” devices. Analysts expect revenue to increase by 34% this year.
The AI boom now offers three new paths for growth.
- Advanced robotics. The most established way for Analog Devices to grow is by providing chips for AI-powered devices. Every AI-enabled phone, car, camera, robot, and wearable device must convert analog data into digital information.
- Chip power systems. High-end GPUs draw hundreds of watts, and their inconsistent requirements create voltage spikes that power systems must smooth out. According to a report by Deloitte, power systems cost between 5% and 10% of a typical AI server rack. This benefits Analog greatly, as revenue from its data center products rose 76% last quarter.
- Analog AI calculations. Researchers are now exploring analog AI chips that can store more than binary 0s and 1s. Although commercialization of this technology is still years away, this could provide Analog Devices with a powerful growth engine in the future.
Together, this makes Analog one of my top long-term buys. The company has a solid moat in analog chips, and its strong quantitative results from Lewis and Keith suggest there is still time to join this high-quality company.
Know when to sell
The Lewis and Keith systems also illustrate this some AI stocks are off the table. These include:
Not only are the fundamentals in these companies deteriorating – often due to AI competition – but the short-term momentum is also turning decidedly negative. This is a very bearish sign in a yield chasing market. No retail investor wants to hold declining stocks.
These are not the only companies at risk.
In the upcoming presentation, Lewis and Keith warn why the coming months may be more volatile than many investors expect… and why comparisons to 1999 are encouraging and Warning to investors today
You can register to view them here.
I’ll be out of town next week, so I’ll see you back here in a couple of weeks
It is considered,
Thomas Young, CFA
market analyst, Investor location
