Why AI Stocks Will Make a Lot of Money

Introduction

Welcome back. AI has “it”. Whatever “It” is, there is nothing on the map that has more than AI. But, why? It’s useful, yes. But how does this usefulness translate into actual stock prices for so many different companies. That’s what I’ll cover in this issue. We’ll also look at some new stocks for this week. $TDUP popped nearly 20% within days after it was mentioned in the last issue. Will we get a banger this week too? Let’s find out.

Why AI Stocks Will Make a Lot of Money

Over the past week I’ve been researching, and building, AI automations - mostly for lead generation. What I found was that you essentially need a stack of tools. One for web scraping and parsing. One for storing the found information - names, company names, etc. One for enriching the found information - adding emails, phone numbers, social handles, etc. One for validating emails (if that will be your mode of contact), and, lastly, in the leanest setup, one for sending messages to the list.

The best-in-class tools for each of these layers use an AI model. I repeat, “The best-in-class tools for each of these layers use an AI model!”. So, if you want to build your lead generation pipeline, and accelerate your company’s sales engine, you will be paying for an AI model. 

The “enrichment” step alone could use multiple AI models to get LinkedIn information, validate emails, add telephone numbers, add a company summary, etc., etc. They might use an AI model from Google $GOOGL (Gemini, VEO), OpenAI (ChatGPT), Anthropic (Claude), Tesla $TSLA (Grok), Microsoft $MSFT (CoPilot), or someplace else. And guess what, even if you have your own subscription to one of these, you could be paying for credits from the same AI model multiple times.

Here’s a very entertaining video on the future of AI models: “We’re Not Ready for Superintelligence”, by @AI In Context

For the sake of understanding why this is so important to stock prices, let’s peel back this onion. There is a great video, “This One Metric Predicted Winning Stocks for 23 Years”, by @Investor52 on Youtube that gives a compelling argument that says that 5 year sales revenue growth of over 50% has a direct correlation to future stock price success. In short, winners keep on winning.

So, if sales growth predicts future success, and best-in-class sales pipelines will need to include AI models, and since businesses will have to pay - sometimes multiple times - for subscriptions to these tools, AI-powered tools will be winning. The underlying AI model creators will not only be seeing recurring revenue streams, but multiple recurring revenue streams from the exact same user! And, their corporate customers will likely be among the best in year-over-year sales revenue.

For example, if I use a site like Clay.com to build an email list, then use an enrichment provider like Apollo.io, Hunter.io, or Datagma.com and they were using Claude, by Anthropic, for one of their AI models, the cost of using that model would be passed to you through your subscriptions to those providers, regardless of whether you have your own personal (or business) subscription directly with Anthropic.

So, between having multiple streams of income on the user layer, having an entire ecosystem of apps (in nearly every industry) layered on top of their AI models, and having the defensive moat of the underlying software, the companies that build AI models will be in great position to squeeze more money out of everyone, from independent contractors all the way up to Fortune 500 companies, for some time to come. This should give them a tailwind that will last for years.

Next, is the hardware layer. Underlying all of these models are the microchips, processors, distributors, and server farms that power the hardware used by AI models. Today, these are driven primarily by $NVDA and the companies in its ecosystem. $SMCI and $MPWR being two notable ones. And, in @investor52’s analysis, $SMCI and $MPWR both get a 10-out-of-10 score AND passed 100% of his “Growth at a Reasonable Price” test criteria. The only two stocks to do that. Click here to see the 4 test criteria.

$GOOG and $GOOGL both hit 10 of 10, but only landed 75% of his screener criteria. $NVDA and $APP passed 100% of criteria, and received 9 of 10 score. These were the best overall positions in his analysis, in my humble opinion. I don’t typically look at large cap stocks, but if I removed that filter, $GOOG / $GOOGL would be one of my top picks. 

Then, there’s Amazon with their dedicated AI cloud services. They were also oon the

In short, these stocks will all outperform, because they will suck everyone else dry. We will become so dependent on them that in order to participate in a modern capitalist society, you will have no choice. Unless you’re in a vocation like plumbing, electrical, medical technician, or anything that ends with technician for that matter. It will be a while before AI can repair, reconfigure, and remodel objects in the physical world. But, everyone else - either hold on to your wallets, or get some AI stock. One way or another they will get your money.

Weekly Stock Picks: $VBTX, $IIIN, $SOFI, $MCRI, $GOOGL

In the last newsletter, I mentioned that I had sold most of my positions heading into August with the intention of rebalancing. The following morning I bought back into the 4 stocks I recommended: $HWM (-7.8% stopped out), $AMSC (-3.33%), $RBC (-2.36%), and $TDUP (+20.84% - partial sell at +16.93%). I also bought some $RDDT (+28.39%) and $SOFI (+3.42%). I bought $WLDN (+27.51) on 8/4/2025 also, but got out after a nasty 10% drop on Friday. It was still a nearly 30% gain, though.

Now, of my 46 exits since 5/22/2025, I’m averaging 10% per trade. And, my open positions that were started on 8/4/2025 are up 9.22%.

$VBTX is holding above both the 50 and 200 SMAs, showing solid support from the longer-term trend. ROE has been improving in recent quarters. Price structure is steady with a bias toward continuation, and the trend should remain intact as long as it holds the 50. Although there was a drop on Friday, 8/15/2025, price is still above a rising 5 day AVWAP.  This is on my very short list for establishing a new position.

$IIIN is trading above its 50 and 200 SMAs, with the short-term average stacked positively over the long-term. ROE has been on an improving path, and there was finally a bump up in EPS. Price structure still looks good with continuation near highs, suggesting that the trend remains bullish. It’s also still trading above a rising 5 day AVWAP. I bought some of this last week, and will probably get more this week.

$SOFI is hitting all the marks, and had a price jump on Friday, while much of the greater market was down. The last reported ROE and EPS numbers are both up. It is bumping up against previous highs in the $25 range, which it was rejected from 3 times back in 2021. But, they’ve shown a consistent track record of performance that I think will help them get past that mark. I got in last week.

$MCRI, a previous weekly pick that I bought into, after retreating from it’s post-earnings 20%+ spike, seems to have established a base at its 61.8% Fibonacci retracement (~$95) from that spike (also an AVWAP from a previous base). With the MAs, ROE, EPS, and a bounce from it’s rising 5 day AVWAP on Friday, it looks like it might be a good candidate to re-enter on Monday.

$GOOGL is not a small cap stock, so I typically wouldn’t consider it here. But, because of @investor52’s excellent analysis on Youtube, and the fact that it’s hitting every technical indicator that I usually look at, stacked MAs, Rising ROE and EPS, declining float, price above a rising 5 day VWAP, I may add this one in my long term account, which I don’t usually track here.

More Resources

Free tools that you can use today to improve your trading

• Position Size Calculator - Companion Spreadsheet - $19.95

• Magic Watchlist Google Chrome Extension - FREE

• Position Size Calculator - FREE

Free TradingView indicators you can use right now in your account. Don’t have a TradingView account. Click this link to get one.

• Magic Order Blocks [MW] 

• QQQ and SPY Price Levels [MW] 

• Magic Linear Regression Channel [MW] 

• ATR Bands (Keltner Channel), Wick and SRSI Signals [MW] 

• Bollinger Band Wick and SRSI Signals [MW]

• Price and Volume Stochastic Divergence [MW] 

• Multi VWAP from Gaps [MW] 

• Multi VWAP [MW] 

• MW Volume Impulse

Other cool tools

• HigherHighs.com

• GetPineScript.com 

The End

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