Greetings readers,
I'm corresponding from Abu Dhabi, a mere stone's throw from Iran's shores.
The conflict feels palpable here. My mobile device pings with urgent "take cover" notifications. Above, I witnessed anti-aircraft fire illuminating the night sky and airplanes veering off course.
I'm genuinely touched by your thoughtful check-ins — they truly resonate.
It's understandable why many of you are feeling trepidation presently. Investors have been inquiring whether it's prudent to liquidate holdings and ride out this storm.
I want to impart three words to affix above your workspace immediately: Disregard the headlines.
It seems counterintuitive. But the more media you ingest, the more misinformed you become.
The investors who prosper during times like these aren't the ones transfixed by 24/7 news channels.
They're the ones who block out the clamor and ponder...
What inexorable trend is the globe too preoccupied to notice right now?
Recent history has answered that query at least three times in the past half-century. On each occasion, the investors who posed it amassed fortunes.
Rewind to 1973.
OPEC has just severed oil supplies to America. Vehicles queue for miles at gas stations. Equities plummet by nearly half.
But while investors are frantically divesting, something remarkable is transpiring in a Santa Clara lab. A squad of Intel Corp. (INTC:NASDAQ) engineers has just imprinted an entire computer onto a silicon wafer, the dimensions of a thumbnail.
They dub it a microprocessor.
Within a score, that minuscule chip will empower the PC atop every office desk and re-architect the worldwide economy.
Intel's valuation skyrocketed 50-fold from 1973 to 1993. While the masses fixated on petroleum prices, a select few got wealthy watching semiconductors.
Fast-forward 17 years...
In 1990, Iraq's tanks invaded Kuwait, sparking the inaugural Gulf War.
Yet again, markets quaked over the Mideast.
And yet again, scarcely anyone discerned what was gestating in the background.
Across American university labs, academics were transmitting messages via a web of interlinked computers they termed... the internet.
For the internet to function at scale, someone had to construct the conduits.
That someone was Cisco Systems (CSCO:NYSE).
Cisco manufactures the routers and switches that physically bridge computers. Throughout the 90s, virtually every byte of data traversing the globe flowed through Cisco's apparatus.
Cisco went public in 1990, coinciding with the Gulf War's onset.
By the dot-com apex, CSCO ascended 102,400%.
As investors monitored oil futures and Pentagon pressers, a handful grew stupendously affluent tracking data coursing through boxes.
Now vault to 2008.
Lehman Brothers implodes, and the entire global financial system teeters on the brink. Housing markets are in freefall.
I vividly recall this dread feeling like capitalism's denouement.
Plot twist: It wasn't.
A year prior, Apple Inc. (AAPL:NASDAQ)founder Steve Jobs strode onto a San Francisco stage brandishing a petite glass rectangle he christened the iPhone.
Within a half-decade, 2 billion humans carried one. It evolved into history's most triumphant product, propelling Apple to trillion-dollar titan status.
Since the financial crisis nadir, Apple stock has vaulted 8,080% — 11X the S&P 500's return.
The takeaway?
The big bucks are seldom reaped forecasting crude prices or war outcomes.
It's vastly simpler to possess stellar enterprises at the vanguard of unstoppable megatrends.
Today, that inexorable megatrend is...
Artificial intelligence (AI).
Recently, Earth's biggest and most lucrative corporations have poured nearly a trillion dollars into erecting AI data centers.
We've crunched the figures, and it's the most colossal infrastructure undertaking ever.
In 2020, I acquainted my readers with the novel AI "law." It proclaims: "With every 10X increase in the amount of data you feed into an AI model, its quality doubles."
To elevate performance, AI firms must harness ever-vaster computing might. Superior chips. Grander clusters. Swifter networks.
This past decade, the "compute" required to train cutting-edge AI models has exploded by over 1 billion percent!
"Scaling laws" are the cheat code for amplifying AI acumen. It's why GPT-5 runs laps around GPT-4. It's also why AI-generated videos are nigh indistinguishable from actuality now.
Just as with microprocessors, the internet, and smartphones before, a war won't derail the AI megatrend. That's where investors should direct their gaze.
"So how do we profit from this, Stephen?"
The most patent company at AI's nexus is Nvidia Corp. (NVDA:NASDAQ).
It's been a Disruption Investor portfolio linchpin since 2020. We've notched a 550% gain and already reaped profits twice.
Courtesy of the Iran predicament, Nvidia appears bargain-priced today. It's hovering near a 5-year valuation trough!
I project Nvidia will be Earth's inaugural $10 trillion corporation. It'll attain that milestone ere decade's end.
But abundant lesser-known AI infrastructure stocks boast higher upside.
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- As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Apple Inc. and Intel Corp.
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