Transcription
Folks, you better get ready. In today's video, we're going to break down the latest on the market and plays, and then we're going to go deep into one specific stock that I believe has extreme potential. This is a stock that I believe is going to be a key resource play, is going to be very, very relevant in the buildout of AI in the United States. And arguably, it's going to be one that is very, very important for national security. This is a stock that we've talked about before and one that has started to run up, but I believe it has way more upside. And I'm going to present my case for it. I'm going to present the facts, the data, the evidence, and I'm going to let you be the judge. Of course, as always, you got to make sure that you're doing your own due diligence on all ideas presented. If you're the one taking the ultimate risk, you got to be the one doing the ultimate frisk. Lots of people get real risky risky without doing their frisky frisky and vice versa.
Okay, so to start, you have to understand that right now we're heading into a global AI arms race. If you look at this chart from Bridgewater, it shows almost 40% of the US real GDP growth last quarter was driven by tech capex, capital expenditure, aka investment to build out AI and everything that goes into chips, data centers, software, the overall apparatus. If you look at the trend of hyperscaler capex between just the richest companies in the world, Amazon Web Services, Microsoft, Google, Meta, Oracle, well, this capex is shooting up like crazy and it's expected to go up many, many multiples more. If you look at the company's planned investment trajectory and if you look at the total expected investment in AI by 2030, well, by most analysts' expectations, you're looking at many, many trillions of dollars.
Now, if you're financially minded, you might ask yourself, okay, well, wait a second. Doesn't this AI investment have to pay off eventually, or you're going to see some sort of bubble popping if the AI investment isn't paying off? Well, companies that have invested way too much, way too fast are going to see their valuations collapse, right? Certainly on an individual case by case basis, these questions do matter and market cycles will happen. Downtrends will happen. However, if you're focusing and obsessing over these questions, you might just be missing the forest for the trees. Here are the trees. What people think matters, the companies and how much money they are going to make from AI. That's a small part of it. That's just the trees of an overall forest. What actually matters, the forest, the country with the best AI is going to be the most powerful economically, militarily, and technologically. So in other words, this is actually not just a small simple battle between companies to see who's going to make the most money over the long run. It's actually which country is going to develop the best AI and is going to become the next superpower, the top dog of the 21st century. Whichever country wins the AI arms race is going to be the number one in terms of economy, military, technology, living standards, is going to be able to rewrite the culture of the world. This is what we saw with the United States the last 100 years and on. And whoever wins this AI arms race is going to be the next to have the torch on that. And really, this is a race between the United States and its allies and China and its close allies. Now, I like to be an optimist and be pacifistic and say that, hey, maybe we're all going to be friends, Kumbaya. But history suggests other things. And if you really look at history, it suggests that the only ways that people can be friends is with mutual competitiveness. But this AI arms race has the potential to completely derail the entire world order.
Now, you might think, "Wait, Charlie, what does this have to do with anything?" I'm just here to make some money, Charlie. This national security threat means that AI investment is not just going to be tied to profits. It's going to be increasingly bankrolled and backed and protected by the US government. And because the private sector knows this and they know Uncle Sam's going to be behind their rear end every time they fall, well, it emboldens them even more to invest. And we're not even talking about the lowering of the interest rates by the Fed, which is going to cause even more investment. The folks that are saying that AI investment within the United States is going to stop, well, they must also believe that the United States is going to be willing to bow down to China, which again is not the reality of what we're already seeing, let alone what we're going to see in 5 to 10 years.
So, here are the early phases of the AI arms race. Now, pay attention very, very closely because almost all of these are already happening. Phase one, recognition. Global leaders realize AI is the new arms race. Dominance in artificial intelligence is seen as critical to national security and economic power. Phase two, the investment surge. Massive private sector spending begins, led by US tech giants and Chinese state-backed firms racing to build compute infrastructure and train frontier models. Phase three, government intervention. As capital expenditure, capex needs outgrow corporate balance sheets, governments step in. The US and China begin directly funding AI infrastructure, chips, data centers, energy security. AI funding becomes the modern equivalent of the Cold War space race. Phase four currency impact. To fund this new wave of national spending, both sides expand their money supply, aka print money, effectively debasing their own currencies. Phase five, the asset response. So investors hedge against debasement, leading to rallies in gold, silver, Bitcoin, and other stores of value. Productive asset owners, owners of shares in AI and AI related stocks, see massive, massive wealth accumulation while regular folks see their purchasing power eroded and many, many will even lose their jobs entirely.
Okay. So, in order to have the best AI as a country, what areas does your private and public sector have to invest in? Well, energy, rare earths, chips, data centers, software. These are areas that I believe very, very strongly are going to be backstopped long term by the federal government, by the Fed with low interest rates and by the private sector that wants to make money piggybacking off Uncle Sam. Of course, if you're buying AI stocks that draw AI doodles, maybe that's not going to be super important for national security. But the ones that do fall into these categories, of which there are many, well, those are going to be very, very important in the long term. So, anyways, in no way, shape, or form am I saying you're never going to have a crash again. You're never going to have a market cycle dip. You're never going to have any of these things. You're going to have them. They're going to be even more extreme than ever because of massive amounts of margin. But what I'm saying is that you need to be calm, collected, look at the bigger picture. Look at dips as huge dip buying opportunities. Look at these rips, these higher and higher highs as opportunities as well. And buy slowly over time. Good stocks, good assets at good prices. And I'm going to be fired up to give you as many quality ideas as I possibly can with the research to boot so that you're not just randomly buying stuff. You got to have an understanding of what it is and why you're buying everything. And you got to have a plan.
Okay, let's go on to the latest on plays. So, we got to start with RGTI, our leading quantum idea. So, if you go back to when it was in the $8 region and it was in a big big dip cycle, we were saying, "Hey, look, this is a great buy because the quantum space is in its early innings of investment and RGTI is a leader in the space." And as of yesterday, RGTI hit new highs at $57.54, which was very much a beautiful run. And we love beautiful runs. Now, if you look back at that April video and some of the other videos we made back then on RGTI and over the summer, a lot of people said, "Look, I don't like RGTI because it's in the quantum space." and that's still too early innings. That technology is too much of a fugazi or something like that. The reason that I believe that quantum is something that can't be slept on is specifically because it's next-gen technology. Again, these technologies are not just essential for a company, but also for a country. Whoever has the most powerful chips, has the most powerful AI, and is the most powerful economy. For example, by many metrics, China is investing way more in quantum than we are here in the United States in both a public and private way. And I believe that more and more dollars are going to flow into quantum in order to match at least match that expenditure. And RGTI as well as a few other plays that we like are really the top dogs to get that capital. This is a company that we've been yelling about since April and we will continue to yell about it and we alerted a new round of calls dating out to 2027 because we do see the longer-term bigger picture on this.
Okay, next we got to talk about NVTS, Nvidita's semiconductor. So back on July 20th, we broke down the case to buy NVTS stock at $6.79. And the reasoning was because they were backed by Nvidia, partnered with Nvidia in several ways. They offer very, very competitive next-gen chips that are faster, smaller, lighter, and have substantial energy savings compared to competitors and at a much lower overall system cost. And of course, we've covered the stock multiple times, and yesterday just hit highs at $14.28, which means over a 2x. So, massive congratulations to folks who believed in this one. But what is the long-term case for NVTS? Well, with this, you're getting exposure to very, very key types of chips. This is a stock that ensures exposure to high growth GNSIC power markets. Now, if you go over to our calls alerted back on July 21st, we said, quote, "Nevita Semiconductor is the clear leader in GAN power IC's, enabling faster charging, higher efficiency, and smaller form factors across EV chargers, and most importantly, data center power supplies and consumer electronics. A strategic partnership with Nvidia to integrate GAN power stages in nextg AI APUs GPUs underscores the technologies growing importance." So that's why NVTS stock has been on such a rocket recently and that's why we continue to believe in it over the long term.
Okay, let's talk MP Materials, ticker symbol MP. So back 3 months ago, we made a video breaking down why MP Materials, ticker symbol MP, was screaming buy and that was because it was in consideration for a DoD contract and stake. And then that deal got finalized. And in the DoD deal, MP actually secured a purchase agreement with a floor price of $110 per kilogram for certain rare earth oxides that they offer, which helps insulate their revenue against price swings. The US Department of Defense also committed to become MP's largest shareholder via a $400 million preferred stock investment. And after that, MP got a ton of private attention, too, with a massive backing by Apple and a massive deal with them. And so at recent highs, the stock hit $15 a share, which is very, very beautiful. But what is the latest on this setup? Well, this is what we sent out to the Discord today. Quote, "MP Materials has long-term backstopping from the federal government and a price floor, and they own the only operating rare earth mine and processing facility in the United States. This stock is overdue for breathing after recent massive runs. Short-term pricing is going to be based around how heated US China trade war tension is in the geopolitical sphere and throughout the media. However, long-term, we expect much broader price appreciation."
And one more before we go on to the main entree. If you are in the Discord, you notice we've started talking about another SPAC player, one specifically called CCCX. Now, this stock is expected to merge with a key Quantum company, effectively taking them public. People are buying the SPAC entity in order to get an early buy in on that quantum stock. We saw a lot of this in 2020 and 2021. We saw this with HD, which is one of our favorite uranium plays. But this play is in the quantum space. Now, here's what we said on the Discord, and I want you to know about this. ECCX has been following a consistent uptrend as hype around a merger deal keeps building. The merger partner is expected to be Inflection, a quantum computing player, with many details still being finalized. Now, from a technical standpoint, the stock is currently trading within an ascending wedge, which can often act as a deprecating factor. We expect a break below this pattern in the near term. However, the dip will be heavily impacted by the merger outcome. Keep in mind that Triple CX is an SPAC with little inherent fundamental value other than the potential company it is merging with. If the deal with Inflection falls through, then we expect to see the bears push CCCX below the $20 level. On the flip side, if favorable details emerge, then a bounce off the 20 to $22 level range is likely. And I really want you to know about this now because I believe you're going to see this talked about everywhere for the next couple of weeks and and especially as we head into the end of the year.
Okay, folks. Now, it's time for the main entree and that is LAC. So, this is a company that fits all the themes we've been discussing. Has US government backing and likely has much farther to go if my anticipations are correct. So, the context here, we called this out before the government actually took a stake in it, and it's been featured on our channel a couple of times. And yes, it's gone up since those levels, but I believe there's more upside. I believe this play is just getting started. So, what exactly is LAC? So, LAC is a lithium development company focused on advancing the Thacker Pass project in Northern Nevada along with other lithium exploration and development assets in North America. Now, Thacker Pass is its flagship asset and the specific one that I believe that Uncle Sam is interested in and it aspires to become a domestic source of battery grade lithium carbonate to feed energy storage and related supply chains. Very, very critical segments for data center security and overall military security. Lithium is so so important and it's one of the choke holds that China has over the US and so you need to see these develop out a lot.
Now, this company in my opinion has the wind at its back. For starters, it's got a strategic industrial policy tilt. The US government has now inserted itself into LAC, which by the way, we brought to you before before they actually inserted themselves. We told you just when it was in the rumor stage, but anyways, they took a stake of about 5% in both the company and the Pass joint venture. That's not just a loan guarantee. It's actual skin in the game which aligns with Washington's incentives. Think about this. This means that any adverse regulation, funding clampdown or permit roll back becomes reputationally costlier for the government, raising the hurdle for political interference in that segment. Now, there's also financing, de-risking, and a lower cost of capital. The DOE loan that they got of $2.26 billion is structured, restructured, and now backed by equity co-participation. That shifts project risk from "if you can raise money" to "can you execute the build," a much, much more manageable bucket to be in. Private capital will now be way more comfortable tapping in and around this government anchored zone. Nobody loves betting more on companies that have been bankrolled by Uncle Sam than private capital.
Now, you've also got just the demand and policy tailwinds that are out of this world. Of course, EVs, but I'm really more concerned about grid storage and battery demand. Those are going to keep climbing. The IRA, the Inflation Reduction Act, the Defense Production Act, critical materials mandates, and content rules all favor US supply chains and thus favor this. China's tightening of rare earth/critical mineral exports or restrictions further amplifies the non-China source premium that should be paid to the stock. Now, I would argue here the story with this stock is that you've got asymmetric risk versus reward at the current valuation given the government's picture in this. On the downside, you have risks of delays, cost overruns, weaker than expected lithium prices. But many of those are mitigated by government backing and advanced engineering. Nobody likes picking winners and losers more than Uncle Sam. And once he's taken a stake, I believe that's a pretty good indication that he thinks you're going to be a winner. And if you're not, well, he's going to try to backstop you all the way to make it as likely as possible. Again, my opinion, I could be wrong, but again, when you're analyzing these trends, you have to point these out because these are very, very beautiful setups.
So, anyways, what is the rundown on why we like LAC? Well, because LAC now crosses from a junior development story to a strategic national asset with real government capital aligned. We like it because the execution is not just speculative. If you actually look into their reportings and their SEC filings, they have locked design, EPC partners, union labor, and they've got beautiful public transparency as a publicly traded company. And all these things are very, very good. Now, because the global lithium cycle is entering a tight regime, new projects globally are late, permits are slow and the ESG pushback has been strong. Well, I think that companies that actually have this leg up that they have are going to really, really perform and I also think this is due for substantially more multiple expansion because of how the United States again is backing this, which means that you're going to see a lot of de-risking of capital.
Now, what do we see happening to the stock price? Well, I would like to see, and I always say this because I always mean this, I would like to see the stock breathe. I don't like the idea of chasing. It just feels painful. But at the same time, I do want to remind you of the bigger picture. And that's why I'm also going to be alerting LAC call options for a specific time range. If you'd like to see those, well, first link to join the Discord is right there down below. Anyways, folks, that caps off today's video. Have a great rest of your day and we'll see you next.