Profits and spending on AI are on the rise, but the road ahead will not be smooth.
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The AI boom is creating enormous wealth. But it also raises a familiar worry: Did things go too far, too quickly, leading to collapse?
On Friday digest In Takeover , legendary investor Louis Navellier makes a fascinating comparison between today’s AI-driven market and the dot-com boom of the late 1990s. Not because he believes a collapse is imminent, but because he sees many of the same forces at work: massive capital spending, strong technological change, and investors trying to separate perennial winners from temporary hype.
The difference, Lewis argues, is that today’s boom is fueled by something that many dot-com companies lack: real profits, real sales, and a huge backlog of orders.
Of course, this does not mean that the journey will be smooth. Below, Lewis explains why he believes AI shares There could be significant upside ahead, but also why these gains will test investors’ nerves.
He will share more about all of this during a special event next Wednesday, June 10, with TradeSmith CEO, Keith Kaplan. The two will discuss a new AI-powered approach to dealing with market volatility. You can register here
If Lewis is right, the biggest risk this summer is not volatility itself. It’s letting that volatility get you out of a great stock at exactly the wrong time
I’ll let him take it from here
I wish you a good evening,
Jeff Remsburg
In 1999, Jeff Bezos was doing something that drove Wall Street absolutely crazy.
Amazon.com Inc. (Amzn) It was already a public company. And it could actually turn a profit, if Bezos wanted it. But instead, keep reinvesting aggressively. Instead of worrying about profits, he was building warehouses, distribution infrastructure, and technology systems.
Every quarter, the margins that were supposed to be there weren’t there, because every dollar was going straight back into the Amazon machine.
Analysts were angry. Where are the profits? What exactly do we have here?
Meanwhile, all around Amazon, the dot-com boom was producing companies with no revenue, no product, and sometimes no cohesive business model at all — and its stock tripled. The whole market was chasing the story.
Who looks more like the future? Who has the best novel? Wall Street was funding them quickly and asking questions later.
Bezos wasn’t playing that game.
What he understood – and almost no one else understood at the time – was that 1999 capital was a once-in-a-generation resource. Every dollar of market enthusiasm can be converted into permanent infrastructure: execution capacity, distribution scale, and systems that become cheaper the more volume they handle. Didn’t improve this quarter. He was building something that would be almost impossible to replicate once the window was closed.
When the music stopped in 2000, it stopped for everyone. Story Companies – Do I need to mention Pets.com? – He disappeared almost overnight.
Amazon went through a brutal withdrawal, but the infrastructure Bezos built was still there. Customer relationships were still there. The cost curves were still bending in the right direction.
By 2005, Bezos looked like a genius. In 1999, he only seemed tactical.
I was managing money through it all. I will tell you that 1999 was one of the best years of my career. It was also one of the strangest markets I have ever seen in my nearly 50 years in this business. Capital was flowing faster than the fundamentals could justify.
for me Stock grader This system made me focus on what actually matters: real profits, real institutional conviction. Not many dot-com fans showed up in my system at all – and many of them went to zero.
But companies with real fundamentals have managed to survive the noise. And those companies — like Amazon — that used the window tactically were unable to survive. They won the entire decade.
Right now, the AI boom is tuning into that moment in ways that I find exciting and useful. But at the same time, this is not the dot-com boom, the fundamentals are much stronger.
So, in this article, I want to show you why this AI boom reminds me so much of the late 1990s… and why I think some AI stocks could be much higher by the end of the year… and why the smartest move today is not to run for the exits when things get volatile, but Get more tactical.
Finally, I’ll tell you about a new tool that can help you do just that…
ChatGPT moment
I recently obtained a chart from our friends at Bespoke Investment Group comparing the performance of the Nasdaq Composite Index during the dot-com boom of the late 1990s with its current path during the AI boom.
The comparison is striking.
ChatGPT seems to have done for AI what Netscape did for the Internet.
When Netscape came along, investors realized that the Internet wasn’t just a neat new technology. It was a business revolution. Money flowed into the companies that built this new world, and the Nasdaq soared.
We see the same basic story today.
ChatGPT has awakened people to what AI can actually do. Wall Street quickly realized how much infrastructure it would require.
The fact is that the boom is supported by real sales, real profits and real order backlog.
look at me Bloom Energy Company (He is)For example. The company helps make fuel cell generators, which data centers need to produce power on-site so they don’t have to rely on the electrical grid.
Bloom Energy’s current product backlog is approximately $6 billion, while its total product backlog exceeds $20 billion.
At this rate it will take Years To deliver what is already in the pipeline. Bloom Energy is no stranger. This story plays out across the AI and data center space.
Businesses receive more orders than sales. This makes this a true capital expenditure cycle.
That’s why I remain optimistic. Personally, I think AI and data center stocks across my premium services could rise another 30% to 40% between now and the end of the year.
But that’s the way it is no This means that investors must feel complacent.
Summer can get bumpy
August and early September tend to be choppy. It seems like everyone on Wall Street and in Europe is on vacation, trading volume has dwindled, and unscrupulous short sellers have come out of the woodwork.
So, I wouldn’t be surprised if the market gets bumpy.
In fact, Bespoke also shows that the Nasdaq saw a major decline between late May and October 1998 — in the middle of what turned out to be a historic rally. I wouldn’t be surprised to see something similar this summer.
But here’s the kicker: If the AI revolution continues to follow the path of the dot-com boom, the summer pullback won’t mark the end of this bull market. It could simply set the stage for much higher levels later in 2026 and beyond.
That’s why I don’t want you to follow the “sell in May and leave” crowd to the exits.
We are still in one of the best earnings environments of our lives. Analysts continue to revise estimates higher. Companies continue to exceed expectations. Fundamentally outperforming stocks with accelerating earnings and sales growth should continue to lead.
But there is a big difference between continuing to invest and just closing your eyes.
The late 1990s created enormous wealth. But this market did not move in a straight line. Even large stocks get hit hard from time to time. Investors who panicked during these pullbacks often missed out on the biggest gains that came afterward.
This is the real danger this summer.
It doesn’t mean that great stocks are having a bad week. The real risk is that you let a bad week scare you out of a big stock before the next leg up.
That’s why I was working with my friends at… Want Smith On to something special – something specifically designed for times like these.
Stay optimistic, but be tactical
In my view, the answer is simple: stay optimistic, but be tactical.
This means focusing on companies that are fundamentally superior. This means paying attention to earnings momentum, sales growth, and analyst reviews. This means there is a better way to track whether the stocks you own are still healthy in the short term.
That’s why I was paying close attention to what my friends at TradeSmith were building.
on Wednesday, June 10 at 10 a.m. ESTI’m cooperating with the CEO of TradeSmith Keith Kaplan For a special event.
Keith and his team have spent years building technology designed to help investors make more tactical decisions. During this event, we’ll show you a new AI-powered approach to navigating today’s fast-moving marketplace.
I don’t want to reveal the full story today. That’s the goal of this event. But here’s the basic idea…
If this market is truly in tune with the late 1990s, investors need to be prepared for two things at once:
- They need to stay in a position to soar, because I believe the AI revolution still has a way to go.
- But they also need to be prepared for volatility, because even the strongest bull markets can shake people along the way.
Before the event, you can also test out part of the technology yourself. You can enter symbols for stocks you already own — or stocks you’re thinking of buying — and see how the system rates their short-term safety.
This is exactly the type of tool that I believe investors should have at their fingertips in a market like this.
When volatility rises, you don’t want to guess. You don’t want to rely on fear. You don’t want to throw away a great long-term opportunity because the market is having a bad week.
That’s why I encourage you to sign up for our free event. And to try out the free indicator tool before the event.
Jeff Bezos didn’t close his eyes in 1999 and hope for the best. He’s got the tactical.
This is exactly what I am asking you to do now.
sincerely,
Louis Navellier
Senior investment analyst, Investor location
note: I think Lewis makes an important point here. The question is not whether the AI boom is over. The question is how investors deal with the inevitable fluctuations along the way. This is exactly what he will discuss during his upcoming event with TradeSmith. If you haven’t registered for Lewis’s free event yet, I encourage you to do so now.
The Editor hereby discloses that as of the date of this email, the Editor owns, directly or indirectly, the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations contained in the article described below, or otherwise mentioned:
Bloom Energy Company (He is)
