Three Stocks to Watch During the AI Frenzy
.png)
Special ReportBy Marc Chaikin
Artificial intelligence ("AI") and all that it encompasses is incredibly exciting.
It's a new bull market... And friends who were skittish about investing for the last few years are now calling and e-mailing me out of the blue to get my opinion.
This is often when people get hurt.
Whether you find the idea wondrous or horrifying, AI is finally going mainstream.
The AI frenzy kicked off last November, when San Francisco-based company OpenAI launched ChatGPT. This chatbot wowed users with its humanlike conversation. It also served up quick answers to complex questions – greatly cutting down on research time.
Unlike previously hyped tech trends like the metaverse, generative AI has immediate applications and uses... This isn't some pipe dream for the future...
It's now being reported that chatbot-themed investments have added $1.4 trillion in stock market value in 2023.
In fact, generative AI may make up most of the gains we've seen in the market this year.
The technology itself is here to stay. It already has massive buy-ins from the biggest and most well-established tech companies of the past 20 years.
But let me be clear: As I'm about to show you, the run-up in AI stocks is not the whole story.
AI can provide massive good for all humanity – but there's a dark side to this emerging story, too... one that most Americans haven't even considered.
What's going on is much, much bigger than AI.
Surely you and everyone else knows this mania won't last forever. Nothing does. However, the tech revolution is not going to stop. It's going to continue to accelerate.
AI is already part of our everyday life. You see it everywhere, like the facial recognition that unlocks your iPhone, Amazon's virtual assistant Alexa, and Google's "Call Screen" feature.
The innovations that come from generative AI will create countless investment opportunities down the road.
But as history has taught us, with great progress comes great risk...
History Doesn't Repeat Itself, but It Rhymes
There always has been, and always will be, some investment du jour – the next big thing that makes early investors a fortune...
Then it ultimately harms the investors who buy in too late.
It was gold in the '70s...
Then Japanese stocks...
The Internet boom... crypto... social media...
It goes as far back as the "tulip mania" during the 17th century Dutch Golden Age. Things got so crazy that people exchanged 12 sheep or 1,000 pounds of cheese for a single tulip bulb. You can't feed your family tulips during a cold Dutch winter.
Compare where we are with AI today with the dawn of Internet integration in 1995...
You might remember when people used to say, "Why would I need a computer in my house?"
This is where we're at today with AI, because folks just don't get it yet...
The first smartphones were nothing like the miniature computers we carry around in our pockets today. A 2005 Nokia phone didn't use the Internet at all. Instead, it used a telephone communications band with a tiny digital backchannel.
But kids in Finland started to use this backchannel for texting – specifically, texting 1,000 times a day with their friends to build a de facto social network. That networking effect set the stage for the boom in wireless Internet, starting with the iPhone.
The moment the first website went live on August 6, 1991, it became almost inevitable that we'd end up here.
AI can be as exciting as it is scary...
Data Is King
What is the next technology growth story that will drive demand for data storage?
Generative-AI models are designed to respond to you like a human would. In some cases, they can generate audio or video files with a human voice.
What generative-AI models are good at is pattern recognition. They make sense of large data sets. And the more data you feed the models, the "smarter" they get.
Generative-AI systems like ChatGPT are computing systems with interconnected nodes that work much like neurons in the human brain, with each node having its own computational processes. They accept data, process it, and usually push the output to a new node with new parameters within the network.
What is important to understand about machine learning is that there is a human element to advancing the functions of these systems. The more people who use a model, the better the model gets. It "learns" through human interactions and feedback. So, there's value in being a first mover in this space because it means you'll collect more feedback than competitors who get a later start.
Ultimately, generative-AI models are only as good as the data they're fed, or "trained" on.
Increasing applications for AI technology will mean a lot more data and much higher demand for a place to store it all.
AI is playing a huge role in data analytics across many industries.
There's no doubt that AI will change the way we do things. It has the potential to automate repetitive and time-consuming tasks. And that will give employees more time to focus on other – and more important – duties.
Throughout history, there have always been periods when new innovations disrupt everything about how human societies function.
But the bottom line is, it's okay to be apprehensive about new technology and still make money off of it.
No matter where you stand on tech, you can't ignore it as an investment opportunity. Tech investments have likely made the average retail consumer more money than anything else.
And it's nearly impossible to make much money in the stock market, decade after decade, ignoring hot tech trends.
However, investors must remain skeptical and strategic. That way you end up holding the historic winners and avoiding the historic losers.
The Mainstream Financial Media Won't Show You What to Do With Your Money
If you're looking at the hundreds of AI recommendations and warnings printed in the mainstream financial media right now, you're better off reading tea leaves.
My name is Marc Chaikin. I'm best known as the creator of one of Wall Street's most popular indicators... a system that appears in every Bloomberg and Reuters terminal in the world, and is now used by hundreds of banks, hedge funds, and every major brokerage site.
For decades, I used it to help banks grow wealthier.
But then the crash of 2008 came along...
My wife lost around 50% of her 401(k)... all because of a bad money manager.
And that's when I made a radical decision that yanked me out of retirement and has kept me working 24/7 for the last decade now... creating what I consider the ultimate "secret power" for everyday people.
It's a way to see which stocks could soon double your money, by taking the same information I gave Wall Street for 50 years... and using it to give yourself a huge and "unfair" advantage.
And right now, I'm giving you a full version of the Power Gauge on three popular stocks to try yourself.
Here are the three stocks you can plug in right now.
STOCK #1:
CBOE Global Markets (CBOE)
Click here to enter this stock into the Power Gauge right now...
You'll find the rating is BULLISH due to very strong earnings performance, very positive expert activity, and attractive financial metrics.
CBOE Global Markets (CBOE) operates the largest options exchange in the world, as well as equity and foreign-exchange markets in the U.S. and Europe.
It opened its doors 50 years ago as the first exchange to list standardized equity options contracts. And today, about 60% of CBOE's revenues are still from options trading.
Retail trading in both stocks and options has soared in recent years...
And this explosion in retail-trading activity is a boon for CBOE. It doesn't matter whether these traders are making a profit... CBOE scrapes a little off the top on each and every trade that goes through it.
By matching a buyer to a seller on one of its exchanges, CBOE receives a transaction fee from the broker. These types of fees make up CBOE's "transactional revenue". Increased volume and volatility mean more transactional revenue for CBOE.
Even more important, the CBOE doesn't require big capital expenditures to maintain and expand its business. That means it can richly reward shareholders with its free cash flow...
In addition, CBOE has also built and experimented with two widely known proprietary options products, those for the S&P 500 Index and its proprietary Volatility Index ("VIX"). The VIX, which launched in 1993, is undoubtedly the best-known CBOE product...
It measures future expectations of volatility... the implied volatility of the S&P 500 over the coming 30 days. It has essentially become the market's "fear gauge."
The VIX is the only product of its kind – nobody has a viable competitor. So in a way, this gives CBOE a monopoly on fear in the market.
The higher the VIX, the higher the expected volatility. And since volatile markets and high trading volume often go hand in hand, the CBOE tends to profit from those market conditions through its wide variety of products...
So no matter what you expect to happen in 2024, you should take a closer look at the company...
Today, CBOE Global Markets earns a Very Bullish rating from the Power Gauge.
The company has been outperforming the market through 2023. And our Chaikin Money Flow indicator shows us that the "smart money" institutional buyers have taken a strong interest in this company.
CBOE Global Markets is a perfect example of a classic Chaikin Bull... it has a very bullish Power Gauge ranking, is outperforming the market, and there's persistent buying in the stock.
STOCK #2:
McDonald's (MCD)
Click here to enter this stock into the Power Gauge right now...
And you'll see the rating is listed as NEUTRAL.
Fast-food giant McDonald's (MCD) is one of the largest chains in the world. You can spot the Golden Arches at more than 40,000 restaurants across more than 100 countries.
But McDonald's has struggled to keep up with the broad market over the past year.
That's likely one reason why McDonald's is changing up its burgers... including its signature Big Mac – different buns, cooking patties in smaller batches, and tweaking ingredients.
This isn't the first time the company has refreshed its menu, of course. Through the years, it has tried everything from Angus Third Pounders and "all-day breakfast" marketing campaigns to the McCafé concept that led to a flourishing coffeehouse-style brand.
Still, the coming changes to its burgers are big. And folks, this move is a gamble...
Whenever a company messes with a beloved consumer product, it risks creating the next "New Coke." That was Coca-Cola's (KO) failed attempt to reformulate its product in 1985.
That's why the Chaikin Power Gauge is so useful...
As we mentioned earlier, the stock underperformed the S&P 500 in 2023.
In addition, McDonald's currently earns "bearish" grades in the Earnings and Technicals categories. And worse still, the company receives a "very bearish" rating in the Financials category.
When the Power Gauge puts all the data together, McDonald's would get a "bearish" overall rating. But as anyone who trades stocks knows... the trend is still the trend.
Sometimes, "bullish" stocks go down. If the trend turns far enough against these stocks, the Power Gauge flags them with a "neutral+" rating.
Other times, "bearish" stocks go up. If the trend moves far enough in these stocks' favor, the Power Gauge flips to a "neutral-" grade.
That's exactly what we're seeing with McDonald's today...
The gray dotted line on the previous chart is the stock's long-term trend line. And as you can see, the latest rally for McDonald's pushed it above this line in mid-November.
In other words, the stock is currently above its long-term trend line.
In response, the Power Gauge bumped it to a "neutral-" rating. That's how we know that our system acknowledges both the stock's trend and its lackluster grades at the same time.
It's an incredible system. I wouldn't buy a stock without running it through the Power Gauge first. And you shouldn't either.
Bottom line: McDonald's could be in the early stages of a turnaround. As we've discussed today, the fast-food giant is in the middle of a major revamp. That move could be good for the long term.
But the Power Gauge urges us to be careful. So keep McDonald's on your watch list for now.
STOCK #3:
Las Vegas Sands (LVS)
Click here to enter this stock into the Power Gauge right now...
And you'll see the rating is listed as BEARISH.
Las Vegas Sands (LVS) is one of the world's biggest casino companies.
Despite its name, it primarily operates today in Macao and Singapore. And it's a lot more than poker tables and slot machines...
Today, the casino business is better thought of as a convention-based resort developer – essentially a big-tent entertainment complex for the whole family and conference attendees – rather than focusing exclusively on hardcore gamblers.
But LVS stock has been relatively weak compared with the market for much of 2023... and the Chaikin Power Gauge sees more downside ahead.
The company has had solid earnings growth as it continues to recover from the COVID-19 pandemic.
However, its financial metrics are weak... It carries too much long-term debt and looks overvalued. Wall Street analysts are also beginning to trim their ratings for the stock.
So it's no surprise that according to the Power Gauge, LVS could soon be rated a "Sell" at every major bank and hedge fund... which means that this company could end up as one of the biggest losers in the coming months.
If you own LVS, get out immediately.
Finding bearish stocks is how I once appeared on CNBC's Fast Money back in 2014 and warned the public about Priceline.com, just before the stock plummeted. A friend of mine reported seeing a 733% overnight gain on a single play he came across by using my prediction.
Should I Put My Money in the New Bull Market?
In my discussion, which you can watch right now in the video below, I'll walk you through how the Power Gauge works.
I'll give away my No. 1 AI recommendation.
While AI is the strongest tide in the sea right now, there's a massive dark side to today's story. It has been present in every frenzy since the dawn of the financial markets.
When the AI bubble bursts – as bubbles always do – we'll see a devastating sell-off. You must have an exit strategy. That's the only way to see massive potential gains from this moment forward – without taking on catastrophic risk.
The Power Gauge has identified at least nine of the top 10 stocks of the year... every year... for the last six years.
My strategy will help you take advantage of this critical stage of the AI investment trend... while also protecting you from the AI stocks that could cost you everything in the months to come.
I'll show you exactly how to play my prediction using the Power Gauge.
Last year alone, it pointed to Riot Blockchain before it shot up 10,090% in less than 12 months... Digital Turbine, before it shot up 789% in eight months... Overstock.com, before it shot up 1,050% in four months... and more.
Watch my event below, where I'll explain what to buy now, and what to buy next, for the biggest potential gains of this new bull market.
Get StartedRegards,
Marc Chaikin
Founder, Chaikin Analytics
Creator of the Power Gauge
About Marc Chaikin
Marc Chaikin has spent 50 years on Wall Street, he is one of the most influential contributors to financial strategy and technology. Over the past 50 years, he survived and thrived in 9 bear markets... helped create three new indices for the Nasdaq, where he once rang the opening bell... has built what many experts consider the "golden standard" for determining where a stock is going next (based on his worldwide indicator which appears on every Bloomberg terminal)... and has appeared many times on Fox Business and CNBC's Mad Money.
As CNBC’s Mad Money host, Jim Cramer, once said:
“I learned a long time ago not to be on the other side of a Chaikin trade.
I want to explain why I love Marc’s stuff. It’s simple, it’s understandable, it’s rational, it’s not emotional, and I use it constantly and I almost never want to go against it.”
Click here to start using the Power Gauge for yourself—right now.
