Today’s issue in preview:
- This AI power trade is taking off. Are you on board?
- Ignoring this explosive sector could be your biggest mistake of 2026
- One of the world’s most important AI companies soars to a new all-time high.
- Did you act and profit? South American stocks continue their powerful bull market
This AI power trade is taking off. Are you on board?
Get ready for higher prices. The bull market in solar energy is back on.
Over the past four months, I’ve repeatedly made the case for owning solar energy stocks. The bull case here is simple: Big tech companies such as Google, Amazon, Microsoft, and OpenAI are spending hundreds of billions per year on AI infrastructure… which is becoming a massive new source of electricity demand… and driving a big bull market in almost all forms of electric power production.
Industry experts believe solar energy can’t compete with nuclear and fossil fuels to supply the enormous amounts of “always on, always there, baseload” power needed for AI data centers.
However, inexpensive, easily installed solar systems can supply power to smaller individual consumers, such as homes, offices, stores, and small factories. Demand for solar power is increasing because AI is driving up the price of other forms of electricity.
That’s the fundamental bullish case.
But around here, the fundamentals of a trend are less important than what the market thinks of a trend.
Fortunately, the market likes the solar trend. After I published my original September bullish note on solar, the Invesco Solar ETF (TAN) advanced 20% in less than two months. It then began digesting that big short-term gain by moving into a sideways consolidation period.
Today, TAN broke out of that sideways pattern to reach a new one-year high. This breakout to the upside signals that the bull market in solar stocks is back on.
Ignoring this explosive sector could be your biggest mistake of 2026
Solar energy stocks aren’t the only sector reaching new highs today. One of our biggest winners in 2025 – biotech stocks – are breaking out as well.
Regular readers are familiar with our bullish stance on biotechnology. On August 18, I sent a research note to colleagues detailing my bullish take on the sector’s price action. Since then, I’ve written more than a dozen updates on the biotech bull market, as the sector has outpaced the S&P by an incredible 44% to 7%.
The biotechnology sector is full of companies working on cures and treatments for hundreds of diseases. When investors grow interested in this industry, the returns can be incredible. During the last biotech bull market, the sector soared 300% over four years.
Since biotech has performed poorly since 2021, most investors are indifferent to it. But I see major potential here. I believe this industry could start regularly generating stock market doubles and triples.
The fusion of AI plus biology will generate dozens of compelling stock narratives over the coming years. Researchers running super-intelligent AI programs will be able to run millions of digital simulations for drugs and treatments. This will put medical innovation into overdrive… and create many big stock market winners.
Companies that use AI to “crack the code” for various diseases, treatments and drugs will enjoy 100%… 500%… even 1,000%+ stock rallies.
In many cases, these rallies will happen thanks to stories and potential… rather than a company generating revenue or earnings.
I often say capitalizing on many of today’s biggest stock market trends means focusing on promise over profits. The biotech sector holds the potential for both.
The biotech sector spent December trading sideways and digesting its big 2025 gain. But today, the sector – as represented by the S&P Biotech ETF (XBI) – broke out to a new multi-year high. I expect this trend to keep running.
One of the world’s most important AI companies soars to a new all-time high.
It’s a brand new year full of new opportunities. But the “AI Bust” crowd is singing the same old tune… and still losing its argument with the market.
Over the past five months, I’ve frequently highlighted how “AI Boom or AI Bust” has become the world’s most important financial question.
More than three years into the AI megatrend, major tech companies, including Meta, Google, Amazon, OpenAI, and Microsoft, are engaged in an epic race to develop the world’s best AI models and infrastructure. They are on pace to spend around $500 billion on AI infrastructure this year, with more than a trillion dollars to follow. It’s the largest infrastructure spending boom in world history.
Whether Big Tech’s massive investment pays off has become the world’s most important financial question.
AI bears say much of this spending is crazy. Big Tech won’t generate the revenues and profits required to justify it. Once the world realizes this, GDP growth will stall, and the stock market will crash.
AI bulls say, “AI is the most transformative innovation of the century. Big Tech leaders know what they are doing. The bears can’t fathom the amazing and profitable AI applications to come.”
Regular readers know we like to know both sides of any debate about the “fundamentals” of a megatrend. But what the market thinks of those fundamentals is far more important than either side’s beliefs.
Right now, the market prefers the bull case. Shares of AI semiconductor manufacturing equipment leader ASML soared to a new all-time high today. They are up 82% over the past 12 months.
ASML is the only company in the world that can currently create Extreme Ultraviolet Lithography (EUV) machines. Semiconductor makers use EUV machines to build the world’s most advanced AI chips. This makes ASML one of the most important technology companies in the world. Its revenue and future order book are exploding.
ASML’s big move today is another sign that the market prefers the “AI Boom” thesis over the “AI Bust” thesis. This is the market telling the AI bears that they are wrong… and “have fun being poor.”
Market Notes
- The semiconductor supply chain keeps going strong. Big players such as ASML (ASML), Micron (MU), Lam Research (LRCX), and Applied Materials (AMAT) all reach new yearly highs.
- The Latin America trade we’ve been pounding the table on continues to pay off. Today, big LatAm banks Banco Santander (SAN) and Itau Unibanco (ITUB) reached yearly highs… and the iShares Brazil ETF (EWZ) reached new yearly highs.
- U.S. uranium firm Uranium Energy (UEC) reached a new one-year high today. The uranium trade we’ve recommended continues to pay off.
- The oil trade we’ve been recommending since September continues to generate wins. Oil giant ExxonMobil (XOM) reached a new one-year high today.
- Airplane manufacturer Boeing (BA) reached a new one-year high today. This is a bullish economic signal.
- High-horsepower engine maker Cummins (CMI) reached a new all-time high today. This is another bullish economic signal.
- Factory automation giant Rockwell Automation (ROK) reached a new all-time high today. The robotics megatrend continues to generate winners.
- Lithium mining giant Albermarle (ALB) reached a new one-year high today. The critical resources boom continues.
Regards,
Brian Hunt
Editor, Money & Megatrends
