'AUTONOMOUS DRIVING': This is how John Deere is using AI

Key Concepts

• AI Beneficiaries: Companies poised to benefit from the growth of Artificial Intelligence, beyond just chipmakers.
• Fourth Industrial Revolution: The current era characterized by the fusion of technologies blurring the lines between the physical, digital, and biological spheres.
• Retail-Driven Investment: The increasing influence of individual investors in shaping market trends, particularly in emerging technology sectors.
• Execution Risk: The potential for companies to fail in capitalizing on opportunities despite favorable market conditions.
• AI Compute: The hardware and infrastructure required to power Artificial Intelligence applications.

The Shift from Chipmakers to AI Beneficiaries & New Investment Strategies

The conversation centers around a shift in investor focus from semiconductor companies (the “Magnificent 7”) to companies that will benefit from the broader adoption of Artificial Intelligence (AI). Last year saw significant surges in companies like Caterpillar, largely due to being rebranded as an AI play, demonstrating investor enthusiasm for the sector. This trend is expected to continue, prompting a need for strategic positioning.

Deere & Honeywell: Examples of AI Beneficiaries

Sylvia Jablonski highlights Deere (John Deere) as a prime example of this beneficiary trend, mirroring Caterpillar’s experience. Deere is leveraging AI through autonomous driving on tractors and crop automation, leading to anticipated revenue growth.

Honeywell is presented as a less obvious, but significant, AI player. The company’s substantial investment in Kwan Town Yum is driving AI applications in aviation, industrial production, and automation. This demonstrates that AI’s impact extends beyond traditionally “high-tech” sectors.

Intel’s Struggles & Execution Concerns

The discussion then turns to Intel, a former industry leader. Despite receiving government backing and benefiting from chip-related legislation, Intel’s recent performance has been disappointing. The CFO’s guidance indicated a failure to adequately manage supply to meet anticipated demand from data centers, raising concerns about the company’s ability to execute. Charles notes that Intel “fell asleep at the wheel” and appears to be continuing to struggle. This raises the question of whether Intel’s struggles are a broader indicator of issues within the data center AI story. The poor guidance, specifically regarding margins, further reinforces this concern.

The Role of Retail Investors & the RKNG ETF

Sylvia Jablonski’s firm has launched a new ETF, RKNG (Retail Kings), designed to capitalize on the emerging trends driven by the “Fourth Industrial Revolution.” RKNG is built on the premise that the world is shifting towards innovation across various sectors.

The ETF is allocated across several themes:

• AI Compute & Semiconductors: The foundational technologies for AI.
• Space & Defense: Areas experiencing significant technological advancement.
• AI Software & Healthcare: Applications of AI in critical sectors.
• Financial Platforms (Fintech): AI-driven financial technologies, which outperformed traditional banks last year.
• Semiconductor Equipment: Supporting the growth of the semiconductor industry.

RKNG is equally-weighted, holding 30-50 names, and leverages insights from a retail investor community to identify promising stocks. The ETF incorporates a pricing momentum strategy, focusing on stocks with positive price trends. The ETF began trading yesterday and is showing “healthy” volume and interest.

Coreweave & Past AI Doubts

Charles references Coreweave and Oracle as examples of individual companies that previously cast doubts on the broader AI narrative. He questions whether focusing on these specific instances was a mistake, suggesting that the overall AI story remains strong. Sylvia suggests that chip companies, in general, have demonstrated better execution than some of these individual names.

Notable Quotes

• Sylvia Jablonski: “Last year it was all about the chipmakers and the Mag 7, and this year it's about the beneficiaries.” – This encapsulates the central theme of the discussion.
• Charles: “Intel used to be number one, they were a monopoly, they dominated. They fell asleep at the wheel, looks like they’re still falling asleep.” – Highlights the concern about Intel’s declining performance.
• Sylvia Jablonski: “The whole thing now is that I think the world has changed and the puck is moving towards the fourth industrial revolution.” – Emphasizes the broader technological shift driving investment.

Logical Connections

The conversation flows logically from observing the initial surge in AI-related stocks (Caterpillar) to identifying the broader trend of investors seeking “AI beneficiaries.” The discussion then examines specific companies (Deere, Honeywell, Intel) to illustrate the opportunities and challenges within this space. Finally, it introduces RKNG as a new investment vehicle designed to capitalize on this trend, driven by the insights of retail investors.

Conclusion

The core takeaway is that the AI investment landscape is evolving beyond the initial focus on chipmakers. Investors are now seeking companies across various sectors that stand to benefit from the widespread adoption of AI. Successful investment in this space requires identifying companies with strong execution capabilities and understanding the broader trends driving the “Fourth Industrial Revolution.” The launch of RKNG reflects a strategy to tap into this trend, leveraging the power of retail investor insights and a diversified, equally-weighted approach.