Today’s issue in preview:
- These stocks are soaring and pay huge yields. Do you own them?
- Big Tech’s AI spending spree drives an AI equipment niche to new all-time highs
- Our oil stock recommendation continues to generate gains… offshore drillers lead the way
- The AI Lawnmower continues to cut down vulnerable stocks. Make sure you don’t own them.
These stocks are soaring and pay huge yields. Do you own them?
Credit: Denis Shevchuk
Today, the Alerian MLP ETF (AMLP) advanced 1.13% to reach a new all-time high. It’s yet more evidence that the market is waking up to our big “income from AI” idea.
In early 2024, I saw the natural gas pipeline business as the best way to generate substantial passive income from the AI boom.
Given AI’s enormous promise, the world’s largest and wealthiest companies are embarking on the biggest capex spending cycle in history. Giants such as Google, Meta, Microsoft, and OpenAI are spending hundreds of billions of dollars a year on data centers, AI chips, and other infrastructure components.
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 how AI’s growing power demands are a bullish driver for natural gas. Natural gas 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 (AR), Expand Energy Corp. (EXE), and Range Resources (RRC) are compelling long-term stock ideas.
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) is up 21.4% to reach a new all-time high. Fellow blue chip Kinder Morgan (KMI) is up 24% to reach an all-time high. Fellow blue chip operator Energy Transfer (ET) is up 19% to reach an all-time high. These individual stock gains have driven the pipeline operator-focused AMLP to a 16.2% year-to-date gain. Despite AMLP’s big run, it still yields around 7.5%.
A gain of 20% in less than three months isn’t extraordinary for an AI semiconductor maker or a space industry firm in hypergrowth mode. However, it is extraordinary for a relatively stodgy pipeline business. A move like this only happens thanks to a huge influx of money from institutional investors recognizing the situation described above.
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. And it’s getting an AI boost that will last for years. This sector’s extraordinary YTD performance over the past month is confirmation that I’m onto something.
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Our oil stock recommendation continues to generate gains… offshore drillers lead the way
Credit: nikkytok
As of this morning, our Sept. 29, 2025, recommendation to own oil stocks has led to an extraordinary 59.4% gain, as gauged by the SPDR S&P Oil & Gas Equipment & Services ETF (XES).
Back then, we laid out a simple bull case for oil stocks: As the global economy grows, oil demand will remain solid. However, importantly, U.S. shale oil production growth appears to be peaking.
Flatlining supply from this region would remove a critical and reliable source of production growth that has been in place for more than a decade. Plus, oil is very cheap relative to gold and other assets, indicating good value in oil.
With all that in mind, we’ve written frequently and bullishly about owning Canadian oil giant Suncor (SU), U.S. oil giant ExxonMobil (XOM), and XES.
When I recommended oil and started trading it from the long side, I did not factor in the potential bullish driver of Operation Epic Fury. That’s been a “bonus” driver of gains in oil stocks. Sometimes, the dice rolls in your favor.
The current rally across oil stocks has been particularly rewarding for the offshore drilling “subsector.” This oil industry niche consists of companies that manufacture and operate offshore drilling ships, platforms, and related equipment & services.
Drilling offshore is one of the few areas in the world that still offers the potential for large new “company maker” oil field discoveries. This means lots of money is flowing towards offshore drillers… and driving related stocks to new all-time highs. Current market leaders here include Transocean (RIG), Valaris (VAL), Noble (NE), and Seadrill (SDRL).
The prospect of an Operation Epic Fury wind-down could produce a sharp correction in these big winners. However, the long-term picture here is bright, and the trend is up.
Big Tech’s AI spending spree drives an AI equipment niche to new all-time highs
Credit: Henrik5000
After going through a sharp “Operation Epic Fury-induced” correction, the AI optical networking theme is back to running higher. Attention should be paid.
Over the past month, we’ve highlighted how “AI demand shocks” are taking industries by surprise and generating extraordinary stock market winners.
AI “demand shocks” are very different from their more commonly known “supply shock” counterparts, in which a war or pandemic abruptly cuts off the supply of a resource like oil.
Instead, demand shocks are where demand for a specific resource or manufactured product suddenly skyrockets… and sends its price hundreds of percent higher. This creates boom times for the companies involved, as their unit sales and per-unit prices skyrocket simultaneously.
Twenty years ago, demand shocks for manufactured goods and natural resources were relatively rare. Businesses had time to anticipate new sources of demand and plan accordingly. For many industries, those days are over.
AI – the fastest-evolving technology in history and the focus of the largest capex spending cycle in history – has changed the rules.
AI’s power, adoption rates, and capacity are exploding… from just one quarter to the next.
AI is advancing at such a rapid pace… and large tech firms such as Google, Microsoft, and Amazon are spending such huge, unprecedented amounts of money on it (over $600 billion in 2026 alone) that AI-driven demand shocks are now happening every year… and creating the biggest, fastest stock market moves we’ve ever seen.
One industry experiencing a demand shock is optical networking. Optical networking equipment is a critical ingredient of the AI infrastructure boom. This equipment allows data to be transferred quickly and efficiently between parts of AI computing chains.
As a result of Big Tech’s enormous AI infrastructure spending, optical network equipment makers Lumentum (LITE), Coherent (COHR), and Ciena (CIEN) have enjoyed soaring revenues, and their stocks have returned hundreds of percent over the past 18 months.
However, the Operation Epic Fury-induced broad market correction hit these “highflyers” very hard. They fell 10%-22% from their highs.
Now that the worst of Epic Fury-induced chaos may be past, optical networking stocks are back to running. Ciena is up 4.3% this morning and reached a new all-time high. Lumentum is up 6.2% and is close to new all-time highs. Coherent is up 4.1% and is close to a new all-time high. The big bull market in optical networking is back on.
Market Notes
- Our March 6 recommendation to own the chemicals niche is paying well. LyondellBasell Industries (LYB) is up 3.5% today approaching yearly highs again. It’s now up 66% YTD.
- Our September 29th recommendation to own oil stocks is paying off like a broken slot machine. Oil giants ExxonMobil (XOM), Suncor (SU), EOG Resources (EOG), ConocoPhillips (COP), and Chevron (CVX) hit new all-time highs today.
- The AI Lawnmower continues to cut down vulnerable companies. Software giants SAP (SAP), Atlassian (TEAM), and Adobe (ADBE) reached new one-year lows today. Credit score firm Fair Isaac (FICO) reached a new one-year low today. Office industry data and analytics firm CoStar (CSGP) reached a new one-year low today.
- The photonics-related “AI bottleneck” firm we highlighted in January – American Xtai (AXTI) climbed 8% today to reach a new all-time high. The stock is up 203% since our note.
Regards,
Brian Hunt
Editor, Money & Megatrends
An urgent message from our colleagues:
How to Trade the Oil Shock for 200%+ Potential Gains
The biggest oil shock in world history has opened a rare window for traders who know what to do. (But if you sit and do nothing, a former money manager to top CEOs says… you risk losing 55% of your money by April.)
