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good morning bow tie Nation Joseph hul thank you for joining us for our weekly market update 9:00 a.m. eastern every Monday morning with the stocks to watch this week and the market news you need to know Nation AI has been the theme this year with Nvidia dominating but nobody knows which is going to be the stocks that are going to dominate that next phase the software and the services in AI recently even the chip stocks like Nvidia and tsmc have broken down but there is one way to invest in AI that is about as close to a sure thing as you can get with this Market I'm going to highlight the seven stocks I'm watching in that group stick around after that we'll do our Monday market update including the important news on Tesla and Google owner alphabet this week first though if you want to see the five stocks I'm buying for the next 30 Years my forever stocks look for the link I'll leave in the description below it's a free report I put together with the mly fool some of the biggest stocks in my portfolio these are the stocks I'm following in major multi-year themes with one of the picks up 100% And the group up an average 94% last year loan that report is totally free you're going to see the first stock immediately and they'll email you the full report with the other stocks it's an easy way to support the LED Talk Money community and see some of my favorite stocks to buy so look for that link in the description below back to our main topic though because shares of Nvidia have been the big winner in that AI boom with the chipmaker growing Revenue by 126% last year Nvidia is likely to continue to dominate the semi conductor space but that next phase of AI where where we're going to see it change the world is going to be in software and services now we have looked into some of those AI stocks best position for that next phase I own stocks like SoundHound AI Salesforce and unity software for just that but the truth is folks nobody knows sure these companies should benefit but the big breakthrough companies could just as easily come from startups you who in 1999 as the internet bubble was inflating and even heard of Google and you couldn't even buy shares until 2004 and in fact the leader in those AI Services right now open AI is a non-public company you cannot buy shares but there is one group of stocks that will without a doubt ride that AI wave higher and nobody can stop the revenue boom in utilities and power generation it's not what you would expect to hear that the next big growth stocks could be a 100-year-old utility companies but Amazon's purchase of a $650 million nuclear power data center has been a wakeup call for the market thanks to Energy Efficiency electricity demand has been basically flat for more than a decade this chart from S&P Global insights shows annual demand pretty much stagnant around 4,000 trillion wat hours in the decade of 2020 zoom out to the forecast though we could see Power demand jump over the next decades a demand growth rate three times what we've seen in the past and that growth is really on the back of three trends that were only just starting to see develop first the onshoring of manufacturing as factories come back to the US from China second the Boom in crypto mining which now accounts for as much as 2% of the nation's electricity use and where power demand has jumped 35% in the last 6 months to 19,000 megawatts a week more than anything though is the rise in artificial intelligence and the immense amount of electricity demand forecasted to run those Acres of data centers pjm interconnection operator of a wholesale electrical market around Virginia a data center Hub expects electricity demand to grow 2.4% a year for the next decade that is six times the average growth we saw in the 5 years through 20121 and Southern Company a utility serving manufacturing hubs in Georgia recently upped its previous forecast through 2030 by 17 fold now expecting more than 6,600 megawatt of growth to the end of the decade I'm going to highlight the seven stocks that could benefit from this but it looks like nuclear power generation is coming out the big winter here now nuclear companies generally have more excess capacity meaning they can generate more electricity than what they've obligated to sell to residential customers and that generation is continuous not dep depending on the Sun or wind like other Renewables the power purchase agreements between nuclear generator tailin energy tier tln and Amazon last month for its data center appears to have been for a premium of at least 50% over what the provider usually gets on the market analysis by S&B Global ratings highlights three other producers with that excess capacity vistor Corporation tier VST which has capacity in Coal nuclear and natural gas energy energy tier NRG which while it does have that nuclear capacity has less excess capacity than some of these other providers because because it does have that commitment to it residential customers and then Constellation Energy ticker ceg which claims to have more nuclear capacity than all other generators combined now quick aside here maybe the best thing you learn from this video is if you look at that last slide this is from the recent business outlook for constellation and the point is here when you're looking for these stocks to buy in a theme and doing your research these presentations can be a great source of that market research if you look here constellation is basically showing you exactly the other companies you should be researching here there showing you in that first graphic companies with nuclear generation capacity so ceg VST Peg or Public Service uh Enterprise Group NE next era tln tailin energy which made that deal with Amazon and D Dominion Energy so as you're looking through these themes and stocks to buy start looking through these company presentation reports just type in Google the name of the company plus investor relations on the company's IR page you're going to find all the SEC filings the news as well as those presentations to to really help you dig into an industry and a group of stocks now here in this theme you want to focus on those independent power producers rather than the regulated market utilities the independent utilities are generally going to have more excess capacity and can sell it to commercial buyers whereas the regulated market utilities those companies mostly have their capacity earmarked for their residential customers so besides those initial three stocks Peg also has nuclear capacity that could be used for those data centers a next era energy ticker NE is a strong producer in the Renewables theme though it does have less uh nuclear capacity even Dominion Energy ticker D though it is in that regulated electric space so it's going to have less upside potential of course some of those winners have already taken off as the market Clues into this theme you see in a one-year performance chart that vistra and constellation are already up over 100% And tailin is up 82% over the period the others have yet to take off though with Peg and Dominion stuck right around 6% return while NE and Bloom Energy another one I'm watching are still negative for the year but that doesn't mean totally avoid the winners and just try to bottom fish your stocks I still like constellation with its dominance in nuclear generation but would definitely take a look at maybe NE and peeg as well another way to play this theme though is through a One-Stop fund like the vanic uranium and nuclear energy ETF ticker nlr which holds all the electricity producers as well as key input uranium producers as well onto the stocks I'm watching this week Tesla ticker TSLA is now down 50% from its 52- we high as it comes into Q earnings reports this Tuesday the company is expected to report a 40% drop in earnings to just 51 cents a share after it announced that it would cut 10% of its Workforce so it transitions into that next phase of growth now of course investors are worried that that next phase is slower with a revenue growth expected just up 6% this year to $102 billion and the full year earnings of two $267 per share is 14% lower than last year the company rolled out plans for its Robo taxi service recently and really have moved to cheer investors but any revenue from that is likely more than a year away for all the downside though we could be approaching a bottom here with a valuation of just 4.7 times this year's Revenue it's it's less than half the valuation the stock cost just last year now long-term investors can feel confident here buying at this level while more risk averse investors might want to sell puts against it or use a covered call strategy to lower your immediate risk International Business Machines ticker IBM also going to be reporting this week on Wednesday with the shares flattening out after a long awaited rebound last year I believe IBM may be one of the last undiscovered opportunities in AI stocks and could easily surprise the market on current expectations of just 2.8% Revenue growth this year and 4% next year despite last year's big run in the stock the valuation of 2.6 times this year's expected revenue is still really low here meta platforms ticker mea the old Facebook also reporting earnings Wednesday after releasing its update to its llama 3 AI assistant last week now meta has taken the unique grow of open sourcing its AI model which could help it attract developers and train that model faster versus other models like open Ai and alphabets Gemini initial reviews are very good for this model and add to the outlook for the stock already expected to grow Revenue by 17% this year and boost earnings by 35% to $20 per share so even though it's had that recent run I still like shares of meta alphabet took a goog is also likely to update the market on its AI Ambitions when it reports earnings on Thursday the company Gemini model has been derided for being really behind in this race especially against Microsoft's open AI chat GPT and could cost the company billions on Lost search ad revenue and while q1 earnings are expected up 29% to $151 per share ful year earnings growth is expected to slow to 17% or about $681 a share giving you that bigger picture with the sectors spider.com sector tracker Great free resource here on the internet four of the 11 stock sectors did manage to close higher last week with utilities and Consumer Staples really filling their role as safety sectors in times of Market stress now strength and financials and Healthcare really seem to be more like a bounce off of sell-offs from last couple of weeks rather than any real Market beating Outlook utilities are now up 7.3% over the last 3 months nearly three times the return on the overall market and I think this could be an Investor's best friend for not only that safety during a market pullback but also the upside potential that we talked about in that electricity demand while stocks have stumbled lately on the idea of those higher rates for longer data this week should show that the economy and corporate profits might not give a damn Wall Street is still forecasting two or three rate Cuts this year a disappointment from six expected cuts that has sent the stocks lower by more than 5% from the highs but there will come a point when broader fundamentals just push this Market higher case in point orders for durable goods so those long-term use uh manufactured goods like appliances are going to be out Wednesday are expected to show an increase of 2.8% from just 1.3% growth last month doesn't seem like high borrowing costs are really hitting corporate borrowers or the economy just yet now Friday of course is going to bring the all-important personal consumptions expenditures report the pce that's the preferred measure of inflation used by the fed the expected headline number of 2.6% year-over-year inflation is going to be slightly higher than last month's 2.5 reported but while the core inflation of 2.7% slightly below the 2.8% reported last month so all in all if it comes in as Ed or even below would be a relief that inflation may not be running quite as hot as thought lately more importantly than all this though is q1 earnings really start heating up this week with 138 of the 500 companies in the S&P 500 reporting profits if earnings come out above expectations as they almost always do then it could be further sign that a healthy economy doesn't really need lower rates to send stocks higher get your free report and see the stocks I'm buying for the next 30 Years my forever stocks with the link in the description below the group is up 94% last year alone and has a lot more room to run or click on the video to the right to see my strategy for buying Nvidia for just $100 a share don't forget to join the let's talk money Community by tapping that subscribe button and clicking the Bell notification
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