A niche AI theme soars to new highs… and has further to run

Today’s issue in preview:

• A niche AI theme soars to new highs… and has further to run

• This high-risk group of tech stocks has 1,000%+ upside

• This one ETF gets multiple large income streams flowing your way

This high-risk group of tech stocks has 1,000%+ upside

Credit: bpawesome

Of the more than 100 investment themes and financial assets we track at Money & Megatrends, few have the potential to change the world more than quantum computing.

This means the quantum computing stock group we track has enormous upside potential.

Quantum computing uses the laws of quantum physics to solve problems much faster than traditional computers. Regular computers store information as bits, which can be either 0 or 1. Quantum computers use qubits, which can be 0, 1, or a combination of both at the same time through a property called superposition.

Qubits can also be linked together through entanglement, allowing them to work as a team in ways that ordinary bits cannot. Because of these properties, quantum computers can process many possible solutions simultaneously. For large, complex problems such as drug discovery, material design, and data encryption, quantum computers are millions of times faster than today’s conventional supercomputers.

This means a world with many fully operational quantum computers would be one where technological progress occurs much faster than it does now. The pace of useful new developments in AI, health care, and energy generation could skyrocket… and usher in an era of abundance like we’ve never seen.

That’s the promise – the dream – that quantum computing fans are trying to sell these days.

The big question with “QC,” however, is, “When does it become a real thing working in the world… rather than an expensive science project?” Although big tech firms Google (GOOG) and IBM (IBM) have developed quantum computers, the technology is still in its infancy. It is not yet a viable replacement for today’s conventional computers. Some experts believe QC could go mainstream in a few years. Some believe it is 5+ years away.

In addition to Google and IBM, a handful of small, publicly traded companies, such as IonQ (IONQ), D-Wave (QBTS), Infleqtion (INFQ), and Rigetti Computing (RGTI), are investing heavily in quantum computing development. Owning these small, profitless firms is like being a venture capitalist in the stock market. You’re not buying established, profitable companies. You’re making high-risk bets on technological breakthroughs.

These firms can also go through huge ups and downs based on nothing more than investor sentiment towards the sector. When the market believes in the technology, these stocks can soar hundreds of percent. When there are setbacks with the adoption and progress of the technology, these stocks plummet. QC stock movements can put roller coasters to shame. In late 2024, a group of QC stocks soared more than 1,100%… and then declined more than 50%.

An investor in QC stocks today has a powerful backer: The U.S. government. Last month, the Trump administration announced it would award $2 billion in grants to nine quantum computing companies. In exchange, the U.S. government will receive equity stakes, according to the U.S. Department of Commerce. Trump and his advisors are obviously keen on accelerating QC development. They believe that beating China in QC is a national priority.

Avid M&M readers know that we like to know the bull case for any investment, but we care a lot more about what the market thinks of the bull case than the case itself. You can be bullish on a technology or industry until you’re blue in the face, but if its price trend is down or sideways, your idea isn’t worth a heck of a lot.

With this in mind, let’s look at the trend in QC stocks. To track the movements in this group, we created an in-house index of 11 QC-related stocks. As you can see, this theme does not have significant investment money flows driving upside momentum. The trend is like a “becalmed” sailboat rendered motionless due to a lack of wind. However, the investment public could soon warm up to this potentially revolutionary tech. We will let you know when it does.

A niche AI theme soars to new highs… and has further to run

Credit: Alexander Sikov

Last Friday, the semiconductor stock group suffered its worst day in six years. The VanEck Semiconductor ETF (SMH) plummeted 9.2%.

Semiconductor giants AMD (AMD) and Marvell Technology (MRVL) dropped 10.8% and 16.7%, respectively.

Many other technology themes – such as solar energy, computer memory, and space – also suffered significant declines.

Almost all tech industry groups are reeling from this selloff… and trading below their 2026 highs.

This makes today’s new all-time highs reached by the semiconductor equipment stock group all the more impressive.

Today, each of the “Big 3” stocks of the American semiconductor equipment group – Applied Materials (AMAT), Lam Research (LRCX), and KLA (KLAC) – climbed more than 2% this morning to reach new all-time highs.

Given AI’s enormous promise, large tech firms such as Google, Amazon, Microsoft, OpenAI, Oracle, and Meta have invested over $1 trillion in specialized semiconductors, data centers, and other AI infrastructure components. 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.

Semi equipment makers are one of the most underappreciated cogs in the global AI semiconductor production machine. They do not build semiconductors themselves. Instead, they provide a wide range of critical services and equipment that enable semiconductor production.

They sell chip fabrication machines and chip components and provide testing services, among other vital services that keep the semiconductor industry going. They sell picks and shovels to the companies making picks and shovels.

No semiconductor equipment industry, no AI boom.

AMAT, KLAC and LRCX are the three U.S. leaders in semiconductor equipment. Each firm holds a dominant role in the AI semiconductor equipment industry, is enjoying terrific revenue growth, and is experiencing a strong uptrend. They are all up more than 100% over the past year.

On March 20, I detailed how these three stocks were holding up well during the Epic Fury-induced market decline. This “relative strength” was a bullish sign. It was a “tell” from the market… that the fundamental forces driving these stocks are very strong. And this week, those fundamental forces drove the semi equipment group to new all-time highs. They are up an average of 48% since our March 20 note.

In other words, it’s good to be on the receiving end of the largest investment boom of all time. Today’s breakout reinforces our bullishness on the semiconductor equipment theme.

This one ETF gets multiple large income streams flowing your way

Credit: bjdlzx

This week, the SpaceX IPO and major volatility in tech stocks are dominating financial media headlines. Nearly everyone is watching Elon Musk’s next move and fluctuating numbers in their brokerage accounts.

Meanwhile, the oil and gas pipeline industry quietly goes about its business of transporting energy, generating stable cash flows, and boosting its market value.

Welcome to one of the world’s great and lucrative “under the radar” financial trends.

Avid M&M readers are familiar with our longstanding take on oil and gas pipelines. In early 2024, I saw the industry as the best way to generate substantial passive income from the AI boom.

Given AI’s enormous promise, big tech firms Meta (META), Google (GOOG), Amazon (AMZN), OpenAI , and Microsoft (MSFT) are racing to build the world’s best AI models and infrastructure. They’ve already spent more than a trillion dollars. This year, they are on pace to spend over $700 billion on AI infrastructure, with more than $3 trillion expected to follow.

All that AI infrastructure is poised to consume vast amounts of electricity. S&P Global estimates that global electricity demand will increase by nearly 50% by 2040.

I’ve frequently mentioned that AI’s growing power demands are a bullish driver for natural gas, as it is the preferred clean-burning fuel for power plants that support AI data centers. This is why I believe natural gas producers such as EQT (EQT), Antero Resources (AR), Expand Energy Corp. (EXE), and Range Resources (RRC) are compelling long-term stock ideas.

The U.S. sits on enormous reserves of natural gas. These companies play key roles in extracting them.

However, all the natural gas in the world isn’t worth much if you can’t transport it to customers.

This is where America’s vast natural gas transportation, processing, and storage industry comes in. An extensive network of pipes crisscrosses America to allow energy companies to transport natural gas from the wellhead to the power plant. If we get an AI-driven boom in natural gas consumption, we get a boom in natural gas transportation by default.

This year, the market has enthusiastically supported our thesis. Blue chip pipeline operator Enterprise Products (EPD) has returned 21% and hit new all-time highs. Fellow blue chip Kinder Morgan (KMI) has returned 17% and hit all-time highs. Fellow blue chip operator Energy Transfer (ET) has returned 20% and reached all-time highs.

These individual stock gains have driven the pipeline operator-focused Alerian MLP ETF (AMLP) to a 16.6% year-to-date gain. Despite AMLP’s big run and shares being near all-time highs, it still yields around 7.7%.

The typical pipeline operator is not your conventional “high-risk, high-reward” AI play. Instead, it’s a boring, predictable business that generates steady cash flows and shareholder distributions.

But the AI megatrend is giving natural gas a boost that will last for years. Plus, the Iran war and its constriction of Middle Eastern energy flows have made U.S. natural gas exports increasingly more valuable to customers in Europe and Asia.

In other words, two megatrends are converging to create a highly favorable environment for U.S. pipeline operators… one that should allow them to continue generating steady income for years. Generating stable cash flows by transporting oil and gas isn’t as exciting as launching rockets, it just works… and business is booming.

Market Notes

• Financial software leader Intuit (INTU) just hit another yearly low. It’s now down 62% over the last year.

• Beverage giant Coca-Cola (KO) reached a new one-year high today.

• The trend of Americans buying so much stuff they can’t store it all at home continues. Storage giant Public Storage (PSA) reached a new one-year high today.

• Shopping mall giants Simon Property Group (SPG) and Macerich (MAC) reached new all-time highs today. The American consumer continues to spend with enthusiasm.

• Drug development investment and royalty firm Ligand Pharmaceuticals (LGND) reached a new all-time high today. This is a bullish development for the biotech uptrend.

• Construction management software giant Procore (PCOR) reached a new one-year low today.

Regards,

Brian Hunt
Editor, Money & Megatrends

An urgent message from our colleagues:

Major Oil Shock to Hit America

Oil prices are about to cause a ripple effect in one of the oldest, most stable markets in America. If you own any of these 5 stocks, you could lose everything.

Full story here.