A lesson from the dot-com boom could help investors spot the next wave of AI winners.
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In March of 2000, Cisco Systems Inc (CSCO) briefly became the world’s most valuable company.
no Walmart Inc (and died). no General Electric Company (General Electric). no Exxon Mobil Company (XOM).
At the time, many people thought this was ridiculous. After all, Cisco was not a consumer brand. It did not manufacture cars. He did not explore for oil. Most people can’t tell you exactly what the company did.
But Wall Street understood something important.
The Internet was changing everything.
The companies were wire offices. Telecom companies were laying fiber. Data traffic was exploding. Every company wanted to connect employees, customers, suppliers and partners to this new digital world.
Cisco wasn’t selling the Internet itself.
It was selling the infrastructure that made the Internet possible.
Today, when people look back at that period, they usually focus on the collapse. They remember Pets.com. They remember the speculation. They remember all the companies that disappeared.
What they forget is that building the infrastructure was real. Fiber was laid, networks were built and servers were installed.
And investors who understood this trend made huge amounts of money.
I’ve been thinking about Cisco lately because we’re experiencing another boom in technology infrastructure.
Not identical. History does not repeat exactly. But in nearly five decades of investing, I’ve learned that major technological shifts tend to go hand in hand.
In fact, there is one company in particular that comes to mind.
Most investors are still thinking about that Micron Technology Corporation (MU) as a rotating memory chip company from Boise, Idaho. However, today Wall Street is looking for the next great leader in AI Nvidia company (NVDA) – And Micron is the focus of the conversation.
Sales are expected to grow by more than 250%. Profits are expected to rise more than 900%.
Those are not normal numbers. This is what happens when a major technological shift occurs and demand outstrips supply. This is where fundamentally superior companies begin to separate themselves from the pack.
In fact, Micron joined the trillion-dollar market cap club last Tuesday, May 26, because demand for advanced AI memory has become one of the biggest bottlenecks in the entire AI ecosystem. The company has reportedly sold much of its high-bandwidth memory production under long-term contracts, and analysts expect supply shortages to persist for years.
That’s why I want you to ignore all the pessimistic predictions you hear every day.
The stock market has a very good foundation underneath it. S&P 500 earnings for the first quarter were up nearly 29% from a year ago — more than double what analysts expected this quarter. Analysts continue to revise estimates higher, and many AI-related companies have seen their earnings expectations jump significantly over the past year.
Building real AI.
And the spending behind it is staggering.
Microsoft Corporation (MSFT), Amazon.com Inc. (Amzn), Alphabet company (Google) and Meta Platforms Inc META is expected to spend nearly $700 billion on AI infrastructure this year alone. This includes data centers, networking equipment, chips, power generation, and everything needed to support the next generation of AI applications.
This is not a startup forecast.
These are some of the largest and most successful companies in the world that have committed massive amounts of capital because they believe that artificial intelligence will reshape the global economy.
This is what I want to talk about today.
More importantly, I want to explain why I think many investors are focused on the wrong thing.
I’ll show you four stocks that have thrived on AI creation beyond NVIDIA and Micron… Why I think the AI boom is expanding into one of the biggest waves of infrastructure spending I’ve ever seen…
And why I’m teaming up with one of the best AI developers in the business to discuss a new way investors can stay in the upside without experiencing volatility.
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 (NKE) – and NVIDIA and Microsoft – long before they became household names.
One thing I’ve learned is that investors are always looking for the next leader.
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 the history of the modern market.
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 benefit. Network companies benefit. Construction companies benefit. Data center companies benefit. Even power generation companies (we used to call these companies “utilities”) benefit.
Why?
Because AI requires a huge amount of infrastructure.
The average investor sees ChatGPT or Claude on their browser and thinks programming.
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. Meta is building a massive AI campus in Louisiana, and similar projects are planned across the country.
These facilities will require thousands upon thousands of chips, servers and networking systems.
That’s why companies like Micron have become so important.
This is also why I want you to care about companies like Dell Technologies (Dale), Hewlett Packard Enterprise (hip), Sina Company (CIEN)…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 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 picking 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 will discuss on June 10 at a free event. We’ll show investors how we’re using AI to become more tactical without losing sight of the bigger opportunity, and you can Register for this event now.
Twenty-six years ago, Cisco became the most valuable company in the world thanks to the spread of the Internet. Last week, Micron became Boise’s first trillion-dollar company due to building artificial intelligence.
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.
Save your seat for our free event here.
sincerely,
Louis Navellier
editor, Market 360
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:
(CIEN) and Cisco Systems Inc. (CSCO) and Alphabet Inc. (GOOG) and Micron Technology Inc. (MU), NVIDIA Corporation (NVDA), and Walmart Inc. (WMT)
