Category Penny Stocks

Revisiting the LA fires … the national housing situation is a mess … are these conditions bullish for homebuilding stocks? … what TradeSmith’s quant tool tells us

On Tuesday, January 7, I stepped outside my apartment in Venice Beach, Calif., and noticed smoke coming from the Santa Monica mountains.

I texted a friend who lives in Santa Monica, closer to the smoke. She snapped this photo from her roof.

We were watching the early hours of the “Palisades Fire.”

Along with the Eaton Fire and additional area blazes, the flames would go on to destroy more than 11,500 homes across 60 square miles. The total real estate losses are expected to top $30 billion.

The housing situation in Los Angeles: from “bad” to “worse”

Prior to the fires, the more popular Los Angeles neighborhoods already suffered a massive shortage of homes/apartments relative to the people who wanted to live there.

And as Econ 101 teaches us, when “too much demand” runs into “too little supply,” the result is sky high prices.

Now, throw in an overnight loss of 11,500 homes.

Though price gouging is prohibited by state and local laws, it’s happening. It’s the byproduct of landlords who are being bombarded with rental requests, and deep-pocketed prospective renters who are willing to pay substantially above-market rent (the people who lived in the Palisades neighborhood were generally affluent, with the average home price coming in just under $4M).

Here’s The Los Angeles Times:

People are desperate, local agents said.

Their homes are in ashes, and they’re looking for stability — somewhere for their family to go that’s not a shelter, a friend’s house or a hotel room.

Some landlords are now sharply raising rent, even beyond what temporary price gouging protections allow.

And some would-be renters are offering a year’s rent upfront in cash and engaging in bidding wars.

This won’t end well…or soon.

The same dynamic is playing out nationally but for different reasons

The root issue remains a supply/demand imbalance. But this time, it wasn’t a fire burning up housing supply, but rather an inflationary fire burning up the purchasing power of homebuyers’ dollars, driving home prices higher.

Below we look at Federal Reserve data showing us the average price of houses sold in the U.S. dating to 1960. I’ve circled the pandemic-related vertical price explosion.

Source: Federal Reserve data

Coupled with a 30-year mortgage rate hovering near 7%, and you get today’s frozen housing market.

Last Friday, we received the latest data on the problem.

From CNBC:

The U.S. housing market continues to weaken, as potential buyers face stubbornly high mortgage rates, high prices and limited supply of listings.

Sales of previously-owned homes fell 4.9% in January from the prior month to 4.08 million units on a seasonally-adjusted, annualized basis, according to the National Association of Realtors. Analysts were expecting a 2.6% decline.

Sales…are still running at a roughly 15-year low.

Now, this would seem to be great news for homebuilding stocks. And, until recently, it has been…

Long-time Digest readers know that we got into an unofficial homebuilding stocks trade in 2022

In our April 20, 2022, Digest, we suggested that aggressive investors could initiate a trade on the iShares Home Construction ETF, ITB. It holds homebuilding heavyweights including DR Horton, Lennar, NVR, Pulte, and Toll Brothers.

Between that date and ITB’s high in October, the trade climbed 119%, quadrupling the S&P.

Source: TradingView

But since then, ITB has fallen about 25%.

Regular Digest readers know that I’m a big believer in using stop-losses to protect gains. So, is it time to sell?

If your knee-jerk answer is “yes,” what about our nation’s housing situation?

Aren’t today’s macro dynamics incredibly bullish for homebuilders? And if so, wouldn’t ITB trading 25% lower be a fantastic buying opportunity?

The complexity of buying homebuilders today

Homebuilder companies face a complicated market environment.

Yes, sky-high prices of existing homes would appear to be fantastic for new home construction demand.

The logic would seem to suggest that builders should just flood the market with new home construction to meet the overwhelming demand. Builders can undercut sky-high market prices and rake in the profits.

It’s not that easy.

Remember, lumber, concrete, and other key materials surged in price during the pandemic and remain elevated, though some have come down from their peaks. That’s bad for margins.

Meanwhile, skilled construction labor shortages mean wages have increased, pressuring margins further.

And don’t forget that acquiring and developing land is more expensive today because of higher interest rates increasing the cost of financing land purchases. Once again, tough on the bottom line.

Altogether, homebuilders can’t undercut prevailing market prices too much if they want to protect their profit margins. So, this market isn’t quite the moneymaker we might assume for builders.

(And we haven’t even talked about how these builders can’t do anything about the near-7% mortgage rates that are having a massive impact on housing unaffordability.)

But still – what if the Fed lowers interest rates later this year? What about aging Boomers having to downsize, being forced to sell their homes which will take pressure off the supply/demand imbalance?

Do those influences not make this ITB selloff a buying opportunity?

We could speculate…or we could let historical market data from TradeSmith guide our decision.

Taking the guesswork out of investing

For newer Digest readers, TradeSmith is our corporate partner.

They’re an investment research company rooted in quantitative analysis. They also happen to be in constant state of R&D (research and development) to make their products better.

They’ve spent over $19 million and over 11,000 man-hours developing their market analysis algorithms with dozens of staff working solely on developing and maintaining their software and data systems.

One of these software/data systems relates to market entry/exit timing.

As we noted in the Digest last week, TradeSmith’s CEO Keith Kaplan is holding a live event this Thursday that provides a walk-through of how it works.

Let’s use it on ITB today.

But before we dive into those details, let’s begin theoretically…

ITB is down about 25% from its high. Broadly speaking, is this a good time to sell…or double-down?

Here’s Keith, not speaking specifically about ITB, but about the decision at large:

[Investors are] “risk-seeking when we’re losing.”

And I bet you’ve had this happen plenty of times. I call it “rationalizing your decision after you make it.” When a stock is falling, you say to yourself:

• I’m going to buy this on the dip.
• This stock will come back, and my break-even price will be lower.
• It’s just a paper loss.

Really, what you’re doing is adding more risk to your position. You are “seeking out more risk” by buying more OR holding on to a falling stock.

Keith explains that momentum is the single most important factor in investing.

When a stock has a confirmed uptrend, it is more likely to rise in the short term. When a stock has a confirmed downtrend, it is more likely to fall in the short term.

Now, this sounds simple…

Buy when a stock is rising and sell when it’s falling! Easy!

But as you know, in the real world, there’s a big problem for investors…

How do you know whether a stock that’s pulling back is in a “confirmed downtrend,” or just briefly regrouping before it makes a new run higher?

TradeSmith has an answer.

Understand a stock’s “VQ”

Volatility is not the same thing as risk, and volatility isn’t uniform across all stocks.

Below, we compare two stocks: perennial blue-chip Coca-Cola (KO) and Matador Resources (MTDR), an oil and gas exploration company.

From October of 2021 through mid-April of 2022, both stocks climbed about 17% But the paths they took to get there were wildly different.

See for yourself. Matador is in red. Coke is in blue.

Coke’s path is far smoother than Matador’s comparatively “violent” series of ups and downs.

Given this, using the same trailing stop-loss percentage for both stocks would ignore the reality that Matador’s normal volatility is far greater than that of Coke’s.

But that doesn’t mean Matador is a “riskier” stock. It just means traders need to factor this greater volatility into their position sizing, trade expectations, and stop-loss levels.

TradeSmith has created a tool that factors in these unique volatility thumbprints, generating a proprietary “Volatility Quotient” (VQ) reading that helps investors know how much volatility is normal and to be expected.

Here’s more from Keith:

[The VQ number] solves so many problems that individual investors face today. Certainly, people like me, and likely you as well.

It’s a measure of historical and recent volatility – or risk – in a stock, fund, or crypto. And that measurement is really focused on the moves a stock, fund, or crypto makes.

Here’s what it tells you (I’ll just refer to stocks, but it covers everything we track):

• When to buy a stock.
• How much of a stock to buy.
• When to sell a stock.
• And how risky that stock is – how much movement you should expect.

Let’s use ITB’s VQ to get a sense for where the ETF is today

Below is how ITB looked as of last Friday on one of TradeSmith’s data pages…

I’ll walk you through some of the details in a moment. But here’s the page first.

Source: TradeSmith

The red “H” is ITB’s high from back in October. This is the price to which we apply ITB’s VQ reading.

In this case, given that high and ITB’s proprietary VQ, the stock’s unique stop-loss level came in at $98.95, which was about 23% lower.

Now, notice the green band at the bottom.

This extended until about mid-December. It was showing us that during this period, ITB was still performing well and reasonably safe to hold.

But as ITB’s price began to slip, green turned to yellow on December 18. This didn’t mean “sell,” but it did signify “caution.” ITB’s upward trend was losing steam.

Fast-forward to last Friday when ITB closed at $98.11…below its stop-loss level of $98.95. Here in the Digest, this means we’re closing our unofficial trade for a gain of 69%.

But what about all the macroeconomics at play that could be bullish for ITB as 2025 rolls on?

That’s possible. ITB may begin soaring tomorrow. No one has a crystal ball.

But what we know, based on the data, is that ITB appears weak today…which suggests further weakness tomorrow.

Back to Keith:

The trend is your friend.

If the confirmed trend is up, stay in your stock. Ride the winner! If the trend is a confirmed downtrend, cut your losses.

The good news for anyone who wants to continue playing the housing market is that Keith’s market timing tool works the other way too.

If/when conditions change and ITB begins a new, sustained uptrend, TradeSmith’s timing tool will notify us (you can set that alert). We can evaluate the trade’s overall attractiveness at that point and perhaps re-buy.

Sure, I could take a guess at how inflation, interest rates, and housing demand will play out from here, and trade ITB based on my analysis – but far smarter analysts than me get such calls wrong all the time.

I believe my portfolio results would be better served if I based my market choices on historical data rather than my own hunches.

If you feel similarly, Keith is doing a run-through of this quant tool with far more details this Thursday at 8:00 PM ET

During the event, Keith will introduce a new tech breakthrough and demo it for the first time ever. It’s called the MQ algorithm. And it’s designed to do one thing: detect and model market melt-ups mathematically.

Keith will reveal what it’s saying about the market we’re in right now… and where it’s headed next.

His team crunched 5.2 billion data points to create this breakthrough. They examined more than 125 years of stock market data for the S&P 500, Nasdaq and Dow. And they ran months’ worth of back-testing to come up with this breakthrough.

You’ll get its prediction for the next 12 months free during this event. Just click here to sign up today.

As for ITB, it’s been a great run, but we’re out…for now.

Have a good evening,

Jeff Remsburg

PCE inflation comes in as expected … volatility is the new normal … Jeff Clark’s bullish indicator … a flashing recession warning … context for this market weakness

The good news is that today’s inflation report – the Personal Consumption Expenditures (PCE) Price Index – met market expectations.

This prevents bears from having a new reason to push stock prices lower.

The bad news is that the report showed inflation remaining well above the Fed’s target of 2%.

Translation – don’t expect rate cuts soon…

Diving into the details, the PCE index climbed 0.3% in January, notching a 2.5% year-over-year rate. Core PCE, which excludes food and energy prices, also rose 0.3% for the month and came in at 2.6% annually.

All these figures were in line with consensus estimates.

The more interesting part of the report had to do with incomes and consumer spending. Here’s CNBC:

Personal income posted a much sharper increase than expected, up 0.9% on the month against expectations for a 0.4% increase.

However, the higher incomes did not translate into spending, which decreased 0.2%, versus the forecast for a 0.1% gain.

The personal savings rate also spiked higher, rising to 4.6%.

This reflects what we’re seeing in the markets today: fear stemming from uncertainty.

From interest rates, to tariffs, to inflation, to public policy – you name it – there are abundant “what will happen?” question marks overhanging stocks today.

And that means one thing…

Volatility. 

Get used to stock market volatility

That’s the recommendation of our hypergrowth expert, Luke Lango, editor of Innovation Investor.

From Luke:

Stocks have swung violently higher and lower many times over the past several months.

In that time, we’ve seen just 5% gains in the S&P 500 and a negative return from the small-cap Russell 2000. 

Is this intense volatility Wall Street’s ‘new normal’?

It may be.

I still think stocks are going higher in 2025. However, I don’t think it’ll be a smooth ride higher – largely because of U.S. President Donald Trump.

To be clear, it’s not Trump himself. Rather, Luke notes that it’s the uncertainty Trump brings to the market.

Wall Street hates uncertainty. Market fog makes it challenging for analysts to run their earnings projections and for money managers to position their clients.

This results in market whipsaws (quick, violent moves up and down) as Wall Street reacts to shifting headlines and new data.

But as Luke noted, this might be our new normal:

We think this will be the pattern for the stock market for the foreseeable future: two steps forward, one step back. Lather, rinse, repeat. 

That means a lot of volatility on Wall Street… 

Now, volatility isn’t necessarily bad.

For traders, it’s the fuel that drives profits. And for long-term investors, while frustrating, it can also present great buying opportunities.

For a detailed roadmap of how Luke plans to play this Trump-based volatility, check out the free presentation he just put together. It covers:

• Luke’s five-point game plan for how Trump’s policies could shape the economic landscape
• How these policy changes might influence your money over the next four years, including when the boom becomes a bust
• The sectors best positioned for exponential growth under the Trump

In the meantime, keep your Dramamine nearby. This volatility looks to be sticky.

But if one of Jeff Clark’s trading indicators is right, we’re getting closer to the good “upward” kind of volatility

For newer Digest readers, Jeff is a market veteran with more than four decades of experience. In his service, Jeff Clark Trader, he profitably trades the markets regardless of direction – up, down, or sideways.

He uses a suite of momentum indicators and moving averages to provide clues about where stocks are going next. And one of them suggests we’re getting closer to a bullish breakout.

Here’s Jeff from his Wednesday update:

The Volatility Index (VIX) is about to generate its first “buy” signal of 2025.

The VIX gave us eight buy signals in 2024. All of them came within a day or two of at least a short-term low in the stock market. And all of them were good for a rally of at least 100 points in the S&P 500.

This “VIX Indicator” triggers when the index closes above its upper Bollinger Band and then closes back inside the bands.

To make sure we’re all on the same page, Bollinger Bands help gauge a stock’s volatility to determine if it’s over- or undervalued. This can inform entry and exit timing in a trade.

Back to Jeff for how to read Bollinger bands in the context of the VIX:

Whenever a chart moves outside of its Bollinger Bands, it signals an “extreme” condition – which is vulnerable to a reversal in the other direction.

In the case of the VIX, these extreme conditions trigger buy and sell signals for the broad stock market.

The last time this indicator triggered was mid-December. The S&P 500 was trading near 5880. One week after the trigger, the index was above 6000.

On Monday, the VIX closed above its upper Bollinger Band for the first time this year. Below is a chart showing how that looked, from Jeff’s update.

You’ll also see the trigger from mid-December.

Jeff writes that when the VIX closes back inside the bands, we’ll have another VIX buy signal.

Below is how things look as I write Friday morning. I’m using a 6-month timeframe so we can see the details clearer. If you can’t see it, the VIX reading is slipping just underneath the upper Bollinger Band.

Per Jeff, we’ll need the VIX to close today back inside the band for an official trigger. But so far, so good. And at a minimum, we can say that the VIX Indicator appears very close to turning to bullish.

We’ll report back.

Continuing with “triggers,” on the macro front, the Fed’s favorite recession indicator triggered on Wednesday

Now, I’ll immediately clarify that we’re not calling for a recession.

That said, it’s important for investors to be aware of what’s happening.

Two days ago, the 10-year Treasury yield fell below the yield on the 3-month note in what’s called an “inverted yield curve.”

Regular Digest readers are familiar with this phenomenon as we’ve covered it extensively over the years. But while we usually focus on the 10-year/2-year relationship, the Fed prefers this 10-year/3-month relationship because the 3-month is more sensitive to movements in the fed funds rate.

In fact, the New York Fed uses it to assess the probability of a recession over the ensuing 12-months. As of last month, that recession probability clocked in at 23%…

This is likely to move.

Here’s CNBC:

[The 23% recession probability] is almost certain to change as the relationship has shifted dramatically in February.

The reason the move is considered a recession indicator is the expectation that the Fed will cut short-term rates in response to an economic retreat in the future.

As we covered earlier this week in the Digest, legendary investor Louis Navellier believes the Fed will enact four quarter-point cuts this year.

If that happens, our inversion might steepen or normalize based on whether Wall Street interprets those cuts as bullish or bearish (which will affect the long end of the yield curve).

After all, cuts can either restore confidence that the Fed has things under control…or inflame anxieties that the Fed is behind the curve and reacting to bad economic data.

For now, what we can say definitively is that the inversion does not mean an impending recession. Remember, this part of the yield curve was inverted for virtually all 2023 and 2024 (turning positive in mid-December 2024). So, while it’s something we should consider, let’s not assume the sky is falling.

We’ll continue monitoring and will report back.

Finally, let’s end today with some good news

If the recent market weakness has you on edge, remember…

We’re in a bad part of the year for market returns.

Below, we look at the S&P’s Seasonality chart, which visually represents the average returns of the S&P 500 over the average year.

The short takeaway?

On average, it’s always bad right now. So, don’t rush to bail on stocks.

The good news is that if average seasonality repeats, we’re in for another week or so of softness, then we’ll kick off a solid bull run into May.

Sounds about right with Luke’s volatility prediction and Jeff’s VIX Indicator.

Speaking of seasonality, back in January we profiled a new Seasonality Tool from our corporate partner, TradeSmith. It searches for historical, repeatable price patterns, specific to any given stock.

Well, yesterday, Keith & Co. released their latest suite of quant tools, while also flagging a rare market pattern that’s suggesting we’re on the verge of a bullish melt-up – despite the market’s wobbles in recent weeks.

It was a great evening with thousands of investors joining Keith. If you missed it, you can catch a free replay here. It covers:

• What’s behind the algorithm that’s flashing a bull signal today
• 10 stocks positioned to ride a melt-up higher
• 10 “big name” stocks to sell immediately
• The perfect way to unleash TradeSmith’s cutting-edge technology on these markets for maximum profit potential

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg

This company must be a fraud.

This is a bold claim to make on national television in front of millions of people.

But this is how Andrew Left, CEO of Citron Research (a notorious short seller), described a technology company on CNBC in September 2017.

Fraud is a serious offense, and usually this sort of accusation does not get thrown around lightly. So, when folks hear that kind of serious claim on TV, they often believe it.

This is what Ubiquiti Inc. (UI) was up against when Andrew Left pointed his guns in its direction.

The high-growth networking technology company designs and sells wireless communications and enterprise networking solutions for service providers and businesses worldwide.

Left called Ubiquiti a fraud because he believed there were several “red flags,” including exaggerating the size of its user community, accounting irregularities and high executive leadership turnover. In the immediate aftermath of the news, Ubiquiti fell 8%.

And then, as the rumors spread, the stock tumbled.

This is exactly what Left wanted. You see, short-selling is a trading strategy where you borrow shares of a stock and sell them at the current market price. The idea is to buy them back later at a lower price to return to the lender, profiting from the decline in the stock’s value.

Simply put, short sellers want the stock to go down.

Firms like Citron, Hindenburg, Muddy Waters and others take short positions in companies and issue research reports that are critical of them. Now, sometimes there are merits to the claims, but a lot of times they simply exaggerate or throw around wild accusations, hoping to drive down the price.   

Here’s how Ubiquiti’s CEO, Robert Para, initially responded:

Now, the question is: Did those claims have any merit?

Despite the short-seller attack, Ubiquiti continued to post strong earnings. In the first quarter following the Citron report, the company reported revenues of $245.9 million, a 20.1% year-over-year increase. It achieved a gross profit of $111.7 million, representing 45.4% of revenues net income of $74.9 million. Earnings per share came in at $0.92.

And in the quarters following the Citron report, the company beat analyst expectations multiple times, demonstrating resilience in both revenue growth and profitability. Ubiquiti’s robust fundamentals, including expanding margins and strong cash flow, ultimately proved that the accusations lacked substance.

I’ll put it this way. I felt comfortable enough to add the stock to my Growth Investor service back in May 2021. We ended up walking away with a 90% gain in December 2021.

More importantly, Ubiquiti is still around today.

If we look back, the Citron report in 2017 was simply a blip in the grand scheme of things. 

In the chart below, the red arrow indicates the sharp drop it took when the report was released. But the stock has since recovered the losses and posted some impressive gains…

The point is the claims ultimately subsided, and the company’s fundamentals ultimately spoke for themselves.

In the end, Para had the last laugh.

But here’s the thing…

The sharp drop caused by Citron damaged the portfolios of a lot of hardworking people. I’m willing to bet that many people were scared away from this stock completely, causing them to miss out on the long-term 500%-plus gain that followed.

I have a problem with that.

These are people who were planning to retire someday. Maybe take a nice vacation with their spouse. Or pay for their daughter’s wedding.

And Left? He is currently facing both civil charges from the Securities and Exchange Commission (SEC) as well as criminal charges from the Department of Justice (DOJ).

In short, I think short sellers are scum, folks.

And I bring this up because the case with Ubiquiti shares some striking similarities to what happened to Super Micro Computer, Inc. (SMCI) last August. If you haven’t followed along, let me break it down for you in today’s Market 360. Then, I’ll review the latest developments and why I continue to believe it’s worth holding today. Plus, I’ll share where you can find strong stocks with superior fundamentals that are great buys right now.

Editor’s note: “An Expert Method to Overcome a Turbulent Stock Market” was previously published in January 2025 with the title, “How to Find Success Despite Wild Stock Market Volatility.” It has since been updated to include the most relevant information available.

When it comes to the stock market, it can be a bit like a hurricane at sea: powerful, unpredictable, and capable of turning calm waters into chaos in an instant.

We’ve been enduring our fair share of market chaos lately, with the S&P 500 seemingly up one week and down the next. Investors are practically begging for monotony. But wilder price action like this may be our new normal…

You see; historically speaking, the stock market averages about one bear market every five or six years. But in the past six years, we’ve had not one… not two… but three different bear markets. 

There was the flash crash of late 2018, which saw stocks briefly fall into a bear market right before the holidays. There was also the COVID crash of 2020, wherein stocks plunged in the fastest market crash in history. And then there was the inflation crash of 2022, when tech stocks were obliterated by sky-high interest rates. 

Three unforeseen bear markets in the past six years – that is wild. 

But, of course, on the other hand, we’ve also seen some huge stock market successes, too.

Navigating Both Flash Crashes & Fast Recoveries

On average, the stock market rises about 10% per year. But in 2024, stocks climbed 23%. They rose around 27% in 2021. And in 2019, stocks rallied about 29%.

In other words, over the past six years, the S&P 500 has achieved three different years with nearly 30% returns. As a matter of fact, of the stock market’s 10 best years since 1950, three have occurred since 2018. 

Three different bear markets and three of the best years ever for stocks – all within the past six years.

So, if the stock market has felt wild to you lately, that’s because it has been. 

But this wildness could be the new norm for Wall Street going forward. 

We can thank technology for that – at least, that’s my opinion. 

Why? Because algorithms run the market now. 

These days, algorithmic trading accounts for approximately 60- to 75% of total trading volume in the U.S. stock market. That means most trades are automatic, executed by bots adhering to pre-set parameters. 

And, unlike humans, robots don’t really ask why. They just do what they are programmed to. 

So, when something bad happens, all the algorithmic-driven systems rush toward an exit. And when something good happens, they race to get involved. That’s why, in my view, algorithmic trading creates crowding. 

As a result, we get wild swings in the market – both up and down. The algorithms drive momentum one way or the other, and the market follows. 

We get flash crashes and fast recoveries; big bear markets and massive bull runs; major meltdowns and momentous melt-ups. 

We get stock market volatility.

During these busy times, it pays to stay on top of the latest profit opportunities. And today’s blog post should be a great place to start. After taking a close look at the latest data on institutional buying pressure and each company’s fundamental health, I decided to revise my Stock Grader recommendations for 137 big blue chips. Chances are that you have at least one of these stocks in your portfolio, so you may want to give this list a skim and act accordingly.

Upgraded: Buy to Strong Buy

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
BABA	Alibaba Group Holding Limited Sponsored ADR	A	B	A
CART	Maplebear Inc.	A	B	A
CHWY	Chewy, Inc. Class A	A	C	A
CMS	CMS Energy Corporation	A	C	A
EPD	Enterprise Products Partners L.P.	A	C	A
GRAB	Grab Holdings Limited Class A	A	C	A
HLN	Haleon PLC Sponsored ADR	A	C	A
LNG	Cheniere Energy, Inc.	A	C	A
LYG	Lloyds Banking Group plc Sponsored ADR	A	C	A
MAA	Mid-America Apartment Communities, Inc.	A	C	A
MELI	MercadoLibre, Inc.	A	B	A
REG	Regency Centers Corporation	A	C	A
WPM	Wheaton Precious Metals Corp	A	B	A

Downgraded: Strong Buy to Buy

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
AFL	Aflac Incorporated	A	B	B
AUR	Aurora Innovation, Inc. Class A	A	C	B
CASY	Casey’s General Stores, Inc.	A	C	B
COST	Costco Wholesale Corporation	A	C	B
DAL	Delta Air Lines, Inc.	A	C	B
DASH	DoorDash, Inc. Class A	A	C	B
EQH	Equitable Holdings, Inc.	A	B	B
FTI	TechnipFMC plc	B	B	B
LYV	Live Nation Entertainment, Inc.	A	B	B
NFLX	Netflix, Inc.	A	B	B
SAP	SAP SE Sponsored ADR	A	C	B
TCOM	Trip.com Group Ltd. Sponsored ADR	B	B	B
TRP	TC Energy Corporation	A	C	B
WFC	Wells Fargo & Company	A	B	B

Upgraded: Hold to Buy

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
AWK	American Water Works Company, Inc.	B	C	B
BEPC	Brookfield Renewable Holdings Corporation Class A	B	C	B
BKNG	Booking Holdings Inc.	B	C	B
CLX	Clorox Company	B	C	B
CNA	CNA Financial Corporation	B	C	B
DOC	Healthpeak Properties, Inc.	B	C	B
EOG	EOG Resources, Inc.	B	C	B
ERIE	Erie Indemnity Company Class A	B	C	B
FMS	Fresenius Medical Care AG Sponsored ADR	B	B	B
FNF	Fidelity National Financial, Inc. – FNF Group	B	C	B
GLPI	Gaming and Leisure Properties, Inc.	B	C	B
GOLD	Barrick Gold Corporation	B	B	B
JNJ	Johnson & Johnson	B	C	B
KB	KB Financial Group Inc. Sponsored ADR	B	B	B
KDP	Keurig Dr Pepper Inc.	B	C	B
KIM	Kimco Realty Corporation	B	B	B
MET	MetLife, Inc.	B	C	B
NVS	Novartis AG Sponsored ADR	B	C	B
PANW	Palo Alto Networks, Inc.	B	C	B
PEN	Penumbra, Inc.	B	C	B
RIVN	Rivian Automotive, Inc. Class A	B	C	B
SRE	Sempra	B	D	B
SW	Smurfit Westrock PLC	B	C	B
TSLA	Tesla, Inc.	B	D	B
UDR	UDR, Inc.	B	C	B
UL	Unilever PLC Sponsored ADR	B	C	B
WPC	W. P. Carey Inc.	B	D	B

Downgraded: Buy to Hold

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
AIZ	Assurant, Inc.	C	C	C
AMZN	Amazon.com, Inc.	C	B	C
BAP	Credicorp Ltd.	C	C	C
CF	CF Industries Holdings, Inc.	C	C	C
CPAY	Corpay, Inc.	B	C	C
CTSH	Cognizant Technology Solutions Corporation Class A	C	C	C
DVA	DaVita Inc.	C	B	C
EMN	Eastman Chemical Company	C	C	C
EXE	Expand Energy Corporation	B	C	C
FLUT	Flutter Entertainment Plc	B	C	C
HDB	HDFC Bank Limited Sponsored ADR	B	C	C
IBN	ICICI Bank Limited Sponsored ADR	C	C	C
IHG	InterContinental Hotels Group PLC Sponsored ADR	C	C	C
KSPI	Kaspi.kz Joint Stock Company Sponsored ADR RegS	C	C	C
LAMR	Lamar Advertising Company Class A	C	D	C
NU	Nu Holdings Ltd. Class A	D	B	C
NWS	News Corporation Class B	C	B	C
PCTY	Paylocity Holding Corp.	C	C	C
RELX	RELX PLC Sponsored ADR	C	C	C
SCCO	Southern Copper Corporation	C	B	C
TS	Tenaris S.A. Sponsored ADR	C	C	C
UNH	UnitedHealth Group Incorporated	C	C	C
YUMC	Yum China Holdings, Inc.	C	C	C

Upgraded: Sell to Hold

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
A	Agilent Technologies, Inc.	C	C	C
ADI	Analog Devices, Inc.	B	C	C
ADM	Archer-Daniels-Midland Company	C	C	C
AME	AMETEK, Inc.	C	C	C
ASX	ASE Technology Holding Co., Ltd. Sponsored ADR	C	C	C
CARR	Carrier Global Corp.	C	C	C
EXPD	Expeditors International of Washington, Inc.	D	B	C
FDS	FactSet Research Systems Inc.	C	C	C
GMAB	Genmab A/S Sponsored ADR	D	A	C
HSY	Hershey Company	C	C	C
JKHY	Jack Henry & Associates, Inc.	C	C	C
MDLZ	Mondelez International, Inc. Class A	D	C	C
MNST	Monster Beverage Corporation	C	C	C
MT	ArcelorMittal SA ADR	C	C	C
NBIX	Neurocrine Biosciences, Inc.	C	C	C
PBR.A	Petroleo Brasileiro SA Sponsored ADR Pfd	C	C	C
PCG	PG&E Corporation	C	C	C
PFG	Principal Financial Group, Inc.	C	C	C
ROK	Rockwell Automation, Inc.	C	C	C
SWK	Stanley Black & Decker, Inc.	C	C	C
SYY	Sysco Corporation	D	C	C
TAK	Takeda Pharmaceutical Co. Ltd. Sponsored ADR	C	C	C
TECK	Teck Resources Limited Class B	D	C	C
TRMB	Trimble Inc.	D	C	C
U	Unity Software, Inc.	C	C	C
VRTX	Vertex Pharmaceuticals Incorporated	C	C	C
WPP	WPP Plc Sponsored ADR	C	C	C
WTRG	Essential Utilities, Inc.	C	C	C

Downgraded: Hold to Sell

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
AFG	American Financial Group, Inc.	D	C	D
ALLE	Allegion Public Limited Company	D	C	D
BBD	Banco Bradesco SA Sponsored ADR Pfd	D	B	D
CNQ	Canadian Natural Resources Limited	D	C	D
COO	Cooper Companies, Inc.	D	B	D
EPAM	EPAM Systems, Inc.	D	C	D
EW	Edwards Lifesciences Corporation	D	C	D
GIB	CGI Inc. Class A	D	C	D
HD	Home Depot, Inc.	D	C	D
LIN	Linde plc	D	C	D
LOW	Lowe’s Companies, Inc.	D	C	D
NVR	NVR, Inc.	D	C	D
PFGC	Performance Food Group Co	D	D	D
RDY	Dr. Reddy’s Laboratories Ltd. Sponsored ADR	D	C	D
SHW	Sherwin-Williams Company	D	C	D
SLF	Sun Life Financial Inc.	D	D	D
STE	STERIS plc	D	C	D
STLD	Steel Dynamics, Inc.	D	D	D
TGT	Target Corporation	D	C	D
TMO	Thermo Fisher Scientific Inc.	D	C	D
TOL	Toll Brothers, Inc.	D	D	D
VIV	Telefonica Brasil S.A. Sponsored ADR	D	C	D
XYZ	Block, Inc. Class A	D	C	D

Upgraded: Strong Sell to Sell

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
DG	Dollar General Corporation	F	D	D
FMX	Fomento Economico Mexicano SAB de CV Sponsored ADR Class B	F	C	D
ICLR	ICON Plc	F	C	D
STZ	Constellation Brands, Inc. Class A	F	C	D
SWKS	Skyworks Solutions, Inc.	F	D	D
ZBH	Zimmer Biomet Holdings, Inc.	F	D	D

Downgraded: Sell to Strong Sell

Symbol	Company Name	Quantitative Grade	Fundamental Grade	Total Grade
CSX	CSX Corporation	F	C	F
NVT	nVent Electric plc	F	D	F
WDS	Woodside Energy Group Ltd Sponsored ADR	F	C	F

To stay on top of my latest stock ratings, plug your holdings into Stock Grader, my proprietary stock screening tool. But, you must be a subscriber to one of my premium services. Or, if you are a member of one of my premium services, you can go here to get started.

Sincerely,

Louis Navellier

Editor, Market 360

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Article printed from InvestorPlace Media, https://investorplace.com/market360/2025/02/20250225-blue-chip-upgrades-downgrades/.

©2025 InvestorPlace Media, LLC

Editor’s note: “An Outperforming Investment Tool to Help You Game the Market” was previously published in January 2025 with the title, “Introducing: An Outperforming Investment Tool to Help You Game the Market.” It has since been updated to include the most relevant information available.

For the past several months, since it became clear that Donald Trump won the U.S. presidential election, the stock market has been highly volatile. 

The S&P 500 rallied 4% in the week after the election – only to crash 3% the following week. Then stocks rose 4% into December just to sink 5% by the month’s end… popped 6% higher in mid-January before dropping 3% after the inauguration. And here in February, stocks gained 4% in the first few weeks of the month, then flopped about 4% over the past week. 

Wall Street has been stuck on a roller-coaster ride since early November. 

With all this volatility, investors are dying to know what the next four years will look like for stocks under “Trump 2.0.” Is this unpredictability the new normal?

Possibly… 

I have six words of advice for this era: embrace the boom, beware the bust. 

Embrace the Boom; Beware the Bust

Thanks in large part to the AI investment megatrend and long-awaited rate cuts from the Federal Reserve, the U.S. stock market has been booming for the past two years. 

That is, the craze around artificial intelligence has sparked an exceptional surge in investment. Companies have been racing to create the infrastructure necessary to support next-gen AI. Indeed, Meta (META), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL) – pretty much all the world’s major tech companies continue to spend billions upon billions of dollars to build new AI data centers, create new applications, hire more engineers, etc. And all that investment has created a major economic boom.

Meanwhile, throughout 2022 – after embarking on the most aggressive rate-hiking cycle in nearly 50 years – the Federal Reserve finally slowed its pace of hikes. And here in 2024, the central bank actually started to cut rates. This has provided much-needed relief to consumers looking to finance big purchases and businesses looking to make new investments. This relief has also helped support an economic boom.

The result? Stocks have been soaring for two years. 

Since hitting its lows in October 2022 – just over two years ago – the S&P has surged more than 70% higher. In fact, it just posted its second consecutive year of 20%-plus gains. 

The index rose 24% in 2023. It popped another 23% in ’24. That is just the fourth time since the Great Depression – nearly 100 years ago – that the S&P 500 rallied more than 20% in back-to-back years. 

We are unequivocally in a stock market boom. 

And in our view, this boom is about to get even ‘boomier.’ 

Hello, Reader.

Tom Yeung here with today’s Smart Money.

Earlier this month, I found myself staring at a crisp white envelope on my desk.

The paper seemed to glow under the fluorescent lamp… a glossy corporate logo in the corner winking ominously at me.

It was… cue the foreboding music… my utility bill.

Now, I knew my Massachusetts-state utility bill would be high, because New England has the worst utility prices in the nation. However, it was even higher than I expected, because a surge in nationwide utility prices means that just about all Americans’ utility bills are rising 60% faster than average inflation.

Here’s the thing: This little envelope from my utility company and the sky-high bill likely sitting in your own inbox have more to do with your portfolio’s potential profits than you think.

For the first time since moving into our home, we’re considering adding solar panels to this 200-year-old house.

And as millions of other homeowners (and their state representatives) come to the same conclusion, we’re going to see a new boom in solar spending.

As Eric detailed in a recent Smart Money, solar stocks may soon become hot, hot, hot once again… especially during this second Trump administration.

So, in today’s Smart Money, I’d like to dive deeper into the solar industry’s latest, upcoming revolution, why we could see an uptick in solar spending, and what this all means for your portfolio.

Let’s dive in…

The Solar Revolution’s Third Act

The first American solar “revolution” started in California after then-Governor Arnold Schwarzenegger signed the Million Solar Roofs initiative – a cash incentive and rebate program that began in 2006. By 2020, roughly 15% of the state’s utility grid was from solar.

The second revolution began during President Donald Trump’s first term in office.

The surprising truth about the “drill, baby, drill” president is that solar output doubled under his watch, before doubling again during the Biden administration. Trump’s hands-off approach to power generation meant states like Texas and Florida expanded their incentive programs for solar installations with minimal federal intervention, and these efforts continued through the following administration. (These two states combined now produce more solar than California.)

The result is that power prices in both states have fallen in real terms since Trump first took office in January 2017.

The third revolution is now set to start… for three specific reasons:

1. Red-Hot Electricity Demand: The acceleration of AI data center construction has turned electricity generation into a “sunrise” industry, especially in states still lacking solar power.

   In the Mid-Atlantic, for example, auction prices for wholesale electricity have risen almost tenfold since last year on insatiable demand.

2. Cheapening Solar Prices: The levelized cost of solar energy is at least 29% lower than the cheapest fossil fuel option. The price of lithium-ion batteries – an essential component of solar installations – is also in retreat.

   Prices have dropped 25% in the past year alone, thanks to sharp year-over-year decreases in lithium prices (-22%) and cobalt prices (-25%). This makes solar broadly more affordable for utilities, which must provide energy in both daytime and night.

3. State Regulations: Then there are homeowners like me… staring at our rising utility bills.

   One effect of this will be more residential solar. The U.S. Energy Information Administration believes residential rooftop solar is growing at 25% annually, and that rate could accelerate as electricity prices continue to rise.

   But the biggest prize will come from regulatory pressures for utilities to construct more capacity. Utility-scale projects currently make up around two-thirds of installed U.S. capacity and will likely remain the largest growth driver thanks to economies of scale.

In all, we’re already seeing some effects of these three catalysts…

A Compelling Opportunity

Last week, Massachusetts state regulators announced plans to force local utilities to reduce total gas bills “by at least 5%” after public outcry over heating costs. Utilities seeking to raise prices in states like New York will almost certainly find it more difficult going forward.

The math is also changing for public utilities.

Eversource Energy (ES), a New England-based utility company with few historical ties to solar power, is now considering large-scale solar as far north as New Hampshire – a state better known for icy downhill skiing than abundant sunshine.

In addition, solar farms can take as little as eight months to construct – far faster than gas-powered (one to three years) and nuclear (five-plus years) power plants.

Energy companies are seeing unprecedented short-term demand, and solar offers a quick way to meet that need while appeasing regulators and customers.

That is why Eric believes that solar stocks are presenting a compelling opportunity. It’s also why he recently added a promising solar investment to his Fry’s Investment Report portfolio that’s primed for significant growth.

It’s an investment that Eric previously took an almost 80% gain from during the first Trump administration. This go-around, he believes double that first gain is well within reach.

To learn more about this company, and all the stocks in Eric’s portfolio, click here to learn about becoming a Fry’s Investment Report member today.

Regards,

Thomas Yeung

Markets Analyst, InvestorPlace

P.S. As we’ve been talking about all week here, at 8 p.m. ET tonight, TradeSmith CEO Keith Kaplan goes live with his full market briefing: The Last Melt-Up. And it couldn’t be more urgent. The S&P 500 is pulling back. President Trump’s agenda is facing headwinds in Washington. Inflation looms. And the Fed seems stuck in neutral.

Is the great meltdown finally here? Is it time to cut your losses and sell? Join Keith tonight at 8 p.m. ET here and you’ll get the full answers. Or you can sign up here.

The Last Melt-up starts tonight at 8 PM … Nvidia’s earnings are strong but disappoint Wall Street … how Louis Navellier is investing today … a rare earth metals deal between Ukraine and the U.S. … another good headline for Bitcoin

We begin today with a final reminder that tonight at 8 PM Eastern, Keith Kaplan, CEO of our corporate affiliate TradeSmith, is going live.

His presentation focuses on two things:

• The coming stock melt-up that Keith’s algorithms have just flagged (even considering the sell-off in recent days)
• A suite of tools that can help investors ride that surge higher and then get out near the top, escaping before the worst of the ensuing crash wipes out unprepared investors

Behind Keith’s melt-up prediction is a market signal that’s rooted in historical data – and data is where TradeSmith excels.

You see, beyond being our corporate partner, TradeSmith is an investment research shop that focuses on quantitative analysis. They’ve spent over $19 million and over 11,000 man-hours developing their analytical algorithms. And their latest quant breakthrough – the “MQ Algorithm” – has been signaling a coming melt-up.

But even in a melt-up, some stocks suffer sharp drawdowns – which can present fantastic buying opportunities. Given this, Keith and his team of engineers developed a complementary strategy that isolates such pullbacks in top-tier stocks then buys them to ride the rebound.

Overall, in the back tests, the strategy boasted a near 80%-win rate 21 days later, with an average return of just under 16%.

Tonight at 8 PM, Keith will dive more into more details on this. He’ll also cover:

• What’s behind the recent market melt-up signal
• How he’s preparing investors users to take advantage
• 10 stocks positioned to ride the melt-up higher…and 10 stocks to avoid

If you haven’t reserved your seat yet, just click here for instant registration, and we’ll see you tonight.

Nvidia’s “good, but not good enough” earnings

In yesterday’s Digest, we highlighted how the S&P 500 had just bounced off the critical support level of its 100-day MA. Whether that bounce continued or not could drive market direction for the next several weeks.

The most immediate influence on that budding bounce was Nvidia’s earnings report that arrived yesterday after the closing bell.

The numbers were good, but not good enough to kick Wall Street back into full-blown “party” mode.

The chip giant’s Q4 results easily beat Wall Street estimates, and management upped its forward guidance. But Nvidia’s largest source of revenue, data center revenue, slowed substantially. This raised some eyebrows, as did some margin compression.

Here’s MarketWatch:

Nvidia’s stock decline is building [in Thursday’s session], with investors seemingly focused on quibbles such as continued margin pressure and a smaller-than-usual beat on the guidance.

As I write at mid-day, Nvidia shares are down almost 3% despite the beat.

Meanwhile, the major indices have been all over the place. Wall Street is digesting Nvidia’s earnings, the news that Trump’s Mexico/Canda tariffs will go into effect on March 4, and weekly jobless claims that came in above expectations.

Unfortunately, that leaves us where we were yesterday…

With the S&P sitting directly atop its 100-day MA.

We’re still cautiously optimistic about a bounce.

The next big catalyst is tomorrow’s Personal Consumption Expenditures Price Index report, and what is reveals about inflation.

We’ll report back.

The more interesting part of Nvidia’s earnings report

Coming into Nvidia’s earnings report, investors were concerned about the impact of the Chinese low-cost AI platform DeepSeek.

Its advanced technology suggested that the global AI buildout could occur at a lower cost with less power consumption.

Yesterday, Nvidia CEO Jensen Huang threw cold water on that idea. From CNBC:

[Huang] said next-generation AI will need 100 times more compute than older models as a result of new reasoning approaches that think “about how best to answer” questions step by step.

“The amount of computation necessary to do that reasoning process is 100 times more than what we used to do,” Huang told CNBC…

He cited models including DeepSeek’s R1, OpenAI’s GPT-4 and xAI’s Grok 3 as models that use a reasoning process.

In Tuesday’s Digest, I wrote, “I hope you didn’t sell your AI energy stocks back in January when the news of DeepSeek broke.”

That goes double today after Huang’s comment.

Bottom line: Despite Wall Street’s pouty reaction to Nvidia’s earnings, the AI trend is alive and well.

How legendary investor Louis Navellier recommends you invest in AI today

If you’re new to the Digest, Louis is a multidecade veteran investor who’s been out in front of just about every twist and turn of the AI boom. His quantitative algorithms have enabled him to get in early on each mini-phase of the AI rush.

Most notably, his quantitative stock picking system got his Growth Investor subscribers into Nvidia in 2019. They’re currently sitting on 2,924% gains.

Today, Louis is urging investors to add “AI Appliers” – companies finding ways to use AI to grow revenue and improve margins – to their portfolios. His most recent example of an AI Applier is one we flagged earlier this month…

Walmart.

(Full disclosure: I own Walmart.)

Louis reviewed Walmart’s earnings report in his latest issue of Market 360. After addressing how the report reflected consumer concerns about tariffs, Louis dove into the details that many investors overlooked, and they suggest one thing…

Walmart is becoming an AI Applier Juggernaut.

Here’s a quick summation of Louis’ points:

• Walmart has created a new AI agent for its merchants to help “get to the root cause of issues related to things like out of stocks or overstocks with more accuracy and speed.”
• The company is using tools for coding assistance that will “help streamline deployments and deliver code faster with fewer bugs.”
• Walmart has already been using AI to help reduce costs and boost margins.
• The Walmart+ subscription service is helping management understand its shoppers. This AI tool tracks spending habits and creates better recommendations for future buys.
• Walmart is using AI in its supply-chain automation. The company was an early user of warehouse robots.

From Louis:

I bring all this up because you might not think of Walmart when you think about AI.

But mark my words… In the not-too-distant future, every company will be involved with AI to one degree or another.

And those that don’t will go the way of the Dodo bird.

Walmart gets this, and so do a handful of AI Appliers, the companies that apply AI to better optimize their businesses.

The fact is, the early adopters of AI are already becoming more efficient and profitable. And we’re only at the beginning stages of this process.

If this message sounds familiar, it’s because you’ve heard similar versions from Eric Fry and Luke Lango. All our experts are banging the drum on this next evolution of AI.

We’re seeing an investment line in the sand between the companies that are applying AI to increase revenue, make smarter capital allocation decisions, and reduce costs… and those that are falling behind as technology races past them.

It’s worth doing a deep dive into the companies in your portfolio to make sure they’re implementing AI effectively.

For more on the AI Appliers Louis likes today – specifically, in the wake of the emergence of DeepSeek – you can check out his free research video right here.

Why the potential agreement between Ukraine and the U.S. on access to critical rare minerals is about AI

According to President Trump, Ukrainian President Volodymyr Zelensky will travel to Washington tomorrow to sign an agreement on sharing Ukraine’s rare earth minerals with the U.S. in exchange for greater U.S. security guarantees against Russia.

This would boost U.S.’s efforts to solidify its tech/AI supply chain away from China.

You see, “rare earth” minerals and metals are needed to make high-tech products – notably AI. But they’re also key for the green energy transition, a bevy of consumer electronics, infrastructure, and weaponry.

Ukraine has about 5% of the world’s rare earth deposits, according to a 2022 report by Ukraine’s association of geologists.

China has the largest volume of deposits and is behind most of the global processing.

Here’s the Center for Strategic & International Studies:

At present China produces 60 percent of the world’s rare earths but processes nearly 90 percent, which means that it is importing rare earths from other countries and processing them.

This has given China a near monopoly…

China announced a ban of rare earth extraction and separation technologies on December 21, 2023.

This has significant implications for U.S. national, economic, and rare earth security.

Rare earth elements—a group of 17 metals—are used in defense technologies, including missiles, lasers, vehicle-mounted systems such as tanks, and military communications…

Bottom line: This potential deal would be a big step toward the U.S. insulating itself from China in the AI race.

Finally, here’s something for bruised crypto investors to hold onto as prices slump

On Wednesday, Bitcoin entered an official bear market, as defined by a 20% pullback from the most recent high. Many altcoins are down far more.

In times like these, Bitcoin investors might find solace by focusing more on adoption and less on price.

After all, as a loose parallel, in the same way that a stock’s price eventually mirrors the quality of the underlying company’s earnings, Bitcoin’s price has, historically, mirrored the degree of its global adoption. And on that note, yesterday brought encouraging news.

Block (formerly “Square”) is officially rolling out its “Bitcoin inheritance” product.

Here’s CNBC:

What happens to your bitcoin when you die?

While traditional financial institutions allow for the seamless transfer of stocks, mutual funds and retirement plans, bitcoin’s self-custodial nature makes inheritance and estate planning inherently thorny. 

Coinbase requires probate court documents and specific will designations before releasing funds, while physical wallets offer little to no support, potentially leaving all that digital value stuck on a private key.

Jack Dorsey’s Block says it’s created a fix, and the company is now bringing it to market…

Block’s Bitkey self-custody bitcoin wallet [has] an inheritance feature that lets users set a beneficiary for their bitcoin holdings, creating a simple system for transferring the digital currency in the case of death.

This is just another piece of evidence demonstrating Bitcoin’s mainstream adoption. And that suggests higher prices out on the horizon.

To be clear, perhaps Bitcoin’s new bear market will turn into a real bruiser, and we have far lower to go. But even if that’s the case, history shows that this asset is fantastic at rising from the dead and proving the naysayers wrong.

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg

I remember it like it was yesterday.

My son was an engineering student at Stanford when one of their research teams debuted an autonomous race car named Shelley.

As a self-professed car guy, my interest was immediately piqued.

It was a modified Audi TTS – a beautiful machine with perfect handling. The students even upgraded it with ceramic brakes since they fade slower and are easier to program.

But what really caught my attention wasn’t the car.

It was what powered it.

This self-driving project was made possible by semiconductor chips from NVIDIA Corporation (NVDA).

Maybe you’ve heard of ‘em.

I say that tongue-in-cheek, of course, because practically the whole world knows NVIDIA by now.

My introduction to NVIDIA could have happened to anyone. It was one of life’s happy coincidences. But after 40-plus years in this business, I’ve learned that keeping your eyes and ears open is key if you want to be a great investor. You never know when an opportunity is right in front of you.

By that same token, NVIDIA didn’t become the household name it is today because of self-driving cars.

Instead, it took advantage of another happy coincidence – one that changed the future of computing.

Back in 2012, a PhD student named Alex Krizhevsky used NVIDIA’s graphics processing units (GPUs) to train a deep neural network called AlexNet.

This model didn’t require a single line of traditional programming. It taught itself to recognize images. And when it crushed the competition in the ImageNet challenge, it proved that GPUs were far superior to CPUs (central processing units) for AI workloads.

That’s when everything changed.

Practically overnight, NVIDIA’s chips became must-haves for AI.

The AI Revolution was on.

Fast forward to today, and NVIDIA remains at the heart of the AI Revolution. But after such a historic run, investors had one big question ahead of its latest earnings report, which was released yesterday: Can the company keep up the momentum?

Because this time, the stakes were a little different…

• The rise of DeepSeek, a Chinese AI firm, has raised concerns about competition and the need for high-powered chips. (I discussed what happened – and why DeepSeek isn’t a threat – in this article.)
• Investors are growing concerned about Big Tech’s AI spending habits.
• Production delays in NVIDIA’s new Blackwell chip had some investors on edge.
• And as Big Tech companies look to make their own AI chips for internal use, Wall Street was watching closely.

So, in today’s Market 360, let’s break down NVIDIA’s latest results. We’ll dive into what they mean for the AI Revolution, and more importantly – how you can take advantage of the next stage of AI investing… even if you missed the first wave.

In August 2021, Americans were on edge. The Delta variant of COVID-19 had arrived.

This caused consumers to panic a bit, and it showed in the data. The Conference Board’s Consumer Confidence Index fell to 113.8, down from 125.1 in July. That was a steep 9% drop in one month.

Now, it’s happening again – but for very different reasons.

This morning, the Conference Board’s Consumer Confidence Index for February showed a reading of 98.3. That’s down from January’s 105 reading, and economists were looking for a reading of 102.5. Not only that, but it was the third-straight monthly decline for the index.

This is its biggest drop since August 2021.

This didn’t come out of nowhere, either.

On Friday, the University of Michigan’s Consumer Sentiment Survey also plunged. The February reading came in at 64.7, down almost 10% from January’s 71.7.

This also marked a 15-month low. The last time the consumer sentiment survey was this low was in October 2023, when people were grappling with the October 7 terrorist attacks by Hamas in Israel, the U.S.’s ballooning budget deficit and elevated Treasury yields and interest rates.

Now, the reasons for the drop in consumer confidence and sentiment this time around are different. Some of the current consumer pessimism could be weather-related. But the main driver we are seeing this time around is due to tariff threats. The Conference Board noted today that “there was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019.”

The truth is Americans are still feeling the sting of high prices. Even though inflation has cooled from its 2022 peak, it’s still sticking around. Gas, groceries, rent – they’re all more expensive than they were a year ago.

Tariffs threaten to raise the prices of imported goods and reduce consumer demand. So, consumers are on edge that these tariffs might unravel the progress made in bringing inflation down recently.

We already knew that S&P 500 companies are concerned. According to FactSet, more S&P 500 companies are citing “tariff” or “tariffs” on quarterly earnings calls than at any point since Q2 2019. 

But it was Walmart Inc.’s (WMT) earnings report last week really raised the first major red flag that consumers were concerned about tariffs.

So, in today’s Market 360, we’ll take a closer look at Walmart’s earnings and what the company management had to say about tariffs. I’ll also share the important details that investors are overlooking. Not only do they bode well for Walmart’s future, but they highlight a huge shift in companies’ approach to artificial intelligence. I’ll explain what’s shifting… and how you can profit from it.   

Let’s get started.