How to Profit From the $10 Trillion AI “Regime Change”
BY MICHAEL SALVATORE, EDITOR, TRADESMITH DAILY
In This Digest:
- The Fed is in a bind on rates, but we can profit regardless
- 15 tickers solving three key AI bottlenecks
- Three seasonality patterns with a perfect track record are kicking off now
The Fed is in a lose-lose position on interest rates…
Most eyes these days are on the war in the Middle East.
And that’s understandable with oil topping $100 a barrel… key fertilizer ingredients unable to pass through the Strait of Hormuz… and about one-fifth of the world’s natural gas supply trapped.
But as you read this, something else is happening close to home that also impacts the markets.
The Fed is releasing its decision on whether to cut rates or keep them steady. And odds are near unanimous that rates will stay right where they are, in a range of 3.5% to 3.75%.
In a normal market, this would be so un-newsworthy that I probably wouldn’t mention it. But the backdrop makes it just as interesting as what’s coming in the next two months.
Due to the disruption to oil markets, prices at the pump here in America are up roughly 17% over the past two weeks.
That’s a direct hit to consumers’ wallets – and an inflation risk. And it’s nothing compared to what a prolonged war will do to prices for residential energy, food, and consumer goods.
When inflation risks are high, the Fed tends to raise interest rates to cool the economy. But Fed chair nominee Kevin Warsh – President Trump’s nominee to replace Jerome Powell when his term expires in May – says he wants lower rates.
He argues that AI is making the economy more productive – and that a more productive economy doesn’t need high rates to keep inflation in check. Trump picked him because of this stance.
That leaves Warsh with a dilemma. If his Fed lowers rates in the face of rising prices, inflation could rip again. Raise rates, and he’s sure to draw the ire of a president all too willing to throw grenades at the Fed.
Fortunately, as a TradeSmith reader, you don’t have to worry about interest rates whether they go up, down, or around in circles.
With our tools, you’re spoiled for choice on great investment ideas, regardless of where rates go next.
Today, we’ll look at a few more of those ideas – specifically through the lens of our short-term momentum tools, our quantitative stock ratings system, and our seasonality pattern tracker.
But first, let me tell you how to get 15 stock recommendations to play the multitrillion-dollar AI infrastructure buildout for the low price of free.
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How to profit from this $10 trillion AI “regime change”…
Eric Fry is an award-winning stock picker, futurist, and analyst at our sister company, InvestorPlace. He’s spent more than three decades watching the market cycle through booms and busts.
And he has a proven track record of nailing big calls…
- He warned of the dot-com crash early enough to help his readers escape with gains as high as 5,997% in the wreckage.
- He went on CNBC in 2005 to publicly call the housing bubble.
- He even published a book in 2019 warning of an imminent crash – months before COVID hit.
And last July, he recommended his readers “sell Nvidia, buy Corning.”
Since then, Corning (GLW) – the maker of the super-tough Gorilla glass for phone screens as well as fiber-optic cable needed for AI data centers – is up more than 100%. And Nvidia (NVDA), the golden boy of the AI megatrend, is up less than 7%.
Eric made this call because he saw months ago that the AI trade was going through a “regime change.” And that change is accelerating now.
AI hyperscalers like Amazon (AMZN), Microsoft (MSFT), Meta Platforms (META), and Google parent Alphabet (GOOGL) are set to spend $635 billion on AI infrastructure in 2026.
But they’re running into three bottlenecks that can’t be solved with money alone: raw materials, energy, and memory chips.
Eric released a presentation today that walks you through what’s going on – including 15 tickers of stocks tied to these three supply chains that are set to be the next round of AI winners.
The broadcast aired an hour ago. But the replay is available now, and everyone who watches will get the full list of stocks for free.
Whether or not you agree with Eric’s timeline, the underlying supply constraint story connects directly to what our own data is showing. So, I recommend you check it out here.
If nothing else, you’ll learn a ton about what’s going on under the surface of what’s shaping up to be the biggest stock boom in history.
These software stocks are bucking the bearish trend in the sector…
If you’ve been following TradeSmith Daily this year, you’ll know the software sector has been getting hammered.
The iShares Expanded Tech-Software Sector ETF (IGV) is down nearly 17% since January… and that’s after rallying 11% from its February low.
Investors have fled every company that sells software as a service, out of fear that AI tools like Claude Code will let businesses fulfill those needs in-house.
This is a key reason why the tech-packed Nasdaq 100 index recently entered our Short-Term Health Red Zone. It’s the first sell signal since last March, two weeks before the Liberation Day tariff crash.
But buried among the wreckage, a small pocket of software stocks is actually doing well.
And beyond strong price momentum, they’re showing high-quality, growing fundamentals and the telltale signs of institutional buying.
These two signals point the way…
We found them by combining two TradeSmith tools: Short-Term Health and the Quantum Score.
Short-Term Health tracks the kind of momentum shifts that can last a few weeks to a few months. When a stock’s Short-Term Health is in a Green Zone, it’s a buy. When its momentum starts to break down, it goes Yellow for caution. Red is a sell signal.
The Quantum Score combines fundamental strength – earnings, revenue, and profit margin growth – with a technical read on institutional money flows. Anything above 80 means a highly ranked stock is seeing unusually large inflows from Big Money investors and is a buy.
Used together, these two signals act as confirming filters. A stock has to be in a healthy uptrend and attracting serious institutional capital to make the list. That cuts out a lot of stocks.
Right now, only nine software stocks pass both tests…
Here are the three most recent to flash a new Short-Term Health Green signal, all with Quantum Scores above 80:
- Clear Secure (YOU) makes the biometric identity verification systems used at airports, stadiums, and sports arenas. It scans your fingerprint or iris instead of making you show an ID. Its Quantum Score is 92.6, and it’s up 44.9% over the past month, with its Green signal active for more than two weeks.
- RingCentral (RNG) provides cloud-based business communications – phone, video, messaging, and internet-based tools. Its Quantum Score is 86.9, and it’s up 24.0% over the past month, with its Green signal also more than two weeks old.
- Fastly (FSLY) runs a platform that speeds up and secures how websites and applications load. Its Quantum Score is 85.8, and it’s up 24.8% over the past month, with its Green signal now three weeks old.
None of these stocks are household names. And all three are smaller companies, valued between $2.8 billion and $4.4 billion and operate in software niches that aren’t directly in the crosshairs of the AI disruption.
While the software carnage is real, it isn’t universal. Some software stocks are performing well.
And the ones surviving share two things in common: niche, defensible businesses and institutional money flowing in, despite the broader carnage.
These three seasonal patterns have never missed…
One tool always worth watching in the TradeSmith toolkit is our Seasonality system.
In our research, we’ve found every stock has a behavioral fingerprint built up over years of trading. Certain windows produce consistently strong performance in the same calendar periods, year after year.
TradeSmith’s Seasonality tool identifies these patterns by looking at a stock’s price action across years, and even decades, of data. Then, it flags windows where the probability of a positive move has been especially high.
When the historical accuracy on a pattern is 100%, that means it’s worked every single time in the past when the window triggered. Those are the trades to pay attention to.
Right now, three patterns are kicking off – and every one of them carries a perfect track record.
Grupo Cibest Bancolombia (CIB), the parent holding company of Bancolombia, Colombia’s largest bank, with operations across Latin America – enters its seasonal window today, running through April 16. Historically, this pattern has produced an average return of 8.8% over the window, every single time.
Cohen & Steers Infrastructure (UTF) is a closed-end fund that holds infrastructure-related stocks across utilities, pipelines, and communications. It enters its seasonal window on March 24, running through April 29. It’s always been higher through this window and has posted an average return of 9%. But keep in mind that an anomalous spike during the 2020 pandemic crash recovery drags that average return higher.
Encompass Health (EHC) operates a national network of inpatient rehabilitation hospitals. It enters its window on March 25, running through April 30. Its average return over the period is 10.2% at 100% accuracy.
To be clear, seasonality is not a crystal ball. Even a perfect historical accuracy rate doesn’t guarantee a future result.
Patterns that held for 15 years can break down, particularly in unusual markets like this one. But when a setup has never missed across more than a decade of data, it deserves a spot on your watchlist.
And in a market where most of the familiar trades have stopped working, high-probability seasonal windows are exactly the kind of setup worth having in your corner.
The throughline today…
The Fed is stuck. Oil is high, inflation is sticky, and even a rate-cut-friendly incoming chair can’t change the math right now.
But TradeSmith’s tools don’t wait for the Fed to act. Short-Term Health and the Quantum Score are already surfacing the handful of software stocks holding up in a broken sector.
Meanwhile, Seasonality is flagging three perfect-record windows kicking off this week.
And Eric Fry’s AI regime change thesis maps directly onto the energy and materials signals we’ve been tracking for months.
That’s the edge TradeSmith’s data gives you. Instead of relying on guesswork and gut feel, it gives you a real-time read on what’s working right now.
To building wealth beyond measure,
Michael Salvatore
Editor, TradeSmith Daily
Disclosures: Michael Salvatore held shares of Alphabet (GOOGL) at the time of this writing.
RJ Hamster 