There's been a lot of chatter in the media about a little LLM (large language model) from China suddenly popping the “AI bubble” that vaulted NVIDIA shares to rival Apple in the past two years.
But instead of getting our analysis from observers, we want to understand what is really happening in the economic engines and industries creating a new future very rapidly.
The DeepSeek wake up call wasn’t “China can do it cheaper so AI is a bubble!”
It was “Artificial general intelligence (AGI) is developing faster than anyone realized. And the world will look very different in five years. So it’s time to get focused and invested—quickly.”
In this article, we'll look at the three primary forces driving this acceleration and how to position our portfolios for it.
Force #1: Hyperscalers Are Looking 5 Years Out for ROI
Much of the panic in stocks last month, when the Nasdaq opened 3% lower on a Monday morning, was hysteria around the assumption that capex investment from the Big Four datacenter builders would suddenly revert because somebody else allegedly “did something cheaper.”
But not only was the money-math wrong on what DeepSeek invested, Microsoft, Amazon, Alphabet, and Meta are seriously in the midst of a long-term build-out around all the manifestations of AI (not just LLMs) that will dramatically change the world in the next five years: hyperscale automation, robotics, autonomous vehicles, life-science revolutions, and incredible innovations in energy and materials.
That's why on their earnings calls in the past few weeks, we heard them reaffirming their capex plans that will spike this year's spending 40% higher than 2024 to over $320 billion. Even Larry Ellison of Oracle wowed us last year with his long-term forecast: "We have 162 datacenters... we'd like to have 1,000 to 2,000 more."
I’m sure it’s not hard to imagine that Elon Musk is taking no investment breaks either in his development of the advanced compute infrastructure required to support Tesla Full Self-Driving, Optimus humanoid robots, or the release of Grok 3, an LLM he claims to be the “smartest AI on Earth.”
Musk's xAI data center in Memphis, codenamed "Colossus," initially launched last October with 100,000 NVIDIA H100 GPUs. We now know after Grok 3 was unveiled Monday night that 100,000 more GPUs were added to train and support the latest LLM. Word is, he’d like to scale to 1 million GPUs and can’t wait to get his hands on Blackwell GB200 chips.
More . . .
------------------------------------------------------------------------------------------------------
Don’t Miss Zacks’ Enhanced Stock-Picking Formula
Our TAZR formula (Technical Analysis + Zacks Rank) has become something of a phenomenon, quietly adding even more thrust to a stock-picking system that already beats the market more than 2X over and averages +24.3% per year.
Recently the formula has closed flurries of double- and triple-digit gains.
Want to see the latest stocks it's turning up? Special opportunity ends midnight Sunday, February 23.
Check Out These Super-Charged Stocks Now >>
------------------------------------------------------------------------------------------------------
Force #2: The 5th Industrial Revolution
This is the underlying motive for all that investment. For perspective, the 4th Industrial Revolution ran from approximately 1995 to the late 20-teens and was all about the synergies of connectivity, data, devices, exponential semiconductor power, surging internet bandwidth, and the explosion of software productivity tools.
Google, smartphones, IoT, 3D printing, the cloud, and VR/AR became household words.
The 5th Industrial Revolution (5th-IR) turbocharges the acceleration of all those industries with machine learning and AI that offer the promise of merging digital, physical, and biological systems into AGI -- when machine intelligence consistently replicates human intelligence in all cognitive tasks.
This achievement of AGI power will mean an explosion of knowledge and efficiency across medicine, energy, materials, engineering, manufacturing, transportation, agriculture, and the sciences. I won’t promise exactly what will unfold, but I think it’s safe to predict world-transforming scientific progress, unbelievable new tools and efficiencies, the disruption of most work as we know it, and massive deflationary innovation in the next five years.
Ray Kurzweil, a principal AI researcher at Google, predicted two decades ago that we would realize “the singularity” by the year 2045 as AI superseded human intelligence. His lesser-known prediction is that we’d hit AGI by 2029.
Well, I’m here to tell you… it’s here now on our doorstep, so close it makes the hair stand on my neck just thinking about it.
With the pace of development, as the hyperscalers stack NVIDIA GPU clusters bigger, better, and faster, the folks building AGI, and who have to prove it, agree. Sam Altman of OpenAI wrote a blog on Super Bowl Sunday where he explained how it’s all coming even sooner than I expected…
“Anyone in 2035 should be able to marshal the intellectual capacity equivalent to everyone in 2025; everyone should have access to unlimited genius to direct however they can imagine.”
Sam’s point is that what is emerging can multiply super-exponentially, creating intelligence outputs-per-dollar that are “unbelievably stronger” than Moore’s Law. And so investment will continue to pour into the space as the returns scale for the next decade, just like they did for semiconductors.
Now let’s explore what Sam means in the context of how the 5th-IR is about to unleash massive economic productivity and social benefits, as it empowers individuals and companies across every industry.
Force #3: The Agents Are Coming
What DeepSeek made clear to the professionals who I talk to in AI technologies and related industries is that it just upped the ante on something called “Agentic AI.”
Agentic AI refers to artificial intelligence systems designed to autonomously perform tasks and achieve goals without direct human intervention, often exhibiting planning, problem-solving, decision-making, and even collaboration with each other.
Imagine this: you need a spreadsheet, lengthy report, financial plan, investment proposal, raw data file, deep website, or hours of audio and video analyzed, summarized, annotated, or otherwise improved before you deploy it elsewhere. There’s an agent for that.
Picture attorneys, accountants, and even doctors shaving hours off of their work day (and billable hours -- yeah, they won’t like that part) with agentic-AI tools, platforms, assistants, and robotic process automation.
Consider M&A consultants, city planners, engineers and scientists from every field being able to summon deep research quickly to verify or dispute their findings before they make career-altering presentations.
Finally, imagine having multiple agents that you instruct, working together while you sleep to research, build, and improve knowledge systems and automations of your design. I know it sounds like science fiction. But early adopters are already doing it -- especially software engineers trying to reinvent their careers.
A new era of human-machine collaboration, learning, autonomy, creativity, and agency is upon us… that delivers a multiplication of the skills, knowledge, time, and impact of any single professional.
Yes, this is Jarvis for the rest of us. While we may not all have our own humanoid robots anytime soon, the world of AI “getting physical” and impacting our daily lives is closer than your talking refrigerator.
Take it from me. I’m not a coder or developer. But I just spent the last two weekends building a youth STEM education app on Replit and Bolt, my new “secret agents.” It was a transformative experience while the words of Jensen at CES building the foundations of “Physical AI” with NVIDIA Cosmos were still running rampant in my brain (yeah, I watched his keynote a few times).
Again from Sam Altman...
“There is a great deal of talent right now without the resources to fully express itself, and if we change that, the resulting creative output of the world will lead to tremendous benefits for us all.”
This is the power of combining agentic AI and physical AI. Work becomes more efficient while new industries and jobs are also created. Jensen sees robots becoming a “multitrillion-dollar opportunity.”
Preparing As Investors for the 5th Industrial Revolution
I’ve made the case that the DeepSeek moment only intensified the race to build bigger, better, faster LLMs and other AI tools.
But it also apparently inspired some fresh competition, which is bringing down costs for users like you and I. Perplexity already claims to be offering OpenAI Deep Research at a fraction of the cost. There are debates about the relative quality, but the theme is one that Sam also mentioned: “The cost to use a given level of AI falls about 10x every 12 months, and lower prices lead to much more use.”
I can’t predict all the physical labor and knowledge jobs that automation, robotics, and AGI will replace in the next five years, but I remain an optimist on what cross-skilling and up-skilling can do for smart people who still want to learn, build, and contribute.
Maybe your job or business won’t be disrupted by competitors using better tools. Maybe your “killer app” is simply staying invested in the right stocks.
Then we must ask, where will the sales and profits gravitate?
One place is for sure: NVIDIA. They will be the center of gravity. And while I continue to hold our roughly 10X gain in NVDA shares since buying the 2022 lows, I also have a special trading strategy to extract more alpha from the algo tricks and “paper hands” swings before new all-time highs (no, it’s not options).
I’ve also been investing in quantum computing, cybersecurity, robotics, and software platforms-as-a-service (PAAS). While we can’t invest directly in OpenAI, Perplexity, or Anthropic, we can find alternatives in the stock market who will roughly track them.
The pace of transformation right now exceeds any prior tech revolution. Whereas I used to focus on quarterly developments across the AI space, now amazing things are happening every week. So join me in the hunt before NVIDIA reports earnings on February 26 and then the big show hits town with the GTC (GPU Tech Conference) March 17.
How to Find Stocks Poised to Outperform
The AI Revolution is underway, creating significant wealth opportunities for investors. So where are the most promising stocks right now? I’ll share my list when you try my portfolio service, TAZR (Technical Analysis + Zacks Rank).
The stock recommendations are based on a formula that adds thrust and even greater timeliness to our proven fundamental stock-picking system.
Of course, you can uncover some of these enhanced trades on your own if you start with the 220 Zacks Rank #1 and 660 #2 stocks. Then reduce the list to an investable few by adding technical signals for even more pinpoint timing.
But it takes more than a few chart setups to catch the right trades at the right times - and it can take years of learning through trial and error to get good at it.
That's where our TAZR system comes in.
We can’t guarantee future success - no one can - but recent performance includes impressive gains, such as +73.9%, +101.5%, +812.0% and +1,340.0%. TAZR followers even closed a gain of +416.0% in as little as 3 months.¹
Want to see what stocks I’m recommending now? It’s only $1 for a full 30 days.
Bonus: Get started today and you can also download our Special Report, 5 Stocks Set to Double. Five Zacks experts each present their single favorite stock to deliver gains of +100% or more in the year ahead. It supplements our generally fast-action TAZR buys with five long-term trades.
I encourage you to take advantage today. This arrangement expires midnight Sunday, February 23.
Look into TAZR and 5 Stocks Set to Double now >>
Good Investing,
Kevin Cook
Senior Stock Strategist
Kevin Cook, Senior Stock Strategist at Zacks, is a leading expert in technical analysis and what makes markets move. He provides commentary and recommendations for the Zacks TAZR portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
Image: Bigstock
DeepSeek and the 5th Industrial Revolution
There's been a lot of chatter in the media about a little LLM (large language model) from China suddenly popping the “AI bubble” that vaulted NVIDIA shares to rival Apple in the past two years.
But instead of getting our analysis from observers, we want to understand what is really happening in the economic engines and industries creating a new future very rapidly.
The DeepSeek wake up call wasn’t “China can do it cheaper so AI is a bubble!”
It was “Artificial general intelligence (AGI) is developing faster than anyone realized. And the world will look very different in five years. So it’s time to get focused and invested—quickly.”
In this article, we'll look at the three primary forces driving this acceleration and how to position our portfolios for it.
Force #1: Hyperscalers Are Looking 5 Years Out for ROI
Much of the panic in stocks last month, when the Nasdaq opened 3% lower on a Monday morning, was hysteria around the assumption that capex investment from the Big Four datacenter builders would suddenly revert because somebody else allegedly “did something cheaper.”
But not only was the money-math wrong on what DeepSeek invested, Microsoft, Amazon, Alphabet, and Meta are seriously in the midst of a long-term build-out around all the manifestations of AI (not just LLMs) that will dramatically change the world in the next five years: hyperscale automation, robotics, autonomous vehicles, life-science revolutions, and incredible innovations in energy and materials.
That's why on their earnings calls in the past few weeks, we heard them reaffirming their capex plans that will spike this year's spending 40% higher than 2024 to over $320 billion. Even Larry Ellison of Oracle wowed us last year with his long-term forecast: "We have 162 datacenters... we'd like to have 1,000 to 2,000 more."
I’m sure it’s not hard to imagine that Elon Musk is taking no investment breaks either in his development of the advanced compute infrastructure required to support Tesla Full Self-Driving, Optimus humanoid robots, or the release of Grok 3, an LLM he claims to be the “smartest AI on Earth.”
Musk's xAI data center in Memphis, codenamed "Colossus," initially launched last October with 100,000 NVIDIA H100 GPUs. We now know after Grok 3 was unveiled Monday night that 100,000 more GPUs were added to train and support the latest LLM. Word is, he’d like to scale to 1 million GPUs and can’t wait to get his hands on Blackwell GB200 chips.
More . . .
------------------------------------------------------------------------------------------------------
Don’t Miss Zacks’ Enhanced Stock-Picking Formula
Our TAZR formula (Technical Analysis + Zacks Rank) has become something of a phenomenon, quietly adding even more thrust to a stock-picking system that already beats the market more than 2X over and averages +24.3% per year.
Recently the formula has closed flurries of double- and triple-digit gains.
Want to see the latest stocks it's turning up? Special opportunity ends midnight Sunday, February 23.
Check Out These Super-Charged Stocks Now >>
------------------------------------------------------------------------------------------------------
Force #2: The 5th Industrial Revolution
This is the underlying motive for all that investment. For perspective, the 4th Industrial Revolution ran from approximately 1995 to the late 20-teens and was all about the synergies of connectivity, data, devices, exponential semiconductor power, surging internet bandwidth, and the explosion of software productivity tools.
Google, smartphones, IoT, 3D printing, the cloud, and VR/AR became household words.
The 5th Industrial Revolution (5th-IR) turbocharges the acceleration of all those industries with machine learning and AI that offer the promise of merging digital, physical, and biological systems into AGI -- when machine intelligence consistently replicates human intelligence in all cognitive tasks.
This achievement of AGI power will mean an explosion of knowledge and efficiency across medicine, energy, materials, engineering, manufacturing, transportation, agriculture, and the sciences. I won’t promise exactly what will unfold, but I think it’s safe to predict world-transforming scientific progress, unbelievable new tools and efficiencies, the disruption of most work as we know it, and massive deflationary innovation in the next five years.
Ray Kurzweil, a principal AI researcher at Google, predicted two decades ago that we would realize “the singularity” by the year 2045 as AI superseded human intelligence. His lesser-known prediction is that we’d hit AGI by 2029.
Well, I’m here to tell you… it’s here now on our doorstep, so close it makes the hair stand on my neck just thinking about it.
With the pace of development, as the hyperscalers stack NVIDIA GPU clusters bigger, better, and faster, the folks building AGI, and who have to prove it, agree. Sam Altman of OpenAI wrote a blog on Super Bowl Sunday where he explained how it’s all coming even sooner than I expected…
“Anyone in 2035 should be able to marshal the intellectual capacity equivalent to everyone in 2025; everyone should have access to unlimited genius to direct however they can imagine.”
Sam’s point is that what is emerging can multiply super-exponentially, creating intelligence outputs-per-dollar that are “unbelievably stronger” than Moore’s Law. And so investment will continue to pour into the space as the returns scale for the next decade, just like they did for semiconductors.
Now let’s explore what Sam means in the context of how the 5th-IR is about to unleash massive economic productivity and social benefits, as it empowers individuals and companies across every industry.
Force #3: The Agents Are Coming
What DeepSeek made clear to the professionals who I talk to in AI technologies and related industries is that it just upped the ante on something called “Agentic AI.”
Agentic AI refers to artificial intelligence systems designed to autonomously perform tasks and achieve goals without direct human intervention, often exhibiting planning, problem-solving, decision-making, and even collaboration with each other.
Imagine this: you need a spreadsheet, lengthy report, financial plan, investment proposal, raw data file, deep website, or hours of audio and video analyzed, summarized, annotated, or otherwise improved before you deploy it elsewhere. There’s an agent for that.
Picture attorneys, accountants, and even doctors shaving hours off of their work day (and billable hours -- yeah, they won’t like that part) with agentic-AI tools, platforms, assistants, and robotic process automation.
Consider M&A consultants, city planners, engineers and scientists from every field being able to summon deep research quickly to verify or dispute their findings before they make career-altering presentations.
Finally, imagine having multiple agents that you instruct, working together while you sleep to research, build, and improve knowledge systems and automations of your design. I know it sounds like science fiction. But early adopters are already doing it -- especially software engineers trying to reinvent their careers.
A new era of human-machine collaboration, learning, autonomy, creativity, and agency is upon us… that delivers a multiplication of the skills, knowledge, time, and impact of any single professional.
Yes, this is Jarvis for the rest of us. While we may not all have our own humanoid robots anytime soon, the world of AI “getting physical” and impacting our daily lives is closer than your talking refrigerator.
Take it from me. I’m not a coder or developer. But I just spent the last two weekends building a youth STEM education app on Replit and Bolt, my new “secret agents.” It was a transformative experience while the words of Jensen at CES building the foundations of “Physical AI” with NVIDIA Cosmos were still running rampant in my brain (yeah, I watched his keynote a few times).
Again from Sam Altman...
“There is a great deal of talent right now without the resources to fully express itself, and if we change that, the resulting creative output of the world will lead to tremendous benefits for us all.”
This is the power of combining agentic AI and physical AI. Work becomes more efficient while new industries and jobs are also created. Jensen sees robots becoming a “multitrillion-dollar opportunity.”
Preparing As Investors for the 5th Industrial Revolution
I’ve made the case that the DeepSeek moment only intensified the race to build bigger, better, faster LLMs and other AI tools.
But it also apparently inspired some fresh competition, which is bringing down costs for users like you and I. Perplexity already claims to be offering OpenAI Deep Research at a fraction of the cost. There are debates about the relative quality, but the theme is one that Sam also mentioned: “The cost to use a given level of AI falls about 10x every 12 months, and lower prices lead to much more use.”
I can’t predict all the physical labor and knowledge jobs that automation, robotics, and AGI will replace in the next five years, but I remain an optimist on what cross-skilling and up-skilling can do for smart people who still want to learn, build, and contribute.
Maybe your job or business won’t be disrupted by competitors using better tools. Maybe your “killer app” is simply staying invested in the right stocks.
Then we must ask, where will the sales and profits gravitate?
One place is for sure: NVIDIA. They will be the center of gravity. And while I continue to hold our roughly 10X gain in NVDA shares since buying the 2022 lows, I also have a special trading strategy to extract more alpha from the algo tricks and “paper hands” swings before new all-time highs (no, it’s not options).
I’ve also been investing in quantum computing, cybersecurity, robotics, and software platforms-as-a-service (PAAS). While we can’t invest directly in OpenAI, Perplexity, or Anthropic, we can find alternatives in the stock market who will roughly track them.
The pace of transformation right now exceeds any prior tech revolution. Whereas I used to focus on quarterly developments across the AI space, now amazing things are happening every week. So join me in the hunt before NVIDIA reports earnings on February 26 and then the big show hits town with the GTC (GPU Tech Conference) March 17.
How to Find Stocks Poised to Outperform
The AI Revolution is underway, creating significant wealth opportunities for investors. So where are the most promising stocks right now? I’ll share my list when you try my portfolio service, TAZR (Technical Analysis + Zacks Rank).
The stock recommendations are based on a formula that adds thrust and even greater timeliness to our proven fundamental stock-picking system.
Of course, you can uncover some of these enhanced trades on your own if you start with the 220 Zacks Rank #1 and 660 #2 stocks. Then reduce the list to an investable few by adding technical signals for even more pinpoint timing.
But it takes more than a few chart setups to catch the right trades at the right times - and it can take years of learning through trial and error to get good at it.
That's where our TAZR system comes in.
We can’t guarantee future success - no one can - but recent performance includes impressive gains, such as +73.9%, +101.5%, +812.0% and +1,340.0%. TAZR followers even closed a gain of +416.0% in as little as 3 months.¹
Want to see what stocks I’m recommending now? It’s only $1 for a full 30 days.
Bonus: Get started today and you can also download our Special Report, 5 Stocks Set to Double. Five Zacks experts each present their single favorite stock to deliver gains of +100% or more in the year ahead. It supplements our generally fast-action TAZR buys with five long-term trades.
I encourage you to take advantage today. This arrangement expires midnight Sunday, February 23.
Look into TAZR and 5 Stocks Set to Double now >>
Good Investing,
Kevin Cook
Senior Stock Strategist
Kevin Cook, Senior Stock Strategist at Zacks, is a leading expert in technical analysis and what makes markets move. He provides commentary and recommendations for the Zacks TAZR portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.