BUY HEAVY! The Next 30 Days Will Make AI Millionaires

The AI boom has already created 900% returns in Nvidia and turned SanDisk into 47 times your money. Now, September could bring a brutal 10 to 20% correction in stocks. But instead of running from it, I'm using the dip as a buying opportunity of a lifetime. I'll show you exactly why, along with how to know when the AI bull market does finally crash. Nation, despite Friday's rebound in stocks, the NASDAQ is still off its June all-time high by 3% and has struggled since May. We are into what has historically been the worst month for stocks and this year could be even worse. Over the last 30 plus years, the market has been up less than half the time through September and has fallen.84% on average. September is the only month in which the average performance for stocks is negative across all four major market indexes with stocks in the Dow and the broad S&P 500 down more than a percent on average. Basically, nation in September, the stock market changes its relationship on Facebook to it's complicated and investors get pulled into the drama. And this year could be even worse after the market's monster rally from April. Stocks bounded 31% from the April low in just 2 months to a new all-time high as investors positioned for what ended up being a mind-blowing earning season. Companies in the S&P 500 reported profits of 47% in the second quarter, the highest growth since 2021 when the government was pumping trillions in COVID stimulus into the economy. And that run has pushed stock prices and valuations back higher to 26 times on a price to earnings ratio. Now, that's not historically high. We've been around 28 times PE for much of the last 2 years, but it is still above 10% more expensive than the 10-year average valuation, just above 23 times price to earnings. So stocks are no longer cheap. Add it all up, the historically weak month for stocks, plus probable profit taking by investors and we're very likely to see that 3% dip in the NASDAQ turn into more of a typical 5 to 10% correction we see almost every year. Over the last 50 years, we've seen a stock dip of 5 to 20% in 36 of those years, nearly three and four before the market eventually rebounded. And of course, the real pain comes from that 5 to 10% drop in the broader market is likely to be a bigger 10 to 20% or more for some of the hottest stocks out there, but it's going to be your buying opportunity. Because I'm going to show you how to know exactly when stocks do eventually crash into the next bare market. And that's because the market and hell, the entire economy has become a junkie for AI spending. Estimates are that the AI spending boosted the US economy by more than a percent last year. And that's on total growth that was only about 1.6%. 6%. So artificial intelligence and that massive wave of spending for it, that's more than half the nation's economic growth. And that means understanding this chart and more importantly knowing where the weak link is in that AI spending chain that is going to pinpoint the timeline for when this eventually comes crashing down. And I'm going to give you a hint. It's not even close to this month. And by the way, I'm going to use this digital chart because after an hour, I realized my IRL whiteboard skills suck. So I'm not going to put you through that. But let me know in the comments if you want to see me struggle through a real whiteboard demonstration in the future. Back to it though, and everyone talks about AI spending. But few investors really understand this chart and how to decode it because if you do, you're going to see exactly when to watch for those real market weakness. Now, I spent more than a decade as an equity analyst, and this is where the returns come from. Folks, forget the stock price for a minute and follow the money here. Understand how the system works and what's going to break. So layer one here, AI usage by consumers and enterprises. This is what justifies everything above it. The trillions being spent on AI data centers, that 47 times return on your money and shares of SanDisk, or the 900% return on Nvidia over the last 5 years. IDC estimates that AI could be a$22.5 trillion economic opportunity by 2031. That's on annual spending of 4 to 5 trillion plus by consumers and companies. And more than 60% of that global economic hit impact hits right here in the Americas. And now a big chunk of that money, the biggest really, is going to go to just two companies, OpenAI and Anthropic, to use their AI models, GPT and Claude. And we're going to come back to these two companies because this is going to be where that chain breaks. I'm going to show you how all of this plays out next. But first, if you haven't yet, use the special invite link below to join me on the Blossom Investing app and see every stock in my portfolio. It's totally free to use and it helps support this channel, so I appreciate that. And you're going to also get to see what over 500,000 investors are talking about in the social feed. So look for that invite link below or just scan the QR code here. Open AAI and Anthropic. They run their AI models through giant data centers filled with tech hardware. That's servers, semiconductor equipment and networking equipment and cooling. Of those data centers are being built by the hyperscalers and the neocloud companies. That's Microsoft, Amazon, Google and Meta for the hyperscalers. And Cororeweave, Nebus and Oracle are the major neoclouds. that these companies offer cloud compute services. Now, think of this like rentable computer time. Open AAI rents these data centers from the hyperscalers or those neoclads to serve that AI to customers. And of course, if those forecasts for AI use come true, we don't have nearly enough data centers or that compute power. Goldman Sachs estimates we're already at full capacity and exceeding that with the power consumption alone, up 175% from 2023. And that's why we see these hyperscalers spending trillions on the new data centers and the hardware that goes in them. Garter estimates AI spending is growing 47% this year to over $2.5 trillion. It's forecast to grow another 35% next. And here I've added percentage growth through next year for these individual segments up 67% spending growth to 86 billion for AI cyber security which shows you why I am all in on cyber security stocks this year. AI infrastructure here, all those new data centers and the hardware. By far the largest spending slice at $1.4 trillion this year, expected to grow another 32% to almost $1.9 trillion next year. And it's that $ 1.9 trillion that is going to continue to go into these hardware names here in layer 4. The semiconductors from Nvidia and AMD, the networking and accelerator chips from Broadcom, that's took our AVGO and Marll technology took our MRVL. the memory chip makers like SKH Highix, SKHY, and Micron, ticker MU, and the power and cooling to run it all with names like Bloom Energy, ticker BE, and Vista, ticker VST. So far so good. And despite the recurring fear that that enduser revenue won't be enough to justify all these trillions of dollars in spending, it's still only fear and can't pop the bubble because we have no way of measuring it. All we have are these blue sky estimates for how big that AI revolution could be. but none of the reality because right here the man behind the curtain for all of this. The weakest links is Open AI and Anthropic. That's because both of these companies are still private which means they don't release audited financial statements. And sure, OpenAI CFO Frier is quick to talk up the company's 32% increase in enterprise revenue last quarter and the new model is coming. Anthropic can tell us how its annualized revenue has increased to $65 billion, a seven-fold increase from last year, but we have no way of verifying that through actual accounting standards. They can twist the message all they want and tell investors exactly what we want to hear. Basically, we've built trillions of dollars in AI infrastructure around two private companies telling us, "Trust me, bro, the numbers are awesome." But that all changes soon, and they're going to have to start proving that growth. Once these two companies IPO, they'll start reporting earnings every 3 months. that shows sales growth and profitability. That's when the market could put actual numbers to those AI fears, and that's when it causes something much bigger than just a 10% correction in stocks. But again, that's not happening yet, or even over the next few months. Anthropic has already filed its documents confidentially with the SEC, which means it doesn't have to publicly release all of it until just before the IPO. Now, that IPO is rumored to be coming midocctober. And the initial IPO financials, well, they're going to look great. That's their job to hype up the company's value and get a good price on the shares. The IPO prospectus is going to lean heavily into that promised future growth because they still don't have to prove it. They can just talk about that potential market size for the company. IPO financials are basically Tinder for companies. Sexy pictures, but absolutely no mention of the baggage. So, you've got Anthropic's IPO mid-occtober, maybe November. Open AAI was rumored to actually push for an IPO before Anthropic, but it's falling behind and is eerily quiet lately. It could be a warning here. Are the numbers already so poor that it's afraid to even release that initial prospectus for the IPO? But then the real test isn't around that IPO and is why any September dip is still going to be a great buying opportunity. The real test of all of this is going to come those first few earnings reports from these two companies after they IPO. That's when investors are going to be able to see those audited financial statements, a trend in revenue and the profitability and more likely to be disappointed. Now, of course, revenue growth is still going to look great. But as we've seen with many of the AI stocks this year, market always wants more and can crash a stock even when the company beats its forecast. Case in point, shares of Micron plunged 14% after its March report, showing that revenue almost tripled and gross profitability jumped more than 2x, but investors just weren't impressed and they ditched the stocks. In fact, what you need to do here, the day each of these two companies IPO and OpenAI and Anthropic, you need to be setting a news alert on Google to notify you when they get ready to report earnings each quarter. Now, just as important as the revenue in these earnings reports is going to be that revenue with profitability. Right now, the frontier models OpenAI and Anthropic are subsidizing their customer costs. Basically charging less than the market cost to get more customers and more growth. When that revenue growth does become important though, when they have to start showing it on their financial statements, they're going to need to start charging more and that could happen at the worst possible time because model performance is already converging with some of these cheaper open open models catching up. You see the open models for artificial intelligence. They're downloadable. A company using it needs to own its own servers and computer hardware, but it doesn't have to pay open AI or anthropic to use it, potentially saving millions. that this chart from research at Stanford shows performance of open models catching up with these frontier models, closing that huge gap in performance we saw early 2023 to very nearly the same quality today. Beyond that open weight versus frontier model performance, we also see all AI models really converging in performance that is very close. There is becoming very little difference in overall performance and that's quickly going to lead to what's called commoditization where most models are basically the same. The only competition is on price and that is going to kill both revenue growth and profitability. And that is when we see this bubble pop. When we see those verified audited financial statements that open AI and Anthropic are not going to have the revenue or the cash flow to make good on all these promises, the trillions of dollars spent in that AI buildout. Now, the good news is that it's not going to be at least until mid next year. If Anthropic has its IPO in October, then those first earnings reports won't be until January or February. While OpenAM might not not even IPO until then the second and the third earnings reports after IPO then when investors really start to get a sense of all this not going to be until April or May and then July and August. So we're looking at nearly a year before then. I know it's a gloomy future but hey that's for 2027 Joseph to worry about. For now earnings by Oracle were strong last week and the anthropic IPO should be good for drumming up investor excitement into AI stocks. That means using any September dip to make sure you're still riding that AI gravy train in those hardware and the infrastructure stocks. Stocks like Nvidia, AMD, Broadcom, Marll, Micron, and Bloom Energy. But instead of just investing in everything out there, I wanted to take you through some of the biggest names, really go through the fundamentals, the growth, the profitability, and the valuation. Show you where I'm investing right now. Here we've got AI infrastructure. I'll show you show you AI memory as well as those cyber security stocks. Next here we've got Nvidia, ticker NVDA, Advanced Micro Devices AMD. Broadcom, AVGO, Taiwan Semiconductor, TSM. ARM Holdings, ticker ARM, Marll, ticker MRVL, and Arista Networks, ticker A&E. Now, these are my my core favorite AI infrastructure stocks and semiconductors and accelerators in networking and a everything that goes into that first layer of uh of the AI infrastructure. Not the first layer of the chart that we saw but that first the semiconductor supply chain here we can see over the last year see these companies mainly move in tandem very closely correlated obviously all very much related or correlated to the AI infrastructure theme but uh but have separated here. Okay. So as we see over this last over this last six months or a year the uh the market has spoken the market has spoken that Marll AMD and ARM are outperforming there we got uh Marll with a 161% return over the last 6 months AMD 152% ARM 120%. down here. Not too bad though. AET 44%, TSM 22%, Nvidia struggling over really the last 6 months of 17% and Broadcom 5% over the last 6 months. So, you really see kind of a split in the performance of a lot of these stocks. But then we want to see where they're going here. So, we want to first look at growth. Which ones are growing fastest? Which ones uh are going to grow our grow those revenues faster. So, here we want to look at revenue growth first. Then, we want to look at earnings growth. I'm going to be looking at the the re forward estimates for revenue growth and then the forward estimates for EBIT dot growth. EBIT dot that's earnings before interest, taxes, depreciation and advertisation. That's your core earnings there. That is core operational earnings. That's really what's going to be important in uh in figuring out okay how pro how well are these companies converting that revenue into earnings and what valuations really matter here. So revenue growth, we see really the outlier here has always been Nvidia. 73% revenue growth expected over the next year. Nvidia is now on an 18-month cycle for their chips. So they're coming out with new chips every 18 months. Used to be longer, used to be 3 to 5 years. So now they are in a much more accelerated cycle. That means a lot of those other infrastructure players, the hyperscalers, the data center buildouts have to be buying those chips much more frequently. That's going to be very expensive for them, but very good news for Nvidia. 73% uh revenue growth for them. 50% for AMD, no slouch, but it's always lagged in the GPU segment. Nvidia also getting getting uh interested in the CPU segment, competing more directly with AMD. So, that could be dangerous for AMD, but uh but both of those doing very well. AVGO, Broadcom competing in chips as well as networking. really like it because it has so many different products in that that whole data center uh stack with its networking with its accelerator chips and other ones. 50% growth expected there. TSM really the only fabricator right now. Intel keeps saying it for years. It wants to be a fabricator, a manufacturer for chips. Hasn't been gotten there yet. TSM really the only name in the game for uh actually manufacturing those chips. ARM 27% growth. Marll another favorite in that networking space or the accelerator chips space excuse me 46% and AET really in that networking space competing with ABGO 32% growth now looking at the IBAG growth so the actual earnings growth of these we see very similar to some of the the revenue growth but what is impressive here because we see 75% uh earnings growth 50% earnings growth for uh Nvidia and AM AVGO so very close to their revenue growth but we see 80% % earnings growth for AMD. So basically leveraging up that 50% revenue growth into 80% earnings growth. I really like that. I really like a company that's able to find ways to be more efficient, more effective at converting that uh that revenue growth into even higher earnings growth. So that is definitely a plus there for AMD. Similar for TSM, ARM here 2725 Marll 46% revenue growth, 55% earnings growth. So that is very good. So Marll and AMD looking very good on profitability here. We'll just check that with the EBITD margin here. Now this again the margin that's their core profitability that is how many dollars of uh or what percentage of revenue is converting into that earnings. Here we see Nvidia with 66% far and away the leader. That's because you know their chips are in such demand by these AI buildings these data centers that they can pretty much charge whatever they want. We're going to see that here in the memory chips as well. but they can charge whatever they want as high as prices as they want and they're still going to sell out on their chips. Uh that is leading to a very high operating margin. AMD not quite the pricing power there that Nvidia has only 23% operating margin. AVGO very strong 58%. TSM again here we see the competitive advantage TSM has really the only game in town for manufacturing those chips. Okay, all these other companies, Nvidia designs it chips, AMD designs, uh ARM has the uh the licensing on it, but they don't manufacture their own chips. TSM is the only company that really manufactures the vast majority of these high performance chips. So, it can charge whatever the hell it wants and it's getting it. It's getting it's turning that revenue growth into 71% earnings growth. Here we see 20% profitability for ARM, 30% for Marll and AET 44%. So here on profitability, I'd really be watching TSM and of course Nvidia there. But then we want to tie this all up with valuation because of course even a great company can be a bad investment at too high a price. We want to come down here to the PEG. That's the price to earnings, price to earnings adjusted for growth. Okay, so that is the price to earnings. That core measure of how expensive a stock is. You know its valuation. How much price are you paying for every dollar in earnings? Right? So, for example, Nvidia, you're paying $23 for every earnings per share reported by that company. To buy a share of that stock, to buy a portion of those earnings, you're going to have to pay $23 for every dollar in earnings. What we want to do though, we want to adjust these for growth because you have to, some of these are growing so much faster than others. You really want to see where the better deals are. Of course, if Nvidia is growing so much faster than some of these other companies, that revenue growth of 83% 73% expected this year, I'd be willing to pay a little bit more for it. So, I want to adjust this valuation by grow by growth to get a feel for which are the least expensive. Okay. And here we see we're going to go off the non-GAAP Ford estimates for PEG, Nvidia at 0.45. Compare that to AMD, its main competitor there at one times. Nvidia the very much the better bargain. Okay. And shares of AMD nearly twice as much or more than twice as expensive as Nvidia right here. AVGO doing really well.57 times valuation. TSM a little expensive here. You are definitely tr paying for that competitive advantage it has in manufacturing. ARM very expensive three times. Marll 1.2 very fairly expensive and ANET fairly expensive also at two times. So here on the valuation bringing it back to uh you know to valuation that growth and the profitability I would definitely say Nvidia is a buy here. AVGO I really like that as well. So here really AVGO and Nvidia in these uh infrastructure names looking at the AI memory and storage has been so hot this year because of that that shortage of the memory chips in that go into a data center here we've got MU Micron technology Seagate technology ticker STX WDC Western Digital and SanDisk Corporation SNDK looking at the price chart here though this is where the money has been made over the last three years really over the last two years but SanDisk up 4,400% That is 45 times your money on that stock. Micron Technology up 1300%. That's 14 times. Uh Seagate up, 1990%, Western Digital 942%. Even the worst of these is 10 times your money, folks. That is amazing. But are they too expensive right now? Are is the best returns already out? Let's look at the year-to- date and see that they have really started to pull apart or SanDisk has really started to pull away. 588% for the year. Micron, the rest of them not doing too bad either this year. Micron up 241%. Seagate Technology up 200%. Western Digital up 159%. Over the last month, let's see. It's still SanDisk here, folks. The market is speak is speaking here pretty loudly and clearly. SanDisk is the uh is the winner here in this memory shortage even though Micron I think gets more news. But over the last month up 28%, Micron up 12%. Western Digital and Seagate uh up only two and 1% each over the last month. But let's bring this back to growth. See where they're going here because that's really where you want to start the analysis here is in this growth. Revenue growth 113% expected for Micron. I have a feeling you're going to pay for that growth in valuation later. IBAG growth forward 190% expected to almost triple its uh earnings over the next year. Here we do see though in that uh most recent earnings report there in March how they tripled their earnings but the stock still fell because again you know you got to look at that valuation. And you got got to look at how far the stock has come and take those dips when you can buy them because a lot of times even these great numbers aren't going to be reflected uh in the uh in the shares when the you know when the uh when the company earnings has its earnings report and investors get disappointed but 190% EBITD growth there from MU Seagate 84% Western Digital 73% Sandex 276% earnings growth expected over this year for SanDisk. risk. That is why that that stock is still pulling away from these others. Looking at the profitability here and we see again that idea that these the shortage in memory chips is so strong, is so big that these companies can basically just price whatever they want. They can they can charge whatever they want on these limited chip supply and they'll get it because those uh the data centers they need the memory chips. Okay, MU 75% EBIT down margin that was as low as 35 or 37% just a few years ago. 5-year average on ebida margin for MU for all of these right around 30 to 35%. So they have more than doubled their profitability on this memory chip cycle or this shortage here. Uh Seagate 37%, Western Digital 38%. And SanDisk 62%. That's really why you see these two, the Seagate Technologies and Western Digital really lagging in those returns in every time period. They just don't have the revenue growth. They just don't have the profitability of these other two companies. But I have a feeling you're going to see all of this in valuation here. When we look at valuation again, we're going to look at this on the PEG. So the price to earnings adjusted for growth non-GAAT forward here for Micron.08 always has been the least expensive of the group and probably a great buy even here even after this big run over the last couple years. Seagate.35 uh Western Digital.32 and Sandex.19. So kind of surprising here even after those huge runs over the last couple of years even on that uh very strong profitability. You just don't you just don't have to pay much to get shares of these stocks. Okay. 08 in Micron.19 for SanDisk. I'd definitely be going for those two for as long as this memory chip shortage lasts. And of course my favorite group of the of the AI theme cyber security stocks. Not because these are growing so much faster than any of these other stocks. In fact, they're growing quite a bit slower than some of these. The the price returns aren't as high as some of these other hot AI stocks. But cyber security, folks, this is the best long-term theme. Okay? Even after that that other the the AI theme breaks and other stocks come crashing down n enterprises are going to have to be spending on their cyber security. This is the one line item in a tech budget that cannot be cut. Okay? We've seen that multiple times with hacks and uh and these AI models breaking out of their playground and and doing uh doing malicious things already this year. We are going to need these cyber security stocks and that's why I'm buying these for more that safety and returns than just the returns alone. Here we have Palo Alto Networks ticker PW Crowdstrike Holdings ticker CRWD the two really the two biggest and really the leaders in this space. Then Zcaler ticker ZS Octa Inc. ticker Okta, Fortnite, FTN, Fortnite, and then Cloudflare, ticker NE. Now, I don't usually don't usually recommend Cloudflare as just a pure play cyber security stock. It did start as a cyber security company, but it's expanded so far beyond cyber security. And I really like it for that next stage in AI, really the orchestration between the agents and between the models. Cloudflare going to do very well over the next few years. So, I always like to like to kind of look at it, see where it is in comparison with some of these other stocks. Here we can see over the last year, Zcaler really uh really being left behind down 42% over the last year. A lot of these stocks have gotten hit there in October. You started started to see these come down on the fear that AI would actually replace a lot of the software from cyber security firms. Of course, we know that's not true. We we started seeing that around April. I started talking about that here in November and December picking up these stocks because on the contrary AI is only going to boost the revenues for these stocks. So they've come up quite a bit more. Fortnite up 92%, Crowdstrike 90%, Octa Inc. I still think a very a great takeover target for another company up 81%. Palo Alto 66% and Cloudflare up 36% here over the last year. But let's look at where these stocks are going with that growth, the valuation, the growth and the profitability. We'll start here with revenue growth. Then look at Ibida growth. All of these pretty close together. 20% plus for most of these. Palo Alto and Crowdstrike 20 23%. Zcaler 19% revenue growth expected this year. Really defies reasoning why that stock is down 42% over the last year and yet is expected to post 20% revenue growth, 25% earnings growth over this next year. So still expected to do very well. The stock is just languishing. Octa really only competes in one segment of the cyber security market, the identity access and management segment. It is a much slower growth segment. So that's why we see only 10% 10 11% revenue growth here for octa and 15% for Fortnite. Always been a little bit slower growth than compared to some of these others, but gets it back in profitability. Very good profitability for Fortnite. Net Cloudflare there ticker NE up 30% for uh forward revenue growth there coming down to EBITDA forward. So earnings, expected earnings growth over the next year. And here we see all of these, almost all of these um really leveraging up that revenue growth into faster earnings growth. Again, what I like to see really shows these companies are prioritizing earnings. Palo Alto 23% CrowdStrike 32% earnings growth expected. That is off of just 23% uh revenue growth. And folks, these aren't just numbers. These are what the numbers tell you as well. And this tells me that Crowdstrike has some real competitive advantages. Okay, not only does it have probably the best cyber security platform in its Falcon platform that it can charge pretty much charge whatever it wants for that platform and for those services, it also has some strong operational efficiencies as well. That is uh that is making it able to grow earnings 32% off just 23% revenue growth. So very good profitability there and uh and very good earnings growth. Zcaler again 25% earnings growth off just 20% revenue growth very profit very good very good conversion there and again defies the reason why that stock is down 42% over the last year if it's growing so so well 17% EBITDA earnings growth for Octa here's what's interesting here uh Fortnet 15% revenue growth only expected to post 16 17% earnings growth in the last year it's done 24% earnings growth growth. I think it beats this number out of the water. I think it does much higher than 17%. So, probably surprises Wall Street, surprises investors on the earnings growth over the next year. And that's where you get the opportunity in this stock. Let's take this right back up to valuation here and look at these these adjusted numbers here. We're going to look at the PEG non-GAAP here. And again, folks, you you got to pay for this growth here. If you're going to be waiting for cyber security stocks to be cheap, to be cheaper than other stocks, other industries, you're going to be waiting forever and you're not going to benefit from that great long-term return. So, you just kind of got to hold your nose and just buy the best values here. Now, here we do see on the on adjusted basis that PE value valuation 4.2 for PaloAlto, 5.6 for Crowdstrike. So, definitely paying for that higher earnings growth, that profitability, that competitive advantage in Crowdstrike. Zcaler at just 1.6% by far the best deal here in cyber security stocks. Now again I do feel like Zcaler is probably the most at risk for any kind of an AI uh replacement of its software but it's still you know you can't deny it's still growing 20 25% uh a year in earnings and in in revenue. So something there's a disconnect here between the stock price the returns and the performance of this company. I would definitely be picking up shares of Zcaler. Octa recently come back up 2.7 times. Price to earnings adjusted for growth. Fortnite 2.7 times as well for Cloudflare there 4.9 times. Here I would definitely be picking up Zcaler. I like Crowd Strike. It's hard to pay this high of a price for a Crowd Strike, but I would be, you know, selectively every once in a while picking those up. And I still like Fortnite. Okay, Fortnite is I think just the best the the best combination of valuation here at just 2.7 times on an adjusted price to earnings valuation and that growth. Okay, just a reliable profitable growth for Fortnite. Now, if you're still looking for more stocks to buy, YouTube picked this video out here just for you. Click through. See if you like