Today’s issue in preview:
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Eight stocks to profit from AI’s soaring power demands
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These stocks stand to lose the most from AI adoption. Do you own any?
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Stocks to play the upcoming SpaceX IPO
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Our recommendation to stay long AI infrastructure spending continues to pay off
These stocks stand to lose the most from AI adoption. Do you own any?
Credit: ArtemisDiana
When Elon Musk talks about the rapid, world-shaping effects of AI, he often calls the technology a “supersonic tsunami.” AI is the fastest developing technology in history… and it promises to reshape the world in massive ways.
This week, the supersonic tsunami created another round of losers in the “K-shaped stock market” I’ve been writing about for months. Shares of the world’s largest and most successful data and analytics firms – CoStar (CSGP) and Fair Isaac (FICO) – just reached new one-year lows.
AI adoption and the K-shaped stock market it has created is one of the most impactful megatrends of the century. It is creating huge winners and losers at the fastest rates we’ve ever seen.
Being on the right side of AI can hand you stock returns of 100% in less than a year. Being on the wrong side can wreck your retirement account.
Over the past three months, companies in a category I call KIDS have suffered significant declines in market value. KIDS is my acronym for Knowledge work, Information collection and analysis, Data collection and analysis, and Software.
Generally, these businesses sell digital products and services. We’re talking consulting firms, credit rating agencies, financial data providers, and software firms.
These companies sell products and services that AI programs could produce for a very low cost soon. If someone using AI can code a product or service into existence, then any business related to it is in danger.
AI will put some of these KIDS work companies out of business. But keep in mind, it doesn’t have to put them out of business to make them stock market losers. AI only needs to lower the cost of producing what they produce over the long run. This will enable hordes of AI-centric competitors, which will throw a heavy wet blanket on their growth rates, profit margins, and P/E multiples.
CoStar is getting hit hard by this trend. CoStar is a real estate industry giant. It is a $17 billion firm with a big footprint in office space data and analytics, an office space marketplace, an apartment rental platform, and other real estate businesses. CoStar’s huge size and entrenched positions haven’t kept it safe from the supersonic tsunami. Investors worried about AI’s potential effects have sold CoStar stock so enthusiastically that the company’s market value has plummeted 50% over the past six months.
Fair Isaac is another data analytics giant. It’s a $23 billion firm that plays a central role in America’s credit score system. The “FICO score” is a standard measure of a person’s credit risk and financial health. But like CoStar, Fair Isaac’s huge size hasn’t shielded it from the supersonic tsunami. Fair Isaac’s market value has declined by 35% over the past six months.
Technological disruption isn’t producing just a “K-Shaped economy.” It’s also creating a “K-Shaped stock market” full of big winners and big losers. Staying on the right side of AI will prove to be a huge financial advantage over the coming years.
Eight stocks to profit from AI’s soaring power demands.
Credit: imaginima
This week, shares of Quanta Services (PWR), MYR Group (MYRG), and GE Vernova (GEV) reached new all-time highs.
It’s yet more confirmation that our Power Grid Upgrade theme is one of the world’s strongest market trends.
On October 2, I detailed how big tech firms Google, Microsoft, Meta, OpenAI, and Amazon are making the biggest business “bet” in history. They are spending hundreds of billions of dollars per year on data centers, AI chips, and other infrastructure components. Their total investment in this space will exceed $600 billion this year and reach trillions more over the next five years.
All that AI infrastructure is poised to consume huge amounts of electricity. Goldman Sachs forecasts global data center power demand will climb 50% by 2027 and as much as 165% by the end of the decade.
This creates a big investment opportunity.
The U.S. power grid is often called the world’s largest machine. It’s a giant network of power stations, transmission lines, substations, and underground wires. Most people barely know it’s there or how it works, but without this big machine, your lights don’t turn on, there’s no Netflix, and your iPhone doesn’t charge.
Industry experts say the power grid is aging and creaking under the strain of increased electricity demand. The American Society of Civil Engineers (ASCE) gave the energy sector a D+ in its 2025 Infrastructure Report Card, citing concerns about rising energy demand, aging infrastructure, and a lack of transmission capacity.
Soaring electricity demand… a grid badly in need of an upgrade… AI supremacy on the line… trillion of dollars of economic output on the line…
This is a recipe for a bull market in companies that build, repair, and upgrade our power grid.
This is a broad theme with individual leaders such as Quanta and MYR Group. They are two of the most important electrical grid building firms. GE Vernova is one of the world’s largest makers of turbines for electrical power plants. Each company is enjoying soaring revenues and order backlogs thanks to the historic Power Grid Upgrade theme.
Other compelling names here include equipment makers Hubbell (HUBB), Monolithic Power Systems (MPWR), Itron (ITRI), Powell (POWL), and Eaton (ETN).
If you prefer ETFs, the mouthful-to-say First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) is an option. It owns a diversified basket of companies that manufacture electric grid components and perform grid-related installation/construction services.
As you can see in the one-year MYR Group chart below, the market likes the Power Grid Upgrade theme. Epic Fury has had depressive effects on the broad market over the past month, so new all-time highs are few and far between. However, MYR, Quanta, and GE Vernova bucked the broad market weakness to reach new all-time highs. We remain bullish on the Power Grid Upgrade theme.
Stocks to play the upcoming SpaceX IPO
Credit: Sundry Photography
Is the booming space industry about to get a big “SpaceX IPO” boost?
It looks like that’s what the market believes at least.
Regular readers know space is one of our top megatrend “picks to click” for the next decade. Innovations in satellite and rocket technology have made space an incredible “platform” for deploying communications and surveillance equipment.
Last September, we put a spotlight on the upside breakout in space stocks and said it’s a sector the “public could go wild for.”
At the time, we stated:
When people think of investing in space, they often go towards the business of launching rockets and Elon Musk’s SpaceX. But many of the most promising “space stocks” are in the business of space-based communication platforms and equipment. Think government surveillance, military communication, GPS, internet service, and cell service.
The best big picture fundamental case for space stocks right now is that the Trump administration believes America in a hugely important competition with China and other countries for “space dominance.” This means regulatory and financial support for the U.S. space industry.
Since that note, space-related stocks have soared. Rocket launch firm Rocket Labs (RKLB) is up 52%. Satellite operator AST SpaceMobile (ASTS) is up 109%. Satellite operator Planet Labs (PL) is up 210%.
This strong investment theme could get even stronger thanks to the massive interest in SpaceX’s impending IPO, which is rumored to happen soon. The filing could happen any day now. There’s speculation that SpaceX could seek a valuation of more than $1.5 trillion.
This IPO would rank among the biggest and most “PR generating” transactions in Wall Street history. It would also inject a lot of money and investor interest into the space industry. It’s all good reason to monitor and consider owning the companies mentioned above or the Procure Space ETF (UFO).
This space-industry-focused fund has shrugged off March’s Epic Fury-induced broad market weakness to trade near all-time highs. The bull market in space is about to get a SpaceX-sized shot in the arm.
Market Notes
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The AI infrastructure spending theme remains strong. Leading optics players Lumentum (LITE), Ciena (CIEN), and Viavi (VIAV) all reached new yearly highs today. Lightwave Logic (LWLG) also hit a new high.
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Our January 28th recommendation to stay long on the AI boom is still strong. Technology hardware plays Dell (DELL) and Ubiquiti (UI) just hit new yearly highs.
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Shares of human resource services, software, and analytics firm Automatic Data Processing (ADP) reached a new one-year low today.
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Our recommendation to own the Engineering & Construction theme continues to pay off. Shares of giant E&C firm Mastec (MTZ) reached a new all-time high today.
Regards,
Brian Hunt
Editor, Money & Megatrends
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