Today’s issue in preview:
- How AI’s soaring power demands can make you money
- Revenue is soaring for this industry and is guaranteed to do so for years. How to invest in an inevitable trend
- Heaven or Hell: Your future depends on being on the right side of AI
- Our oil trade soars to new highs.
How AI’s soaring power demands can make you money
Credit: dongfang zhao
Yesterday, the Invesco Solar ETF (TAN) climbed 3.37% to reach a new one-year high. It’s up 16.8% over just the past month.
This strong performance makes solar energy one of the world’s top-performing themes right now… and it makes our September 23 recommendation to own it a big winner.
The bull case for solar energy 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 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 and easily installed solar systems can supply smaller consumers, such as homes, offices, stores, and small factories. This means demand for solar power is increasing because AI is driving up the price of other forms of electricity. Many leading solar firms such as First Solar (FLSR), Sunrun (RUN), and Nextpower (NXT) are reporting 20% – 35% annual top-line growth.
Right after I published my bullish note, solar stocks – as tracked by TAN – took off like a rocket, climbing 20% in under two months. Then, TAN corrected and digested its gains. In January, TAN broke out of its consolidation area and resumed rising. This week, it struck a new one-year high. It’s a bull market in solar energy.
Revenue is soaring for this industry and is guaranteed to do so for years. How to invest in an inevitable trend
Credit: RiverNorthPhotography
For over three years, I’ve made the case that owning stocks in the “Boomer health care” theme is investing with a gale force tailwind at your back. This week, the senior living industry gave us more confirmation that this is a winning idea.
Regular readers are familiar with the bull case here. More than 10,000 Americans reach retirement age every day. 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.
To demonstrate this megatrend in action, we look to the booming senior living and care industry. This is a huge business comprising nursing homes, assisted living communities, and specialized nursing services. Many of the largest businesses here are structured as Real Estate Investment Trusts (REITs).
REITs own, operate, or finance income-producing real estate – such as apartments, office buildings, shopping centers, warehouses, or data centers – and allow investors to buy shares in that real estate portfolio.
By law, REITs must distribute most of their taxable income (typically at least 90%) to shareholders as dividends, which is why they’re often known for generating steady income.
The two largest senior living REITs – Welltower (WELL) and Ventas (VTR) have been getting press for their growth and strong stock price performance. Both recently reached all-time highs, but their smaller colleagues are booming as well.
The chart below is a “performance chart.” It plots the returns generated by a handful of sub $20 billion market cap senior living REITs – Omega Healthcare (OHI), National Health Investors (NHI), CareTrust (CTRE), and Sabra Health Care (SBRA) over the past two years.
Although these are big businesses, they usually fly under the radar of most investors. But perhaps they shouldn’t.
As you can see in the chart, each company is going from the lower left to the upper right. Each has generated an outstanding return of 70%+ (beating the S&P 500’s return of 40.4%).
In other words, the Boomer health care theme is booming. Given its long-term nature, I expect it to continue doing so for years. These health care REITs, drug companies, and genomics firms stand to benefit.
Heaven or Hell: Your future depends on being on the right side of AI
Credit: gremlin
If a company makes something you can stub your toe on, it’s probably doing well.
If a company makes something you can’t stub your toe on, it’s probably doing poorly.
Those two sentences neatly summarize the world’s most important business trend right now. They sum up how the AI Lawnmower is creating a K-shaped market, with big winners and big losers.
Over the past six months, we have scored big wins with our oil, critical resource, silver, gold, copper, robotics, pipeline, and Latin America recommendations.
Each position above has its own favorable fundamental drivers, but they are united in that, at the end of the day, the investor in them is investing in things you can stub your toe on. Things a person using AI cannot code or prompt into existence. As wonderful as AI is, it cannot create a mile of 30-inch steel pipe.
On the other hand, companies in the category I’ve called KIDS have suffered historic declines in market values. KIDS is my acronym for Knowledge work, Information collection and analysis, Data collection and analysis, and Software.
Generally, these businesses sell digital products and services. We’re talking consulting firms. Credit rating agencies. Financial data providers. Software firms. You can’t stub your toe on what they sell.
These companies sell products and services that AI programs could produce for very low cost soon. If someone using AI can code a product or service into existence, then any business related to it is in danger.
AI will put some of these KIDS work companies out of business. But keep in mind, it doesn’t have to put them out of business to make them stock market losers. AI only needs to lower the cost of producing what they produce over the long run. This will enable hordes of AI-centric competitors, which will throw a heavy wet blanket on their growth rates, profit margins, and P/E multiples.
For a visual of this megatrend at work, I present the 3-month performance chart of the Global X Copper Miners ETF (COPX) vs. the iShares Expanded Tech-Software ETF (IGV). Each of these funds is the largest of its respective category.
As you can see, this chart tells the tale of a K-Shaped stock market. COPX is up 52% over the past three months, while IGV is down 21.4% over the same period. Given this situation, I continue to recommend being long “things you can stub your toe on.”
Market Notes
- Our September 2025 recommendation to own oil stocks continues to pay out like a broken slot machine. The S&P Oil Equipment & Services ETF (XES) powered to another one-year high today. It’s up an incredible 48% since our note.
- Our recommendation to own defense stocks continues to be a winner. Defense giant Lockheed Martin (LMT) advanced to a new all-time high today. The stock is up 57% over the past year.
- Transportation giant FedEx (FDX) reached a new all-time high today. This is a bullish economic signal.
- Our longstanding recommendation to invest in Boomer health care continues to pay off. Drug giants GSK (GSK), AstraZeneca (AZN), Pfizer (PFE), and Novartis (NVS) recently reached all-time highs.
- Our bullish note on manufacturing/robotics firm RBC Bearings (RBC) was well timed. The stock is up 30% since early November and just reached an all-time high.
Regards,
Brian Hunt
Editor, Money & Megatrends
