An important “tell” from the market. Weight-loss drug giant Eli Lilly leads health care higher on a terrible day for the broad market.

Today’s issue in preview:

• An important “tell” from the market. Weight-loss drug giant Eli Lilly leads health care higher on a terrible day for the broad market.

• The safe way to invest in soaring AI power demand earns its nickname

• These rising stocks are a smart long-term bet on energy

An important “tell” from the market. Weight-loss drug giant Eli Lilly leads health care higher on a terrible day for the broad market.

Credit: smartstock

On Friday, the tech-heavy Nasdaq 100 index declined 4.8%.

It was the index’s worst one-day decline since April 2025.

Many stocks in “high growth, high volatility” themes suffered much larger declines. The solar energy ETF we track dropped 9%. The space industry ETF we track dropped 7.8%. Semiconductor giants AMD (AMD) and Marvell Technology (MRVL) dropped 10.8% and 16.7%, respectively. Computer memory giant Micron (MU) dropped 13.2%.

The mining industry was hit just as hard as the technology industry. The gold mining fund we track dropped 8.7%. Silver mining down 10.4%. Copper mining down 10.6%. Uranium mining down 9.9%.

After a day like Friday, where most stocks and themes suffer large declines, I like to see what stocks held steady or even advanced. The big decline serves as a “stress test” of investment trends.

If the market drops 3%, you want to see what drops just 1%. If the market drops 2%, you want to see what climbs 1%. That sort of thing. This is often called “relative strength.” It allows you to spot the safer, sturdier megatrends for investment.

It’s like looking at a beachfront neighborhood after a hurricane. Some homes lost their roofs, and some homes were blown away. But some homes were unbothered by the storm. Those are safe, well-built homes.

On this topic, I believe the biggest takeaway for us is the relative strength in health care on Friday.

While most stocks and industries dropped, the Health Care Select Sector Fund (XLV), which owns a diversified basket of health care stocks, climbed 0.6%. The Invesco Dynamic Pharmaceuticals ETF (PJP) – which owns a basket of drug makers – climbed 0.4%. Drug giant Eli Lilly (LLY), which I covered on June 4, climbed 0.55% and then gained an additional 3.3% this morning.

Health care’s relative strength is a good reminder of why “Boomer health care” is a compelling long-term investment theme. Regular readers are familiar with the bull case here. More than 10,000 Americans reach retirement age every day. The U.S. population aged 80 and older is projected to roughly double, from 14.7 million in 2025 to 29.4 million by 2045.

This is the enormous Baby Boom generation entering the phase of life where health care and longevity spending skyrockets. For many boomers, a typical month involves going to see at least one doctor to have something looked at, removed, or treated.

This means many health care businesses are experiencing huge demand now – and will for at least the next decade. It means boom times ahead for many “ology” businesses, stocks, and careers. Dermatology. Cardiology. Radiology. Oncology. Anesthesiology. Ophthalmology. The list goes on.

Investing in many health care businesses is investing with a gale-force tailwind at your back. Friday’s trading helped make this case. Count me in as bullish on XLV, PJP, and LLY.

The safe way to invest in soaring AI power demand earns its nickname

Credit: Ron and Patty Thomas

Health care wasn’t the only industry that enjoyed relative strength on a terrible day for the broad market.

On Friday, the Utility sector showed that it’s a safe way to invest in AI without touching a conventional technology stock.

Back in July 2025, I highlighted the emerging uptrend in the Utilities Select Sector SPDR Fund (XLU) and said AI power demand was poised to drive it higher. This ETF owns a diversified basket of major U.S. electric power producers. I’ve called the stocks “the safe way to invest in AI power demand.”

Regular readers know one of the largest and most profitable facets of the AI megatrend is power consumption. Given AI’s enormous promise, large tech firms such as Google, Amazon, Microsoft, OpenAI, Oracle, and Meta have invested over $1 trillion in semiconductors, data centers, and other components of AI infrastructure. They are on pace to invest around $700 billion this year alone and more than $3 trillion after that.

Both the scale and the velocity of this investment boom are unprecedented. It is the largest collective investment effort of all-time.

All that AI infrastructure is poised to consume huge amounts of electricity. Goldman Sachs forecasts global power demand from data centers will climb 50% by 2027 and as much as 165% by the end of the decade. This demand is driving a big bull market in virtually every form of electric power production.

One of my recommended ways to invest in this megatrend is via electric power producers… aka “electric utilities.” When you invest in utilities, you are not risking your money by trying to pick the company that creates the best AI model or the best AI-powered fintech application.

Instead, you’re making the safe bet that every company and every individual using AI ends up buying some electricity to power it. It’s the old “selling picks and shovels to Gold Rush miners” strategy applied to AI.

On Friday, XLU did not decline along with the broad market. Instead, it advanced 0.93% as investors fled “high growth, high volatility” stocks and bought steadier themes like utilities.

Utility stocks don’t offer the same kind of upside as many of the themes we cover at Money & Megatrends. But they do offer safety and stability.

And as far as their role in the historic AI trend, they have the wonderful quality in that no matter who builds the best AI models… no matter who builds the best AI applications… no matter who builds the best AI semiconductors… every AI company and every AI user must buy some electricity to power it. The long-term demand outlook is extraordinary. I remain bullish on the utilities uptrend.

These rising stocks are a smart long-term bet on energy

Credit: photosbyjim

If everything goes according to plan, SpaceX will hold its IPO on Friday. The stock will be listed on the Nasdaq under the symbol SPCX.

Soon after that, leading AI firms OpenAI and Anthropic plan to go public as well.

Given all the money, drama, and upside involved with these exciting firms, it’s no wonder they are dominating financial media coverage… which means it’s no wonder the bull market in oilfield service stocks is generating returns for shareholders in virtual anonymity.

If you don’t mind making money away from the limelight, this theme should be of interest to you.

On September 29, I highlighted the emerging leadership of oil and gas stocks and stated it was time to be long this sector.

The bull case I made for oil stocks back then was simple. If the global economy is growing, oil demand will remain solid. However, importantly, U.S. shale oil production growth appears to be peaking.

This would remove a critical and reliable source of production growth that has been in place for over a decade. Plus, oil is very cheap relative to gold and other assets, indicating good value in oil.

Soon after our note, oil stocks embarked on a giant rally, which was eventually boosted by the Iran war. This rally has driven the SPDR S&P Oil & Gas Equipment & Services ETF (XES) up 66%. It has generated a 53% gain in Suncor Energy (SU), one of our top ideas. The “Big Oil” ETF – the Energy Select Sector SPDR Fund (XLE) is up 29%. These are terrific returns in less than ten months.

In our May 15 issue, I detailed how oil is unlikely to trade below $80 per barrel for a long time, thanks to damaged infrastructure and the coming wave of oil buying to restock supplies depleted over the past two months. Both are bullish fundamental drivers for oil stocks. I concluded that update with, “Still bullish.”

A continued uptrend in the oil and gas industry would be particularly bullish for oilfield services stocks.

Oilfield services firms do not prospect for oil… nor are they “Big Oil” firms such as ExxonMobil (XOM) and Chevron (CVX). Instead, oilfield services firms provide a vast array of critical equipment and services to oil exploration and production firms. The equipment side includes drilling rigs, high-strength pipe, valves, and drilling tools. Services include operating offshore drilling ships, oil reservoir monitoring, and fracking oil wells.

In our May 5 issue, I detailed how one of the long-term consequences of the Iran War will be a strong imperative for big businesses and governments to diversify their sources of critical resources, such as oil and natural gas. No politician, CEO, or major shareholder wants their business to be in a vulnerable position, heavily reliant on Middle Eastern resource flows. No citizen wants their country to be in that position.

This means building and buying as many forms of “not Middle Eastern” resource supply chains as economically feasible… which means substantial spending on drilling new oil wells and expanding production at existing oil fields around the world.

Big oilfield services firms that stand to benefit from this trend include SLB (SLB) and Halliburton (HAL). Both are large, diversified firms that offer a wide range of equipment and services. Baker Hughes (BKR) is another large, high-quality oilfield services giant. It’s a major player in drilling equipment and services. It is also involved in data center power generation and natural gas shipping services.

If you prefer your oilfield service stocks to be enhanced by the robotics megatrend, please see our research note on high-tech services provider Oceaneering (OII).

If investing via “one click, and you’re done” ETFs is more to your liking, the SPDR S&P Oil & Gas Equipment & Services ETF (XES) and the VanEck Oil Services ETF (OIH) are both good options. Both hold diversified baskets of top oilfield services stocks. OIH is heavily weighted towards SLB, HAL and BKR.

Oil and gas stocks have enjoyed strong uptrends since our September 2025 call. As you read this, industry leader SLB is very close to breaking out to a new high. Thanks to the long-term drivers detailed above, it and its oilfield services counterparts have a lot more room to run.

Market Notes

• Construction equipment rental giants United Rentals (URI) and Sunbelt Rentals (SUNB) reached new all-time highs today. They are benefiting from the U.S. factory and data center building booms.

• Hotel giants Hyatt (H), Marriott (MAR), and InterContinental Hotel Group (IHG) reached new all-time highs today. These are bullish economic signals.

• Trucking giants Saia (SAIA), Old Dominion (ODFL) and Knight-Swift (KNX) reached new one-year highs today. These are bullish economic signals.

Regards,

Brian Hunt
Editor, Money & Megatrends

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