Forget AI: I'm BUYING These Stocks Instead

So, everybody's talking about AI and semiconductors and the power grid, but I actually think there is a new group of stocks that I'm actually personally moving my own money into that is far more interesting. And these won't be tech companies or software names or semiconductor names that everybody is talking about. In fact, on today's video, I'm going to share with you a stock that I sent to our subscribers. This was back in March. The thesis at the time was actually pretty simple. AI was going to help transform this relatively low margin business into one that operated more efficiently and obviously made more money. And since then, stock is actually up 20%. Not only that, but I think if you start to look out for other stocks like this to invest in, not just semiconductor stocks, not just software stocks that everybody is talking about, I actually think you're going to find a lot more stocks that are going to win in the AI era. So, let's get into it. This week, I was listening to the All-In podcast, and something that Chimath said on the program actually really stuck with me. So, I'm going to roll that clip. I'll come back on the other side and kind of explain how it ties into what we're going to be talking about on today's video. I sat down with my CTO today and I said, "How are we doing on token spend?" And he said the most incredible thing. He said, "Right now, our token costs are doubling every 45 days." And I was like, "Gh." And he said, "Yeah." And I said, "Well, what is the downstream productivity?" And he said, "Maybe 5% max." And I said, "Okay, so my costs are doubling every 45 days. My upside is essentially flat." And he said, "Basically, now think about what he just said. He's deploying AI across a business that he's running." And he saw a 5% uplift and he was actually disappointed with that. In a lot of ways, that kind of makes sense, right? A 5% uplift in a software or a high-flying tech firm that he's kind of running might actually not make that big of a difference. But it got me thinking about a stock that I recommended to our Equity Empire subscribers a few months ago back in March. And honestly, I think there's a lot more stocks that are going to be exactly like this where a 5% uplift is a big deal. It's a huge deal. And I'll walk you through the math and why this makes sense here in a moment. But I believe we're kind of finally at this stage where investing in companies benefiting from AI rather than the ones directly tied to the buildout actually makes a lot more sense right now. And I actually don't think I'm the only one. In fact, earlier this year, Jeff Bezos announced that he was going to launch a fund to invest in manufacturing companies across the United States to implement AI, robotics to help improve efficiency and eventually the profits of those companies. I think the knee-jerk reaction by a lot of the media and stuff like that, they thought that Jeff Bezos was trying to replace a bunch of humans. I don't actually think he's going to do that. Here's what Jeff Bezos and I think a lot of smart investors are starting to realize. It's that AI can create really small but noticeable improvements in things like supply chain logistics, manufacturing efficiencies and techniques and really start to improve profits in a way that we've never really seen before. I think part of that is because computer systems and software before AI weren't really designed for that and maybe even weren't that good at it. But AI is making these systems far far and much better. And here's the exciting thing I think for you as an investor. A 5% uplift in efficiency or revenue probably won't move the needle for one of Chimamath's companies or a startup or a high-flying tech stock. for boring stocks and picks and shovel type manufacturing businesses, it actually has a huge impact. And here's how the math actually works. Let's picture a business right now that's running at 3% margins. That means out of every $100 in sales, it actually only gets to keep $3 in profit. If the company were to reduce cost by just 1%, that $3 profit becomes almost $4. So, a tiny 1% cut actually created a 30% jump in profit. That's why a 5% uplift or even like a 1% wunge is actually a really huge deal for these companies that operate at these very low and thin margins. This is why I'm paying far more attention to these smaller companies that almost nobody is talking about. But they're rolling out AI initiatives to cut cost and approve efficiencies across the line because as you just saw, a small improvement leads to a huge gain in profits. That's why Jeff Bezos is going after these companies with his new investing fund. And I think smart investors like you can actually start to look for these same types of things in the public market. So at Equity Empire, I help investors look for these types of things. And several months ago, I started to look for companies that were investing in AI to improve their processes and eventually their profits. And and I find that most of these are found by listening to conference calls and attending or reading transcripts from investor events. And management at these low margin firms are always talking about ways to reduce costs. It's like the number one thing that they talk about on their conference call. But here's the thing, Wall Street doesn't usually give them any credit for that or any of the cost savings today. They like to wait until it actually shows up. So, I think that's where investors like yourself can gain a huge edge. One company that fit this mold several months ago was actually GE Aerospace. So, GE is a jet and rocket engine company that was left over after the General Electric kind of spun out all of its business into many separate businesses. And the jet engine business still uses the ticker symbol GE. All they do is jet engines though. And the way the business works is GE largely sells these jet engines to airplane manufacturers and defense contractors for very thin profits. Like it's amazing how cheap they sell these jet engines to these companies over and above their cost. But how they make money is by servicing those engines with parts and manufacturers all across the United States. I mean they have like thousands of suppliers right now. And for the past few years, G has been working with software firm Palunteer to improve its supplier efficiency and its supply chain. So GE needed its thousands of part suppliers to become more efficient. And GE along with Palunteer worked closely with them to improve their processes, manufacturing lines, and output. G would literally embed their employees or have them come to headquarters of these supplier businesses and make changes that would often make small adjustments to tools, assembly lines, and other software systems. And since GE started doing this with Palunteer in 2024, they've pulled more than 40% more parts out of their best and most critical suppliers in a single year. a 40% uplift. Operating profits over at GE increased 25% and margins are actually still expanding. That's because GE is now able to service more engines because the suppliers are able to deliver more of the critical parts that are actually in short supply. I think investing in companies like GE are one of the best ways to actually play this AI boom outside of semiconductors and energy equipment and kind of the obvious stuff that everybody realizes at this point. That's because the upside in AI working is actually not priced in at all at these companies. Not only that, with the technology getting more powerful and what we're seeing is cheaper and in some cases maybe even easier to implement, I think the list of companies that will benefit from AI is going to expand quite a bit over the next year. And look, if you're interested in finding more companies like this, I've created a little bit of a shortcut for you. I have a free guide of over 20 companies that are somewhat similar to GE and have AI initiatives already in the works and the management is talking about it on conference calls. I I track this for our subscribers. If you want this list, just find the link down below in the description and I will personally email the full report to you for free. It's not going to be an autoresponder. I'm actually going to press send on the email so if you have questions, you can follow up with me there. Now, existing Equity Empire subscribers, many of you watch the channel. You don't really need to do anything. I have us already invested in, I would say, three of these companies, GE being one of them. And there's a lot more that are coming as we move through earning season over the next couple of weeks. I think two or three more are going to get unlocked. So, that wraps it up for today's video. Be sure to get that free guide if you want to. The links down into the description below. And as always, maybe subscribe to the channel if you want to. I'll see you again soon. Good luck with your investments.