☕ We’re seeing AI really hit the books now, and I hope you’re on board!

Good morning! 👋

I am back in the PNW after a fabulous, albeit dang cold, visit to Pleasant Prairie, Wisconsin where I met up with 100+ 5Fitzers, OBAers and other super savvy folks from around the country. 

I can’t wait to go back and hope you’ll join me next trip! 😀 

Let’s get after it! 

The S&P 500 is up this morning as I type and that’s great on a few levels not the least of which is that it’s proof positive the path of least resistance remains higher. 

The “pause” I told you was likely in Monday’s update arrived right on schedule and as predicted, the weak money did panic.  

I hope you capitalized on the chaos! 

Always remember, missing opportunity is more expensive than trying to avoid risks you can’t control. 

1 – TSMC’s first US chip factory + Apple = a win 

I’ve been waiting a while to see this one come out of the ground, pun absolutely intended. (Read)

One of my primary hesitations when it comes to TSMC has been this deal because of Apple’s involvement.  

The reason I bring this up is that a) Apple has committed to being the largest customer and b) the fab is the first of three to be built on site by the end of the decade just a few short years from now.  

Hmmm. 

Might be time to bust a move. 

2 – Palantir to the QQQs? 

We knew this was coming. (Read)

In fact, a big part of the company’s move to the Nasdaq was very likely inclusion. 

Investors quickly latched on because - as I shared with you - the stocks of those companies moving “into” an index tend to do very well as large passive investors (like index funds and style driven ETFs, for example) must buy shares every time those indices get reconstituted. 

Conversely and what they often miss, though, is that they’ve also got to sell shares of those companies being booted. Some of the names likely at risk of an unceremonious exit based on capitalization include CDW, Moderna, ON Semiconductor and DexCom just to name a few. 

Check your portfolio now to avoid any unpleasant surprises. 🤷‍♂️ 

3 – Welcome to the trillion-dollar club 

Broadcom is up 22% today as I type which means it’s now a card-carrying member of the trillion-dollar market cap club! 

This follows strong earnings, which showed a 51% increase in revenue YoY but even more impressively a 220% increase in AI revenue. (Read) 

I know I sound like a broken record on this but the numbers are really starting to accelerate. 

AI will be the biggest investing theme in recorded human history which means that every business will adapt, adopt or die. 

Invest accordingly or you will get left behind, no two ways about it. 

I’ll be here if you need me, btw. 

4 – Costco to $1,000 

I’ve made the case several times over the past 24 months that I thought Costco would hit $1,000 and that there may be a split in the works including, in April, on Varney & Co. (Watch) 

We’re about there. 

Speaking of which, Costco’s most recent earnings were fabulous as I suspected would be the case. That, in turn, opens up the runway for another big retailer on the move. One that the OBA Family knows all about. 

Costco, btw, has returned 51.44% YTD versus the S&P 500 which as returned a wonderful but far less 26.94% over the same time period.  

Invest in the best, ignore the rest! 

5 – T-Mobile ups the buyback 

US carrier T-Mobile has announced its plan to repurchase up to $14 billion worth of shares by the end of 2025. (Read) 

We’ve talked about this before… it’s part of the company’s larger plans to return as much as $60B to shareholders. 

People who complain about buybacks don’t understand the game. 

Buybacks:

1. Are a sign that management thinks its own stock is undervalued.  
2. Reduce the number of outstanding shares and that tends to be great for shareholders.  
3. Can be the most efficient use of capital, higher, in fact, than comparable investment opportunities. 
4. Are not recurring commitments so they can provide tremendous flexibility when it comes to management's ability to response to changing market conditions. Dividends, by contrast, are a pre-planned, pre-committed outlay. 
5. Tend to be more tax efficient because they can be taxed as capital gains rather than dividend income for many investors. 

Smart! 

I might have to take another look at shares, although to be honest, I am still much more focused on two more recent, more dynamic opportunities because they’re both under $10 and have 5-10X potential. Both have the potential to pull a “Palantir” in the next 12-24 months. 

**OBAers, be sure to read the December issue if you haven’t already devoured it.  

Bottom Line 

People fear change because they overvalue what they have and undervalue what they could have if they gave that up.  

     -- James Belasco. 

As always, let’s finish the week strong. 

You got this – I promise! 

Keith 😃