Nvidia Just Delivered Massive News for These 10 Stocks

portion of today's video is disseminated on behalf of Mayfair Gold Corporation. We are in a very weird spot in society when it comes to AI because we're excited to automate all the tasks that we don't like doing. But on the other hand, we're scared that it's all going to get out of control and it's going to wipe us all out. >> But the problems that we've seen to this point where open AI, Anthropic, uh Google, and others have had agents that have escaped and have gotten out and done mischievous things, maybe illegal things. >> I think the answer is we hope it's an engineering problem. I believe is an engineering problem. I know it's an engineering problem and we all need to hope that it's an engineering problem. If it's not an engineering problem, it's not solvable and these are this is a this is a technically solvable problem. When the CEO of Nvidia calls it a solvable engineering problem, I take him for his word. And solving it puts a spotlight on security. Security used to mean keeping hackers out of a company's system. Well, now it also means that you're going to have to keep your own company's AI agents in line. The research firm Gartner expects spending on cyber security to grow at about 11% a year through 2030. And quite honestly, I think that's a little conservative because security is about to become the top priority for most every business. For that reason, I see cyber security as a buy for the next 5 to 10 years. Now, in this video, I'm going to cover 10 stocks within this sector, and I'm going to cover them layer by layer, and I'm going to tell you where my investment signals have each one of these. It's going to share which ones are worth buying today and those that are running a little bit too hot and the price where I'm going to get interested all over again. As a group, I think these 10 look even better than the sector. For today's typical stock, my systems forecast works it out to be about 16% a year over the next 3 years. If you're new to the channel, I'm Brian and I retired at 46 after a corporate career at companies like Target and Amazon where I managed billions of dollars for those companies. Early on, I decided to run my own finances like a business, and that's exactly what got me ahead of all of my peers. So, along the way, I built my own investment system. Now, before we jump into those companies, here's how I'm going to use my system because, like I said, it's a signal system. It is not a buying system. First, I decide if I want to even own the company at all. The fundamentals are going to tell me whether the business deserves a spot on my radar. Then I check the trend with two moving averages. The average price over the last 50 days and also over the last 200 days. When both of these are climbing, it happens to be in an uptrend, which means more investors are buying it than they are selling it. When the 50-day crosses above the 200 day, that's called a golden cross. And it's often the first sign of a new uptrend is beginning to start. I also like to watch whether analysts are raising or cutting their profit forecast because that's the one signal in my system that has actually helped predict where a stock goes next. Now, if any of those terms are new to you, I have a free cheat sheet down below on technicals. So, feel free to check that out. Once I've done my research and I've decided that I want to own a stock, then the signal ladder is going to tell me whether now happens to be a good time to buy and at what price I'm willing to pay. As I said before, the final call is still going to be mine because the ladder really struggles with fast growing stocks because over the past three years, it probably would have told me to hold or trim Nvidia and Palanteer most of the time that it was growing because their growth really ran past anything that it's seen before. This is roughly how the steps look. So, almost every stock lands in one of three places. The first being in the group of the buy area where it's just telling you it's a good time to buy. The hold area means it's still a great business worth waiting on for a little bit of a better price. And the last section is telling me to trim, which is essentially saying the price has really gotten ahead of the business. So, it's either one you're going to watch and wait it out or you might want to take some profits. And lastly, if the price falls below the whole ladder itself, that's my cue to recheck the business before doing anything else. Now is the right moment to get back to cyber security. And with that, these 10 companies are selling something that really goes back to the fear of agents really getting out of control. And honestly, I think Jensen has a really simple way to describe keeping an agent in line. You simply build it a play pen. >> You have to make sure that the sandbox around it, the force field, the play pen, you know, if you will, all of those systems are designed in a way that uh keeps the agent uh with minimal rights. Think about the badge that you swipe at work. It gets you checked in at the front door. It lets you to that elevator that takes you to the floor that you actually work on. In this case, an AI agent is software that logs in, reads files, and it sends emails on its own. So, it needs those same types of checks. For an agent, the doors sit on three different layers. You've got the chip, the network, and the software. So, every one of those doors is something that a company can build and sell. And quite honestly, most companies still haven't closed the gap between these checkpoints. And I'm going to show you where the gap sits and who gets paid to close all of them. We'll start where every other agent starts, the chip. So layer one is hardware. This is the checkpoint built into the chip itself underneath the software where an agent can't reach it or turn it off. So inside the AI racks, the tall cabinets that hold all the AI chips, there's a second small computer. It sits on the network card and the part that connects the server to everything else. That small computer, it watches and it controls the traffic that's going both in and out. And it sits out of reach of the AI agent that's running on the main computer. And no surprise, the company that builds it is Nvidia. And its Vera Rubin racks carry 18 of them, one for every tray of AI chips. And more than 100 companies have already signed onto Nvidia's agent safety platform. And every rack that Nvidia sells puts the hardware for that checkpoint in place. As if Nvidia's moat wasn't big enough, it now sells the racks and the safety net built right into them. Today, Nvidia sells somewhere around 80 to 90% of the chips that run AI. And its sales more than doubled in a single year, and its CEO expects another big jump next year. And the one crack that I see is how much Nvidia keeps from each sale. Right now, it keeps about 75 cents of every dollar after the cost of building its chips. But memory chips have gotten so scarce and so expensive that Nvidia expects that to slip to about 71 or 72 cents come January. Even so, you're not paying much for how fast it's growing. You pay about the same for Nvidia's earnings as you do for Microsoft's. And Nvidia is growing several times faster. And the PEG ratio measures exactly that, the price compared to the earnings growth. So anything under a one is generally considered cheap for growth and Nvidia's is about a 0.36. Analysts also keep raising their profit forecast too and not a single one is cut since back in July. So the people who follow Nvidia most closely expect its profits to just keep on growing. And overall the price has not kept pace. The stock has spent months drifting pretty much sideways. So both moving averages are still climbing but just only barely. So, the signal ladder has Nvidia at by a lot. The one caution is that earnings may be close to a peak. So, I'd build a position over time and add more once the stock starts a real move up again. And the interesting part is that my systems middle-of the road forecast still has it gaining at about 36% a year over the next 3 years, which I have to say is pretty wild for a company with a market cap of over $5 trillion. Protecting what lives on the server matters more every year. And the oldest store of value on earth doesn't even have a password. That brings us to the portion disseminated on behalf of Mayfair Gold Corporation where Howard Marx, the investor that Warren Buffett, drops everything to read and his Oak Tree Capital now own about 5.5 million shares, a million of them added just in August. Insiders own about 36% of Mayfair Gold and they keep buying about 23 million Canadian dollars of stock over 2 years. and Carson Block's muddy waters already north of 17% bought roughly another $2 million US worth back in August. What they're buying is a developer climbing the Land curve. Its Feng Gibb project near Timmans has a previsibility study showing an aftert tax value around 652 million Canadian. That's roughly 2 and a half times the company's market value today with First Gold targeted for 2030. and management comes from Detour Gold, Bareric, and Kirkland Lake, which built and ran mines in that exact same region. Concentrated ownership, heavy insider buying, and a developer in Canada's top mining jurisdiction. That's the kind of setup that most investors are looking for. Now, none of it's guaranteed, and it all requires execution. So, do your own due diligence and learn more about Mayfair Gold down in the link in the description. This is not financial advice, and all investing carries risk. Now, the second hardware name makes a chip that you probably never even heard of. Before any AI runs on a server, something has to check that the server woke up clean and that nobody tampered with its startup code. And that is exactly the job of a tiny security chip on the server's main board. And Lattis Semiconductor makes those chips. And in July, it also bought AMI, the company that writes the startup code the chip is also checking. So Lattis gets paid for the chip and the startup code on every new AI server and you can see it in the sales. So back when the chip market slumped in 2024, Lattis lost almost 40% of its sales. And in the last quarter, it brought in more than it ever has in a single quarter. And the server chips really led the way. Analysts have been raising next year's profit forecast since July, and nobody has cut. So they expect the recover to just keep on going. I'm going to cautiously say that my system's three-year forecast has laddus gaining at about 27% each year for all of those three years. But at about 58 times next year's earnings, a lot of that comeback is already in the price. So that's where I'm cautiously optimistic. And it may seem a little counterintuitive, but the signal ladder actually has this as a hold. And its 50-day moving average has started to slide a little bit, which tells me buyers have backed off for a little bit right now. So, without a doubt, I do love this business, but the price isn't quite there for me yet. So, I'm waiting. And you can see on the screen where its buy zone begins to start. The third hardware name is a security company that went into chips. Most of its rivals run their security software on ordinary chips made by someone else. This one designs its own security chips for its firewalls, the boxes that guard a company's network so they can inspect traffic faster and for a lot less money. that happens to be Fortnite where its hardware sales are growing twice as fast as the company as a whole and it's one of the few security companies that make a lot of real money keeping it about 34 cents of operating profit on every dollar of sales and it's obvious that investors have noticed this and the stock is in a very strong uptrend with both moving averages already on the climb but for me the signal ladder is flagging Fortnite as running a little bit too hot so it's at a trim a little bit more signal so the business is absolutely great. The price is a little bit of a problem at about 40 times next year's earnings. So, if I owned it, I'd decide whether I'm going to take a little bit of profit or if I'm just going to let it ride because I have conviction. And if I didn't already own it, hey, then I'd be patient. I'd let the price come to me. And that's hardware. Now, layer two happens to be the network. But hey, before we jump into that, if you're getting any value from my research, I would greatly appreciate if you'd consider liking and subscribing. It's truly a very simple act that would really mean the world to me. And just a reminder, I am not a financial adviser and I'm doing this for educational purposes. Now, let's go ahead and get back to layer 2, which is the network. So, an agent can be locked down inside the chip, but every time that it reaches out to a file or a website or another agent, that request has to travel across the network. So, the network is the checkpoint that every connection has to pass through and that gives it a chance to say no entry. For years, that checking happened at one big firewall at the front door of a company. But the newer concept is called zero trust, where absolutely nothing gets waved through. You put a firewall inside every switch, the boxes that connect all the computers in a data center, and every connection gets checked right where it happens. And the company that's furthest along on that is Cisco. It also sells guard rails built for the agents themselves. Two years ago, Cisco's sales were shrinking. It was just completely falling off a cliff. But now it just had its biggest corridor in its entire history. And networking happens to be the reason why. Networking is more than half of everything that Cisco sells. And it's growing twice as fast as its security business. Even so, my signal ladder has Cisco at trim because the price has gotten once again a little bit ahead of the business. And its 50-day moving average is now heading a little bit down. So, the price has already started to cool off. The second network name is one that you'll probably still think of as a server company. It bought Juniper Networks, another maker of network gear, and networking now makes up about a quarter of its entire sales. Its switches carry a firewall chip right inside of them, and it's building Nvidia's agent safety tools into the AI systems it sells. That company is no other than Huitt Packard Enterprise. And the number that I like most is its orders, because orders come before sales. So, they're going to give you a look at what's coming ahead. Orders for HPE's networking gear grew about 36% from a year earlier. And of course, that's counting Juniper in both years. So that's about 3.5 times as fast as sales of that gear grew. And honestly, you're not paying that much for it, about 16 times next year's earnings. So the second lowest of all these 10 names. Analysts have raised next year's profit forecast since July without a single cut. And the stock is in an uptrend with both moving averages still climbing. So the business and the forecast and the price happen to all be moving in the same direction. And my signal ladder has HPE as by a little. And my systems three-year forecast has a growing about 17% each of those years. And now we'll move on to the third network name which happens to run in the cloud. It sits between the internet and every worker device and agent at a company. So every connection gets checked on the way through. That's zero trust again. And the company in this case that built its whole business on it is Zcaler. And the more agents that a company runs, the more it's going to have to pay because more of what Zcaler sells is priced by how much it's going to get checked. So they're essentially a bouncer. Its contracts for products that protect AI, it passed $100 million over the past year, and it grew by about half in just 3 months. The signal ladder has Zcaler at a hold, even with analysts raising their profit forecasts and nobody cutting. On the adjusted numbers that the company likes to show, it makes money. But by the standard accounting, it's still losing a little. And granted, that loss is shrinking really fast from about six cents on every dollar of sales back in January to just under two cents just last quarter. Now, if it turns its first real operating profit in the quarter that ends in October, that's when Zcaler gets a lot more interesting to me and probably a lot of the rest of you. Until then, you can see on the screen where its buy zone starts, or at least where I'm looking at it. Overall, that is the network. Now, layer three is the software. And once an agent gets past the chip and the network, software is going to decide what it's allowed to do inside. It's the layer that I'm choosing to watch a little bit more closely because it's where the gap that I think is sitting right now. So, interesting question for you. If one checkpoint catches an agent doing something wrong, do the other checkpoints even know? On September 20th, Open AAI was testing an AI agent that was walled off from the internet. The agent found a hole in that wall and it slipped questions out to a chatbot on the outside. The alarm went off in about 12 minutes, but the automatic stop didn't work. So, a person had to shut the agent down about 2 and 1/2 hours after the alarm. And that is the gap. One checkpoint can see the problem and the others only find out if somebody wires them together. On September 22nd, a login company called Octa pulled together a group to build that type of wiring, including Amazon, Google, and Crowdstrike. And the entire goal is that one alarm at one checkpoint is then going to shut down the agent at every checkpoint. And the first two software names sell that exact wiring. The first software name pulls the alarms from every security tool that a company owns into one place and it acts on them all at once. The same company built a firewall for AI that runs on that small Nvidia computer on the network card. And that firewall already brings in $100 million a year. And the company calls it the fastest start of any product in its history. That happens to be Palo Alto Networks. And the signal ladder is flagging PaloAlto as running extremely hot. And it's up at trim a little bit more. And the reason goes back to the last time that the security stocks got this expensive after the Solar Winds hack, which was a major breach at the end of 2020. The security stocks that started out well kind of reasonably priced, they kept on climbing for the next 2 years. And if you don't recall, those expensive names fell by about half or more. So measured against its sales, PaloAlto's stock now costed about three to four times what it did going into that run, which puts it pretty close to where the losers started. In that case, you're paying at about 92 times next year's earnings. And even my systems own three-year forecast has the stock giving back some of those gains. This is a great business. And like I said, it is running very hot. So, in this case, I'm just watching it and I'm waiting. The second software name watches every computer and every agent, and it stops one the moment that it steps out of line. It's also building the wiring that lets one alarm shut an agent down everywhere. Its business protecting AI agents nearly tripled in a single quarter, and its CEO says that that business can outgrow the product that actually built it. And that company happens to be CrowdStrike. Unfortunately or unfortunately, the latter is also flagging CrowdStrike as running a little bit too hot and it's the most expensive stock of all 10. You're paying about $48 for every dollar of Crowd Strike sales, which I am not on board with that. And for a little contrast, Zcaler is growing just about as fast and it cost about $9 per dollar of sales. So, it's kind of a no-brainer. My entire point in bringing that up is that price puts CrowdStrike right inside the range when the Solar Winds losers started. I mean, if you know, you know. Now, the third software name hands every AI agent an ID badge. And it sells that badge inside the office software that most companies, well, they're already paying for it. This is Microsoft. And here's its CEO on how many agents that it's registered. Just 2 months in, Agent 365 now has nearly 40 million agents registered across tens of thousands of companies. >> With nearly 40 million agents in just 2 months, you might think that Microsoft bundling security into its Office software would be crushing everybody else. But the independent security companies are still growing and Amazon and Google are partnering with them instead of shutting them out. Even at its size, Microsoft is still growing at about 18% and it keeps about 45 cents of operating profit on every dollar. As of today, the stock is in an uptrend with both moving averages climbing and my system puts its gain at about 17% a year over the next 3 years. But even then, my signal ladder is showing it as a hold. So, this is one that I'd rather pick up on a little bit of a pullback. And my whole point in sharing all these details is that you know how to plan for it. The force software name runs AI agents inside the sales and customer service systems of thousands of different companies and it's a founding member of that octa group. Its agent business brings in more than $ 1.5 billion a year and that's up more than $240% from a year earlier and that happens to be Salesforce where the stock price has fallen below even the lowest step on my ladder. So, the signal is telling me to take a fresh look at the business because on price alone, Salesforce is the cheapest of all 10 stocks at about 14 times next year's earnings. That's roughly half of what Microsoft costs. So, it could be a huge value play, granted, or it could be a value trap where the stock looks really cheap because the business is now breaking. So, I checked it. So, if you take out Informatica, a data company that Salesforce bought, and then its organic growth was at about 6%. which is pretty darn slow for Salesforce. It's still solidly profitable. The cash coming in from its operations jumped and it raised its forecast for the rest of the year. Those are steps in the right direction, but there are better places to invest in. Well, at least in my opinion. My system expects the stock to gain it about 10% a year over the next 3 years. And I genuinely hope new news comes out so that I can update the system and has a better trajectory. Without a doubt, the business is holding up. So, this is one where I might start a small position because its 50-day moving average just crossed back over the 200 day, which is the golden cross, which is the first sign the slide may be ending. What I truly want to see next is the price holding above the 50-day and pushing back through roughly $250, where it closed the day after its last earnings report, and I'm hoping to see that by late October. And if it does that, then maybe, just maybe, I'd be a little bit more confident in adding to it. In wrapping this all together, across all three layers, Nvidia and HPE are the two where the business and the signal ladder both point toward buying, and Salesforce might be one that I'm willing to start a small position on. The buy zones are all up on the screen, and as they move, I'm going to continue to figure out a way to share that with my Patreon group. I think that we all recognize that agents are only going to multiply over time. For me, I always want to try to invest in some of the gatekeepers, which in cyber security is all of the layers of those checkpoints. I hope that you got some value out of today's video.