The lens Eric Fry is using to evaluate all new picks… an AI “Enabler” that deserves a spot in your portfolio… are we in an AI bubble?… AI is turning on itself
How important is the AI megatrend in today’s market?
So important that every other investment must be viewed through an AI lens.
According to our macro investment expert Eric Fry, every stock you own going forward must fall into one of four categories:
- AI “Builders”
- AI “Enablers”
- AI “Appliers”
- AI “Survivors”
The Builders are what you expect – the obvious bets like the Magnificent Seven stocks that create the software and hardware architectures facilitating AI technologies.
The Enablers support AI’s growth from behind the scenes, supplying the physical materials, energy, real estate, and/or infrastructure required to build and operate AI systems.
Appliers take those AI systems and use them to boost efficiency, productivity, and profitability – they don’t have to be tech stocks, just effective at using tech to boost profit margins.
And Survivors provide a product or service that is resilient to AI disruption (at least for now) – think agriculture, energy, travel…
In his latest issue of Fry’s Investment Report, Eric dug into this framework, presenting specific investments positioned to lead each of the four categories. I want to draw your attention to one, highlighting an opportunity within.
I’ve profiled it in the Digest in recent months. Readers who took advantage are already up in the trade, but Eric’s deep dive shows that there are plenty more gains on the table.
Let’s talk about the AI Enabler of silver, and how to invest in it today.
The unsung hero of AI
“Rare earth metals” have received loads of attention this summer as the raw materials that power AI – and deservedly so. They’re critical for our most futuristic technologies.
But one of the most overlooked heroes in the AI story is far more familiar: silver.
It’s not just a precious metal; it’s the best natural conductor of electricity we have. That makes it indispensable in the wiring, switches, and contacts inside the data centers where AI models are trained, as well as in the chips that run those models.
The more that AI scales, the more demand there is for components that can move massive amounts of energy and data at lightning speed – and silver’s conductivity makes it irreplaceable in those applications.
So, are you bullish on AI? You’re bullish by proxy on silver.
Here’s Eric:
Industrial usage is surging, which the Silver Institute attributes to high-tech applications like advanced semiconductors, 5G infrastructure, EVs, sensors, and power grid components.
AI is supercharging this source of demand in many ways – think denser servers, networking hardware, high-speed interconnects, and power management in AI data centers, all of which lean on silver’s unmatched conductivity.
But there’s another massive tailwind…
It requires enormous amounts of energy to train and use large AI systems. So, many of the AI Builders are racing to pair data centers with renewable power sources – like solar. And guess what’s critical for solar panels?
Every solar panel requires a meaningful amount of silver paste, so the clean-energy buildout feeding AI’s appetite indirectly adds to silver demand too.
Back to Eric:
For years on end, industrial demand for silver has been ramping higher – spearheaded by demand from the photovoltaic solar (PV) industry.
According to the Silver Institute, annual PV silver demand soared more than 65% during the last two years, and now consumes 197.6 million oz – or about 24% of the annual mined silver supply.
Despite this, most investors have seen silver as little more than gold’s less attractive sibling
While investors crowd into chipmakers and cloud giants, few are connecting the dots on silver. Yet as AI continues to scale, the world’s best conductor could quietly become one of the most strategic metals of the next decade.
It gets better – according to one historical valuation metric, silver is waving a huge “buy me now!” flag.
Let’s go to Eric:
Whenever the silver-to-gold-ratio (SGR) indicator falls to readings that are as low as they are today, the silver price rallies… usually a lot.
For most of the last 30 years, the SGR has ranged between lows around 1.2 and highs around 3.1 – meaning that the price of silver has ranged from 1.2% of the gold price to 3.1%.
The rare moments when this ratio traded below 1.27% signaled great moments to buy silver.
Eric points out that a reading below 1.27% has occurred only eight times during the last 30 years.
Here are the subsequent gains after the first seven of these occurrences:
- 60% over 15 months
- A triple over the next three years
- 370% over the ensuing three years
- 38% over the next five months
- Almost 100% in little more than a year
- A double in less than six months
- 79% in less than two years
Back to Eric for where we are today with this indicator, and what he expects:
Earlier this year, the SGR ratio dipped below 1.27% once again when it hit a low of 1.0% on April 21…
If past is prologue, the silver price will continue chugging higher, and will surpass the S&P.
Now, we haven’t even scratched the surface on another huge angle on this story – how mined silver supply is moving in the wrong direction. Then there’s silver’s appeal as a “safe-haven” asset during times of geopolitical chaos and monetary debasement. But to cover more ground in today’s Digest, let’s jump to the action step.
Out of respect for Eric’s Investment Report subscribers, I won’t name how they’re playing silver. But one easy option for you to consider is SLV, the iShares Silver Trust. It’s engineered to reflect the movements of silver bullion.
Here’s Eric with the final word:
If gold is a “Buy,” then silver is a better “Buy.
Bottom line: a confluence of influences are combining to drive the silver price higher.
Is silver a safer way to play an AI bubble?
In our Tuesday Digest, we highlighted comments from OpenAI Chief Executive Officer Sam Altman the previous Friday.
Altman said:
You should expect OpenAI to spend trillions of dollars [on data center construction in the] not very distant future.
And you should expect a bunch of economists to wring their hands and say, “This is so crazy, it’s so reckless,” and whatever. And we’ll just be like, “You know what? Let us do our thing.”
But a few minutes later in the same interview, Altman had words of warning for investors.
From Bloomberg:
[Altman] sees parallels between the current investment frenzy in artificial intelligence and the dot-com bubble in the late 1990s. In both cases, Altman said, “smart people” became “overexcited” by a new technology.
“Are we in a phase where investors as a whole are overexcited by AI? In my opinion, yes” …
He added: “Someone’s gonna get burned there.”
Our technology expert Luke Lango just weighed in on this.
From his Innovation Investor Daily Notes:
We actually agree: this is a bubble. But bubbles are where fortunes are made — the trick is timing.
With rate cuts likely coming, positive regulation in place, and AI breakthroughs accelerating, we don’t think the pop is near.
In fact, we see at least 12 more months of runway before the cracks start showing.
But even if you’re bullish, the AI story is evolving in a way that you must be aware of
AI technology is moving so fast that yesterday’s cutting-edge tech is at risk of falling behind.
Here’s Luke explaining:
We’ve entered a two-speed economy split by AI. On one side, there’s the AI economy, firing on all cylinders.
On the other side, the “everything else” economy is lagging. Consumer spending is slowing, margins are compressing due to tariffs, and profits are stuck. Stocks in this camp are fading…
But even within the AI economy, a fresh bifurcation is emerging…
Former high-flying AI stocks are slipping. The disruptors are being disrupted. That’s how fast AI is evolving.
Given this, Luke just recommended that his Innovation Investor subscribers sell a handful of stocks that, not long ago, fit into the “AI/tech leadership” bucket. The list includes GoDaddy and Pinterest.
To illustrate the mindset/analysis, here’s Luke’s thinking on GoDaddy:
GPT-5-class models can generate full sites with code, design, and SEO by themselves. AI can also integrate with cloud hosting directly, bypassing traditional web-building tools.
In this new world where foundational AI models can create websites for you for essentially free, we believe the value prop of web-building service providers like GDDY meaningfully decreases.
How do you know if your AI stock is a keeper or tomorrow’s victim?
Start with one question…
Is this company building the tools of AI, or is it simply using AI as a feature?
The safer names are those providing essential infrastructure – semiconductors, cloud capacity, data center hardware, sensors, core software models – without which AI can’t function. These companies may face volatility, but their role in the ecosystem is foundational.
On the other hand, companies that are just sprinkling AI on top of an existing product face more risk. If their competitive advantage can be easily replicated by the next model upgrade, then their AI “edge” is on borrowed time.
But even if you feel confident that you’ve found a safer “essential infrastructure” play, you can’t ignore the price tag.
Returning to Eric, this is the point he’s been hammering home for months now:
I wouldn’t touch a single overhyped tech stock right now.
While these firms may seem attractive to investors, like Nvidia Corp. (NVDA), the truth is that their valuations are overshot, landing them in the stratosphere.
For instance, Nvidia’s market cap sits at $4.23 trillion, the highest in the world. It is currently trading for 56X its trailing price-to-earnings (P/E) ratio, or about double the market average.
I recommend avoiding stocks like these because their high valuations yield to low valuations… eventually…
That is why I look for companies that have a promising runway built by strong fundamentals – attractive valuations.
Eric recently released a “Sell This, Buy That” research package that urges investors to sell some AI/tech leaders including Amazon, Telsa, and Nvidia. In the report, he reveals what he’s buying instead.
Here’s more from Eric:
I’ve compiled a list of three companies that I believe are “Buys.” These are under-the-radar, early opportunities that can help you protect and multiply your money during make-or-break markets.
You can find the details of these companies – ticker symbols and all – in my special broadcast, free of charge.
Bottom line: Between AI’s self-eating creative destruction and nosebleed valuations, it’s becoming increasingly challenging to find the sweet spot today. But that’s exactly what we’ll help you do here in the Digest (check out silver).
On that note, here’s Luke’s guidance to take us out:
The AI Boom isn’t broadening — it is narrowing.
Gains are consolidating into the hands of the few real AI innovators, disruptors, visionaries, and moat-builders. Our job is too keep adapting so we stay with them.
Don’t get dragged down with yesterday’s biggest winners. Adapt to the times. Evolve with the tech. And always stay invested in tomorrow’s biggest winners.
Have a good evening,
Jeff Remsburg
