The biggest opportunities in AI are no longer in Big Tech.
For years, Big Tech’s success in the stock market was driven by two factors:
- Profits
- Share buybacks
Outside of speculation, investors buy companies based on future cash flows. The Big Tech/ Mag-7 plays have been cash generating machines, producing over $500 BILLION in operating income per year. As a result of this, they have dramatically outperformed the broader market.
The second issue driving this outperformance concerned share buybacks. Since 2021, the MAG-7 stocks have spent, on average, 30%+ of their operating income on buybacks. AS a result of this, these companies have experienced a perpetual bid in their shares, regardless of whether or not financial institutions/ retail investors were buying. We’re talking about $250 BILLION in stock purchases per year.
To put that into perspective MAG-7 stock buybacks were a standalone company, it would be in the top 50 companies in the S&P 500, larger than AMD, Salesforce or Adobe!
The AI build out is ending this.
MAG-7 is now spending over $400 BILLION in capital expenditures per year on the AI build-out. This spending is so massive that many of these companies (META, GOOGL, etc.) are issuing debt to finance it.
As a result of this, these companies have less and less money to spend on share buybacks. Which means… the MAG-7 is losing its perpetual bid!
Put simply, MAG-7 has lost is appeal as an AI-play. And the markets KNOW it. The MAG-7 ETF has gone nowhere since September 2025.
So where are the biggest opportunities in AI?
Hard assets: the resources that are CRITICAL for building/ maintaining AI.
If you don’t believe me, maybe you’ll believe billionaire Robert Friedland.
Friedland is a natural resources legend, and he recently issued a stark warning about where the largest issues… and the largest opportunities will be.
Some highlights from his presentation:
- The world needs to produce as much copper in the next 18 years as it has produced in the last 10,000 just to maintain GDP of 3%.
- Natural resources, particularly copper, scandium, germanium and others are now a matter of “national security” because the world is entering a “war time economy” as far production is concerned.
- Demand is growing so rapidly that there is no longer a “rational price” for critical minerals.
Friedland is not being dramatic here. The Dow Jones Industrial Metals index just broke out of a FOUR-year consolidation period.
The same is true for Energy Stocks (XLE).
Even uranium, which has been “left for dead” for years is igniting.
I’ll be detailing a microcap natural resource play with triple if not QUADRUPLE upside potential in tomorrow’s article. This company is the ONLY American-based company that produces one of the 60 minerals the Trump administration has deemed CRITICAL to national security.
Shares have already spiked 60% in the last month. And given the upside potential here… I expect they’ll soon be going a LOT higher.
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Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research
