Invest Like the Best with Patrick O'Shaughnessy

NVIDIA (NVDA) currently trades at its cheapest forward P/E multiple in a decade, presenting a prime long-term entry point for investors despite recent AI sector volatility. Underlying fundamentals for NVIDIA (NVDA) remain exceptionally strong as token growth and GPU rental pricing continue to accelerate rapidly. Investors should capitalize on short-term market panics to buy top-tier hardware and infrastructure providers like Microsoft (MSFT), Meta (META), and Amazon (AMZN), whose hyperscaler cash flows are surging. As older contracted compute bases expire, upcoming price re-adjustments will significantly drive revenue acceleration across the semiconductor sector.

To capitalize on the booming artificial intelligence sector, focus your investments on foundational infrastructure providers rather than speculative application startups. Microsoft (MSFT) and **Oracle (ORCL) **remain top choices for capturing surging enterprise cloud demand and hosting large-scale AI operations. Meanwhile, NVIDIA (NVDA) sits at a critical supply chain bottleneck, providing the essential advanced hardware and GPUs required for all modern AI workloads. Investors should also target specialized chip designers and energy providers that drive crucial efficiency gains as data center power demands skyrocket. Always monitor potential risks related to permitting challenges and public pushback regarding the massive physical footprint of these new facilities.

Investors should prepare for a structural Natural Gas supply deficit starting in 2028, which could drive prices from the current $3.50 range to over $8.00 per MCF. Expand Energy (EXE) is a high-conviction play currently trading at a low 4x EBITDA, offering significant upside due to its control of critical Haynesville shale inventory. For exposure to the Appalachian region, EQT Corporation (EQT) and Range Resources (RRC) are top-tier producers positioned to benefit as gas becomes the primary fuel for U.S. power generation. To hedge against rising electricity costs, look toward utility-scale solar providers like NextEra Energy Partners (NEP) and Clearway Energy (CWEN), which can reprice power contracts at much higher margins. In the nuclear sector, Cameco (CCJ) and BWX Technologies (BWXT) are the strongest long-term bets to benefit from the necessary expansion of large-scale reactor infrastructure.

Focus on high-growth infrastructure providers like WorkOS, Ramp, and Vanta, which are becoming essential for enterprise AI adoption and automated compliance. Monitor the Defense Tech sector closely, but prioritize firms with a long-term track record over those recently pivoting to the trend to avoid "diluted differentiation." When evaluating new ventures like Lila Sciences, apply the Persuasion Equation by ensuring the team has a clear plan to mitigate risk while driving high desire through "scientific superintelligence." Look for investment opportunities that exhibit true Scarcity, similar to the Benchmark model, as these assets move capital the fastest and maintain the best terms. Prioritize companies with a simple, defensible value proposition, as high Complexity in a business story often signals a lack of reliability and slows down institutional support.

Investors should target "Old" Private Companies (6–7 years old) that have recently inflected due to AI catalysts, as their slow starts often lead to significant undervaluation compared to newer startups. Avoid traditional SaaS companies with per-seat pricing models and instead prioritize AI-native software firms that utilize usage-based pricing to offset higher compute costs. For private market exposure, prioritize Emerging Managers over large growth funds, as smaller managers are more psychologically and financially aligned with generating high returns rather than collecting fees. Retail investors should exploit their lack of "career risk" by holding high-conviction, "weird" assets like Bitcoin or "Long Elon" plays (Tesla, SpaceX secondary markets) that institutional mandates often restrict. Monitor X (formerly Twitter) as a leading indicator for market sentiment, as algorithmic narratives now drive high-variance pricing in the Mag 7 and broader tech sectors.

The shift from AI training to inference (running models) is creating a massive opportunity for specialized hardware that outperforms general-purpose GPUs. Investors should look toward TSMC (TSM), which remains the essential manufacturing partner for next-generation AI chips like those from Etched and big-tech hyperscalers. While NVIDIA (NVDA) remains the industry benchmark, its high margins are under threat from application-specific chips (ASICs) designed to run "Transformer" architectures more efficiently. Consider exposure to the "Token Economy" by focusing on companies that maximize "tokens per watt," as energy availability is now the primary bottleneck for AI scaling. By 2027, the market is expected to pivot from "per-seat" software pricing to "per-inference" costs, benefiting high-growth AI agent platforms like Perplexity and Anthropic.

Investors should prioritize US-based assets over international markets, leveraging the country's energy abundance and "permissionless innovation" as a structural advantage. Focus on Asset-Backed Finance and Direct Lending as high-conviction alternatives to traditional bond portfolios to capture yield in a shifting credit environment. Consider reducing long-term exposure to legacy software giants like Salesforce (CRM) and Oracle (ORCL), as AI-native competitors threaten their 30-year terminal value. Allocate capital toward Data Center Infrastructure and Energy projects, which are essential to supporting the massive physical requirements of the AI revolution. Maintain a "just-in-case" investment posture by favoring private equity and infrastructure over public markets to avoid short-term volatility and quarterly earnings pressure.

Investors should prioritize usage-based SaaS platforms like Clay that replace traditional per-seat pricing with value-driven models, aligning perfectly with AI-driven productivity gains. Focus on "picks and shovels" infrastructure providers like Vanta and WorkOS, which capture value by enabling AI startups to meet essential enterprise security and compliance standards. In the financial sector, look for unified platforms like Ridgeline and AI-agent tools like Rogo that consolidate fragmented data and automate complex investment banking workflows. High-conviction opportunities lie in tools that democratize "computation," allowing non-technical teams in marketing and operations to build custom automated systems without engineers. When evaluating founders, favor those practicing "long-term greed" by prioritizing high integrity and reputation over short-term gains, as these leaders are best positioned to navigate genuine market risk.

Investors should prioritize NVIDIA (NVDA) as the essential infrastructure play, as its specialized chips remain the primary beneficiary of a "tornado of demand" that continues to exceed market earnings models. For foundational AI exposure, Google (GOOGL) is a high-conviction pick due to its technical superiority in document processing and its guaranteed spot in the emerging three-player model oligopoly. Look for "de-commoditized" hardware winners like Celestica (CLS) for its 60% share in AI Ethernet switches and Corning (GLW) for the massive fiber optic demand required to connect data centers. While Anthropic is the top private conviction for its $500 billion coding market opportunity, public investors should pivot away from traditional SaaS stocks like Salesforce (CRM), which face severe budget cannibalization from AI. We are currently at only 0.1% penetration of AI adoption, suggesting significant upside remains for companies where average selling prices are rising due to increased manufacturing complexity.

Investors should consider Uber (UBER) as a primary play in the "physical AI" space, as the company leverages over $10 billion in free cash flow to dominate the autonomous vehicle (AV) market. Monitor Uber One membership growth, currently at 50 million members, as this recurring revenue stream is expected to drive high-margin, long-term profitability. Look for Uber to act as the essential go-to-market partner for AV firms like Waymo, Lucid, and Aurora, benefiting from a 30% higher utilization rate than standalone networks. In the broader robotics sector, expect delivery drones to reach commercial scale within the next 2 to 5 years, significantly reducing delivery times for food and groceries. For enterprise exposure, focus on infrastructure providers like WorkOS and Vanta that enable AI leaders like OpenAI and Anthropic to scale security and compliance.

NVIDIA (NVDA) remains a high-conviction "catch-up trade" with attractive valuation multiples of 15x 2027 earnings, making it a core play for the multi-year AI expansion. Investors should look to build positions in Danaher (DHR) during market sell-offs, capitalizing on its superior operational system as COVID-related inventory distortions fade. In the credit markets, X debt offers a high-conviction 12% yield for those comfortable with the underlying enterprise value of the platform. Sony (SONY) presents a significant "governance alpha" opportunity as Japanese regulatory shifts and activist pressure force the company to spin off non-core assets and unlock shareholder value. To capture the full AI Stack, diversify across Semiconductors, Semi-cap equipment, and Hyperscalers, while monitoring Anthropic's growth as a primary indicator of ecosystem health.

Investors should pivot toward "Neoprimes" that bridge commercial technology with military applications, specifically focusing on drones, signals intelligence, and automated targeting software. Monitor the KMT party in Taiwan, as their political success could signal a peaceful regional power shift that reduces the immediate risk of a kinetic conflict with China. High-conviction opportunities exist in AI firms like OpenAI, Anthropic, and Perplexity, but priority should be given to companies that can verify data provenance to prevent "data poisoning" by adversaries. For enterprise infrastructure, look to specialized service providers like WorkOS, Vanta, and Ridgeline that facilitate security and compliance for high-growth tech sectors. Be cautious of small defense-tech firms during Congressional "Continuing Resolutions," as these budget delays pose significant liquidity risks compared to legacy defense giants.

Investors should maintain core exposure to NVIDIA (NVDA), which remains historically undervalued relative to its growth as the primary "seller of shortage" in the AI supply chain. Taiwan Semiconductor (TSM) acts as the critical gatekeeper for the industry; as long as they maintain high utilization without overbuilding capacity, the structural floor for AI valuations remains intact. High Bandwidth Memory (HBM) providers like Micron (MU) and SK Hynix offer a compelling valuation play as memory shifts from a commodity to a high-value AI component with extended hardware lifecycles. For software exposure, prioritize companies in the "token path" like Databricks or Snowflake, and favor Anthropic over competitors due to its superior capital efficiency and massive revenue scaling. Finally, monitor the U.S. energy sector and Natural Gas (NG1), as domestic power advantages provide a significant competitive moat for American AI data centers through 2027.

Investors should prioritize Amazon (AMZN) and Google (GOOGL) as they secure long-term revenue moats through multi-billion dollar compute commitments from Anthropic. While NVIDIA (NVDA) remains a core holding, Anthropic’s successful use of Trainium and TPU chips suggests a growing trend of hardware diversification that reduces single-vendor dependency. For exposure to the "Enterprise-Ready" bottleneck, look toward private infrastructure leaders like WorkOS and Vanta which enable AI startups to meet the security standards of the Fortune 500. Specialized "Vertical AI" agents like Rogo are high-conviction plays for disrupting specific industries like financial services by automating complex Excel and PowerPoint workflows. The most significant growth opportunity lies in the $40 trillion global knowledge work market as AI shifts from simple chat interfaces to autonomous "Virtual Collaborators" with internal company memory.

Investors should consider Airbnb (ABNB) as it transitions from a single-product rental company to a multi-service platform, targeting a "consumer AI renaissance" within the next 24 months. The company’s shift toward "Founder Mode" and a leaner management structure aims to protect its high 40% free cash flow margin while expanding into 50 new service verticals. Keep a close watch on Apple (AAPL) as the benchmark for design-led moats, as its "institutionalized magic" continues to drive premium pricing and long-term brand endurance. In the broader tech sector, look for opportunities in companies that aggressively reduce middle-management layers to increase operational velocity, a trend driven by AI-enabled disintermediation. Finally, pivot focus from enterprise-only AI toward startups and incumbents that move beyond "chat" into functional consumer applications and high-authentication identity tools.

Investors should prioritize Bitcoin (BTC) as a premier scarcity play and inflation hedge, though they must remain vigilant regarding long-term technical risks like quantum computing. The Japanese Yen (JPY) is currently viewed as grossly undervalued, offering a significant appreciation opportunity of 10% or more as domestic capital repatriation accelerates. Conversely, the S&P 500 (SPY) faces a potential 30-35% decline toward historical valuation averages, driven by a massive wave of upcoming IPO supply and high AI capital expenditures. In the fixed-income market, the "sovereign debt bubble" suggests extreme fragility, where a stock market correction could trigger a deficit crisis that severely impacts Bonds. While Gold (XAU) remains a staple for volatility trading, it is currently secondary to Bitcoin due to the latter's superior fixed-supply mechanics.

Investors should prioritize Micron (MU) and other memory leaders like SK Hynix, as a structural supply shortage is expected to double or triple DRAM prices through 2027. NVIDIA (NVDA) remains a high-conviction hold as older GPU models maintain high rental value and the upcoming Blackwell launch scales compute power to unprecedented levels. To capitalize on TSMC’s (TSM) projected $100 billion capital expenditure cycle, investors should look toward equipment suppliers ASML, Applied Materials (AMAT), and Lam Research (LRCX). Beyond chips, the skyrocketing demand for AI-driven reinforcement learning makes CPUs a critical, "sold-out" bottleneck worth monitoring in cloud infrastructure. Finally, watch for a major breakthrough in Robotics over the next 6 to 18 months, which will shift market focus toward physical hardware and actuators.

The dominant market leaders Eli Lilly (LLY) and Novo Nordisk (NVO) remain high-conviction plays as they transition to oral formulations and direct-to-consumer delivery models by 2026. Investors should look beyond weight loss to the "health stack" theme, where GLP-1 drugs become foundational preventative treatments for heart and kidney disease. PCSK9 inhibitors represent an underappreciated opportunity to target cardiovascular disease with fewer side effects and infrequent twice-yearly dosing. In the diagnostics space, Exact Sciences (EXAS) and Guardant Health (GH) are the primary picks for the shift toward non-invasive, blood-based cancer screenings. Finally, prioritize biotech firms that utilize AI and robotic labs to shorten drug discovery windows from years to months, significantly reducing R&D overhead.

Investors should prioritize exposure to the U.S. Uranium Enrichment sector to capitalize on a massive supply gap created by the federal ban on Russian imports effective January 1, 2028. Focus on companies developing HALEU (High-Assay Low-Enriched Uranium) and LEU (Low-Enriched Uranium) capabilities, as these are critical for both advanced Small Modular Reactors (SMRs) and the existing nuclear fleet. Look for "hard tech" opportunities like General Matter or similar firms that utilize vertical integration to bypass traditional nuclear industry inefficiencies and high capital costs. AI Data Center demand is a primary catalyst, making "Behind the Meter" nuclear power solutions a high-conviction play for hyperscalers seeking dedicated energy sources. For broader tech exposure, monitor high-growth enterprise platforms like WorkOS, Ramp, and Vanta, which are currently being adopted by leading AI firms like OpenAI and Anthropic.

Investors should prioritize Multi-Strategy Private Credit managers over "narrow" products to ensure capital can pivot between direct lending and asset-based finance as market conditions shift. Be cautious of "semi-liquid" Business Development Companies (BDCs), as these vehicles may face redemption gates or liquidity locks during periods of high market volatility. When evaluating public asset managers like Blackstone (BX), Apollo (APO), or KKR, monitor for high Fee-Related Earnings (FRE) multiples which may be at risk if private credit defaults rise. Diversify AI exposure beyond tech by identifying "early adopters" in traditional manufacturing and services that are using agentic tools to structurally expand their profit margins. Avoid private equity or credit portfolios heavily weighted in "legacy" software companies, as these assets face significant disruption from AI-native competitors.