Stock ideas for playing “The Next Big AI Trade”

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Today’s issue in preview:

• Stock ideas for playing “The Next Big AI Trade”

• If you want to make money in commodities, buy these stocks

• How to trade the world’s most important trend

• Learn our Top Themes to buy now

If you want to make money in commodities, buy these stocks

Credit: oversnap

In our August 21 issue, we detailed how powerful trend tailwinds are blowing for copper miners like Freeport-McMoRan (FCX) and Southern Copper (SCCO).

Both firms have powerful fundamental forces working in their favor… and both reached new all-time highs last week.

This development, and the uptrend in oil and gas producers we’ve been covering, are bullish for one of our favorite investment destinations, Canada.

Money & Megatrends readers in good standing will recall our longstanding bullish stance on Canada.

Over the past ten months, I’ve made the case that we are in a favorable environment for critical resources… one in which many individual resource sectors will generate strong returns.

Critical resources are the building blocks of the economy. Think raw materials like crude oil, natural gas, iron ore, copper, uranium, corn, and cotton.

Even today’s high-tech world of AI, apps, email, and Zoom calls is built on a “low-tech” foundation of steel, concrete, copper, lumber, and aluminum. Every day, our cars, trucks, and airplanes consume millions of barrels of fuel. Our lights turn on because we burn coal and natural gas.

Mining, extracting, planting, harvesting, processing, refining, and transporting critical resources is a multi-trillion-dollar business that affects every area of your life.

During this time, I’ve frequently highlighted Canada as an excellent place for investment capital. Canada is the second-largest country in the world by total area, after Russia.

This means there’s plenty of area to hold big oil and natural gas deposits… huge tracts of timberland… giant mineral deposits… and enormous farms. Canada is a major player in oil and natural gas production, ranking in the world’s top five producers for both. It’s also a world leader in the production of fertilizer, uranium, aluminum, wheat, gold, lumber, and platinum.

Canada’s massive resource endowment also makes it a beneficiary of the war in Iran and its consequences.

As I’ve covered this year, for many countries and businesses, the war in Iran is a powerful reminder: If your survival or smooth operation depends on uninterrupted resource flows from the often-unstable Middle East, you are in a dangerous, vulnerable position.

No politician, CEO, or major shareholder wants their business to be in that position. No citizen wants their country to be in that position. Many powerful and influential people are realizing this is a big risk that must be mitigated if humanly possible. Executives and politicians will get fired for not addressing it effectively.

This means building and buying as many forms of “not Middle Eastern” resource supply chains as possible economically… like those from safe, resource-rich Canada. I can state with confidence that no caribou will ever strap on an explosive vest and attack a local oil refinery… and no grizzly bear will send a kamikaze drone flying into a natural gas pipeline.

As you can see in the chart below, the bullish factors above are driving a steady uptrend in the iShares MSCI Canada ETF (EWC). Last week, this Canada-focused ETF reached a new all-time high.

Canadian oil and gas giants Cenovus (CVE) and Canadian Natural Resources (CNQ) also reached new all-time highs. Large Canadian banks Toronto-Dominion (TD), Royal Bank of Canada (RY), and Bank of Montreal (BNS) are up more than 50% over the past year and are trading near all-time highs. Canadian fertilizer giant Nutrien (NTR) – which will benefit from a bull market in agriculture – is poised to reach a new one-year high.

Canadian stocks had strong tailwinds before the Iran War. They will have even stronger tailwinds after it. Still bullish on Canada.

Stock ideas for playing “The Next Big AI Trade”

Credit: TanyaJoy

It turns out, being bullish on genomics was a great idea…

Last week, drug firms Moderna (MRNA) and Merck (MRK) made huge news by announcing positive Phase 3 results for their personalized mRNA cancer therapy, Intismeran, combined with cancer drug Keytruda. In high-risk melanoma patients, the combination significantly improved survival without cancer recurrence versus Keytruda alone.

It’s the first successful Phase 3 trial of a personalized cancer therapy and a major validation of the technology. “Personalized” in this case being a very big deal, as for the past 100 years, most drugs and treatments have used a “one size fits all” shotgun approach for the masses.

The news sent Moderna stock up 177% in one day. It also provided a huge boost to many healthcare, biotechnology, and genomics stocks.

• Leading genomics diagnostics/analytics firms Illumina (ILMN) and Natera (NTRA) reached new highs.

• Drug delivery firm Halozyme Therapeutics (HALO) reached a new all-time high.

• Drug research and analytics firms IQVIA (IQV) and Charles River Labs (CRL) reached a new one-year high.

• Synthetic DNA maker Twist Bioscience (TWST) reached a new all-time high.

• DNA analytics firm 10x Genomics (TXG) reached a new one-year high.

Constant Money & Megatrends readers are not surprised to see the genomics theme surge to new highs. Over the past year, we’ve written over a dozen research notes about the extraordinary upside potential of biotech and genomics.

Genomics is the science of analyzing human DNA – often referred to as the “software code of life” – to create tests, medicines, and treatments.

Years of innovation in this field have us on the brink of creating many customized treatments based on an individual’s DNA… and even “editing” genes to cure disease. Bulls on the industry believe it will get a giant “AI boost,” because super-intelligent computer programs can analyze genes and treatment effects so well… and have the potential to create drugs on their own.

The fusion of AI and genomics should generate dozens of compelling stock narratives over the coming years. Researchers running superintelligent AI programs will be able to create useful new diagnostics and run millions of digital simulations of drugs and treatments. This will put medical innovation into overdrive… and create many big stock market winners.

The personalized approach to medicine that genomics offers has us on the cusp of a historic revolution in healthcare. Ten years from now, medicine will be transformed… and a lot of money will be made along the way.

On May 28, I looked at the genomics sector’s price strength and came away bullish and expecting an uptrend. That uptrend has arrived with enthusiasm. Our ETF pick in this space – the ARK Genomic Revolution ETF (ARKG) – has exploded 54% in less than three months (an annualized pace of over 210%).

ARKG owns a basket of bleeding-edge genomic companies. A top holding, Tempus AI (TEM), is often cited as a premier way to play “AI in health care.” ARKG also holds significant positions in genetic diagnostic service firms Natera and Illumina… plus positions in promising “gene editing” companies CRISPR Therapeutics (CRSP), Prime Medicine (PRME), and Intellia Therapeutics (NTLA).

After such a huge short-term run, it’s reasonable to expect the genomics sector to move sideways or correct and “digest” its gains. However, the long-term picture is very bright. It’s boom times for genomics.

How to trade the world’s most important trend

Credit: KanawatTH

This morning, the VanEck Semiconductor ETF (SMH) declined 3% to reach its lowest level in three weeks. This means “the world’s most important trade” is trendless… much like a “becalmed” sailboat on a windless sea.

The status of this critical tech sector has become one of the great sagas of the business and investment world… a source of intense disagreement among industry bulls and bears.

Is this consequential industry group a buy, a sell, or something else?

Today, we update you on the semiconductor industry’s “trend health” and offer guidance on how to think about and trade this sector. This is the fourth part of our special series on “the state of semis.”

The semiconductor industry has always been a critical part of our high-tech economy. Semiconductors are the “tiny engines” that power our computers. However, the proliferation of AI has turbocharged the industry’s revenues, stock prices, and importance to the global economy. It has also made industry leader Nvidia (NVDA) a $5.1 trillion colossus. The stock is up more than 1,300% since Jan. 1, 2023.

In June 2025, semiconductor stocks broke out of a sideways consolidation pattern and began a rally for the ages. During this rally, the world’s largest semiconductor ETF – SMH – gained 147% in just under a year.

Individual semiconductor leaders AMD (AMD), Marvell Technology (MRVL), and Lattice Semiconductor (LSCC) gained more than 200% during that time. Stock gains of 25% in a month became commonplace.

When a sector gains 50% in a year, that’s considered incredible. What semis returned was “triple incredible.”

Avid Money & Megatrends readers know what drove those giant returns. Given AI’s enormous promise, large tech firms such as Alphabet (GOOG), Amazon (AMZN), and Microsoft (MSFT) have invested over $1 trillion in AI infrastructure. They are on pace to invest over $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 in history.

A lot of this money was used to purchase semiconductors. Semiconductor industry revenue totaled $793 billion in 2025, an increase of 21% year-over-year, according to Gartner, Inc.

Big Tech’s historic investment boom has made the entire “AI infrastructure” trend responsible for a large share of America’s GDP growth over the past two years. It has also drawn the skeptical scrutiny of many widely followed investment analysts who claim the trend is a bubble… one that will soon explode and cause tremendous damage to stock prices and the global economy.

I believe the AI infrastructure trend has years to run. As much press as the technology gets, let’s remember that less than 1% of the global population pays for top-tier AI programs. And I estimate less than 20% of large companies believe AI has made a meaningful impact on their businesses.

This revolutionary technology hasn’t yet proliferated, achieved mass adoption, or had mass impact.

Regular readers know I care a lot more about what the market thinks of any stock, trend or theme than what any one person thinks of it, including me. You can be bullish or bearish on a trend all you like, but if that trend is moving strongly against you, then your idea isn’t worth a hell of a lot in my book.

With this in mind, let’s look at the state of semis. The semiconductor sector is our preferred way to track and analyze the hugely consequential AI infrastructure megatrend.

Given its AI drivers and big returns, it’s no wonder semis became the world’s “hottest trade” this summer. And when any theme becomes the world’s hottest trade, it becomes a leading candidate to experience a significant correction or something worse.

That’s just how the stock market works. When a bull market grows very popular and attracts a lot of speculation, it likes to “buck off” market participants with a sharp correction or worse.

That’s what has happened to the semiconductor trade this summer. After soaring from June 2025 to June 2026, SMH declined 24%. Some individual semi names declined by more than 35%.

As you can see in the two-year chart below, the SMH share price declined from the mid-$600s to the mid-$500s. Since reaching a low in late July, SMH has traded up and down, failing to establish a meaningful trend. In other words, “becalmed” as described above.

In my July 20 health analysis of SMH, I stated that if long-term AI bulls are proven right by the market, SMH will likely “digest” its summer losses by trading in a sideways consolidation pattern for 3-6 months… and then recover to trade back to the mid-$600 area and beyond.

If the AI bears are right, SMH won’t see that mid-$600-per-share level for years… and we are much better off focusing on other trends.

With all this in mind, short-term traders should see semiconductors as a directionless trade right now, good for monitoring but not for trading. Long-term bulls, of course, can ignore these short-term moves and stay long. I’ll keep you updated on the former “world’s hottest” trade. It won’t be long before we get meaningful price action that provides direction for trading the semis.

Market Notes

• Our Nov. 17 recommendation to own the biotech theme continues to pay off. Eton Pharmaceuticals (ETON), BioLife Solutions (BLFS), and Cryoport (CYRX) are all up at new highs.

• Payment processing giant Visa (V) hit a new yearly high today. Small-cap processing play Paysign (PAYS) just hit a new high as well. It’s now up 166% in the last year. 

• Leading consumer brands like Target (TGT) and Coca-Cola (KO) rise to new highs. These are bullish economic signals.

• Airbnb (ABNB) just hit a new high, up 35% in the last month alone. This is another bullish economic signal. 

• Our Dec. 3 recommendation to own gold stocks is performing well. The Sprott Physical Gold & Silver ETF (CEF) just hit a one-month high. 

Regards,

Brian Hunt
Editor, Money & Megatrends

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