3 AI Stocks to Buy for the Frontier AI Era

Marc Chaikin does not just talk about AI in the abstract. He names specific stocks to buy, each rated by his Power Gauge system. Here are the three picks from his Frontier AI Hotlist.

Magna International (MGA) is the first free pick in Chaikin’s Frontier AI Hotlist, rated Very Bullish by the Power Gauge. Most investors overlook Magna as just a boring auto parts supplier. But Chaikin explains that Nvidia made Magna its official deployment partner for its entire autonomous driving platform.

Magna’s systems are in two out of every three vehicles launched globally, with 80 major manufacturer customers including BMW, Ford, General Motors, Toyota, Volkswagen, and many others. The key insight: while Tesla spent billions building its own self-driving AI from scratch, Magna was handed the deployment role by Nvidia with a single partnership deal. Magna gets paid every single time it installs Nvidia’s AI into a car, truck, or commercial vehicle.

Magna trades at less than 1/10th of Tesla’s valuation. The autonomous driving market is expected to nearly triple in the next four years, and Magna is positioned as the toll booth that all of that growth passes through. In November 2023, the Power Gauge flagged Magna as bearish before a 35% drop, then turned bullish before the recovery, demonstrating the system’s ability to time entries and exits.

Fabrinet (FN) is the second free pick, rated Bullish by the Power Gauge. Fabrinet builds the physical infrastructure that AI data travels on: transceivers, photonics systems, and fiber optics. As Chaikin puts it, while everyone talks about who’s building the advanced chips that power AI, no one pays attention to who’s building the high-speed superhighway that all the AI data travels on.

Fabrinet has nearly $1 billion in cash and zero long-term debt. Its partners include Nvidia, Cisco, and Amazon. The key insight: even when frontier AI changes the computing architecture, the data infrastructure doesn’t change, so Fabrinet’s hardware becomes more critical, not less. The faster AI gets, the more critical Fabrinet’s hardware becomes.

The contrast with Oracle is stark. Oracle is drowning in debt building data centers for a startup that can’t pay its bills. Fabrinet is swimming in money building the frontier AI superhighway for some of the biggest companies on earth. The Power Gauge rates Oracle Bearish and Fabrinet Bullish, reflecting the institutional money flow into Fabrinet and out of Oracle.

The third pick, the #1 stock, is not named in the presentation but is revealed in the bonus report 100X Starburst Opportunity. Based on the clues Chaikin provides, including a streaming service surpassing Netflix with 10x reach, an autonomous car company called the undisputed leader, a cloud division growing faster than AWS, a 6% stake in SpaceX, a 14% stake in Anthropic, and a government antitrust case, the stock is almost certainly Alphabet (GOOGL).

The #1 stock in Chaikin’s presentation is almost certainly Alphabet (GOOGL), based on the clues he provides. The stock has a streaming service surpassing Netflix with 10 times greater reach (YouTube), an autonomous car company called the undisputed leader against Tesla (Waymo), a cloud division growing faster than AWS (Google Cloud), an ad business called one of the best business models in the world (Google Ads), a 6% stake in SpaceX, a 14% stake in Anthropic, and a government antitrust case (DOJ v. Google).

Chaikin’s thesis is that a DOJ antitrust ruling could force Alphabet to split into multiple companies, unlocking the conglomerate discount through a starburst spinoff. At a $1 trillion Anthropic IPO valuation, Alphabet’s 14% stake would represent a $140 billion windfall on IPO day. The company also holds a 6% stake in SpaceX, which is itself potentially worth hundreds of billions.

Gil Luria of D.A. Davidson said: Break it right, and each spinoff could each command a multiple the market isn’t currently allowed to see. Six academic studies from J.P. Morgan, Credit Suisse, Deloitte, Penn State, Purdue, and Lehman Brothers all confirm that spinoffs outperform the S&P 500 by 10-22% in the first 12-22 months.

The offer is for Power Gauge Report, Chaikin’s flagship research service. It includes 1 full year of Power Gauge Report (monthly stock recommendations and analysis, valued at $499), 1 full year of access to the Power Gauge Rating system (look up any of 5,000+ stocks, valued at $1,000), and four bonus reports: 100X Starburst Opportunity ($199 value), The Robotics Hotlist ($299 value), The AI Energy Hotlist ($299 value), and The AI Bottleneck Hotlist ($299 value). A mystery gift valued at $2,999 is also included.

The total stated value is $2,595 plus the mystery gift, but the actual price is described as less than the price of a nice dinner and is revealed on the order page. The guarantee is 30 days, 100% money-back. If you cancel during the trial period, you keep all four bonus reports. The service has grown to over 550,000 subscribers.

Where to Learn More

For the complete analysis, read our CPGR Frontier AI review covering Marc Chaikin’s full thesis on frontier AI and the Power Gauge system.

Learn more about Magna International and why Nvidia chose it as its autonomous driving partner.

Read our deep dive on Fabrinet, the hidden AI infrastructure play building the data superhighway.

Ready to explore Marc Chaikin’s full research? Learn more about Power Gauge Report here.

This is not financial advice. Always do your own research before investing.