Invest Like the Best with Patrick O'Shaughnessy

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.

Investors should prioritize Vertical AI platforms like Rogo AI and Vanta, which provide specialized automation for high-value sectors like finance and cybersecurity. Focus on "pick and shovel" infrastructure providers such as WorkOS, which powers the enterprise capabilities for industry leaders like OpenAI and Anthropic. In the robotics sector, the highest value is shifting from hardware to "foundation models" and general-purpose intelligence, making software-agnostic firms like Physical Intelligence key players to watch. Look for B2B SaaS companies like Ramp that offer clear ROI through expense automation, as these are more resilient during economic downturns. Monitor the progress of Tesla and Boston Dynamics as hardware costs continue to deflate, but favor companies utilizing End-to-End Learning and Reinforcement Learning to solve complex physical tasks.

Focus on high-quality public software companies where bearish market sentiment has created more attractive valuations than those found in private markets. Prioritize "boring" vertical software leaders like Workday (WDAY) and ServiceNow (NOW), which benefit from high switching costs and dominant distribution moats. Avoid over-leveraged software firms owned by private equity, as high debt often leads to R&D cuts that make them vulnerable to leaner competitors. For exposure to the data boom, look toward infrastructure "picks and shovels" like ClickHouse or Grafana Labs that utilize consumption-based revenue models. Exercise extreme caution with high-valuation AI startups like OpenAI or Anthropic, instead favoring established giants like Meta, Google, and Amazon that possess the data and distribution to monetize AI effectively.

Investors should focus on Embedded Finance infrastructure by identifying vertical software companies like Shopify or Stripe that are integrating deep-stack financial services into their platforms. Look for opportunities in "boring" infrastructure plays like WorkOS, Vanta, and Plaid that solve regulatory and compliance hurdles rather than chasing speculative AI wrappers. Consider exposure to high-growth fintechs such as Ramp, Brex, and Mercury, which are gaining a competitive edge by utilizing Column’s direct-to-Fed banking rails. Monitor "super-app" leaders in emerging markets, such as Kaspi, which are leapfrogging Western banking by integrating government and financial services into single digital ecosystems. For long-term stability, prioritize companies that prioritize early profitability and internal liquidity over the traditional 18-month venture capital fundraising cycle.

Investors should prioritize Palantir (PLTR) as a high-conviction play on the "ontology layer," which serves as a critical, high-moat bridge between raw AI models and actual enterprise decision-making. Focus on the AI Infrastructure theme by targeting software companies that connect models to complex data, as these "middle layer" providers are more defensible than commoditized AI model creators. Look for "Dual-Use" opportunities in the Defense and Industrial sectors, specifically companies that serve both commercial and national security interests to capture a shift away from traditional government-funded contracts. Consider exposure to "picks and shovels" automation tools like Ramp, Vanta, or WorkOS that allow firms to scale operations without increasing headcount. Monitor the U.S. Re-industrialization trend, favoring companies that utilize AI to drive massive productivity gains in domestic manufacturing and supply chain management.

Investors should prioritize Geothermal energy companies that leverage oil-and-gas drilling techniques, as this sector is nearing a major commercial breakout for baseload power. In the automotive space, NIO stands out as a leader in high-end EVs, but the broader threat comes from Chinese firms producing quality EVs under $10,000. To remain competitive against China's rapid industrial execution, Western manufacturing must aggressively increase exposure to Robotics and automation. Within the U.S. energy sector, focus on inter-regional transmission lines and companies positioned to benefit from bipartisan federal permitting reform. Finally, look for residential developers in states like Montana or California where "YIMBY" zoning reforms are stripping local restrictions to unlock new housing supply.

Consider a long-term bearish view on cloud providers like Amazon (AMZN), Microsoft (MSFT), and Google (GOOGL), as their business models face risk from customer concentration in the AI sector. While AI drives short-term growth, these large AI customers may eventually build their own data centers, eroding the hyperscalers' future revenue base. The software sector is also facing headwinds, so investors should be highly selective, favoring companies with defensible "systems of record" that are deeply integrated into customer workflows. Avoid broad software investments, as AI is creating legitimate shorting opportunities against companies that fail to adapt. Lastly, the single biggest risk to the global economy is a potential conflict over Taiwan, which controls the critical supply of advanced semiconductors.