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I am celebrating the 4th of July weekend, so instead of a company report, I am sharing data on the latest holdings in the extremely popular Dan Ives AI Revolution ETF (IVES). Considering the extraordinary popularity of AI combined with the non-stop public appearances of Ives (he is everywhere!) these stocks will continue to receive a lot of attention, especially from retail investors, and some of them rightfully so. Enjoy!

This ETF has already reached over $300 million is assets! and is climbing fast!!

Recent reports indicate the Trump administration is preparing executive orders to boost power supplies for the AI industry (i.e. easing grid connections and providing federal land for data centers). Vistra, the largest competitive power generator in the U.S., is uniquely positioned to benefit from this policy shift, with its diverse portfolio of nuclear, natural gas, solar, and battery storage facilities. Adding intrigue, former House Speaker Nancy Pelosi reportedly purchased ~$1 million in Vistra call options earlier in 2025, signaling strong confidence in its growth trajectory. This report dives into Vistra’s business model, its AI-driven growth, valuation, risks, and why it’s a compelling play in the AI energy revolution.

Vistra: A Powerhouse in the AI Era

Based in Irving, Texas, Vistra Corp is a Fortune 500 integrated retail electricity and power generation company with a staggering 39 gigawatts (GW) of generation capacity, making it the largest competitive power producer in the U.S. Its portfolio spans natural gas, nuclear, coal, solar, and battery energy storage, serving ~5 million customers across states from California to Maine. Vistra’s retail arm, including brands like TXU Energy, holds a 32% residential market share in Texas’ ERCOT grid, with NRG Energy as its main rival.

What sets Vistra apart is its strategic focus on reliable, dispatchable power—critical for AI data centers that require 24/7 electricity. CEO Jim Burke recently emphasized, “Natural gas and nuclear will play an ever-increasing role in the reliability, affordability, and flexibility of U.S. power grids for years to come.” This aligns perfectly with the AI boom, as data centers are projected to consume 6.7% to 12% of U.S. electricity by 2028 (that’s a lot!).

AI-Driven Growth and Trump’s Executive Orders

The AI megatrend is reshaping energy markets. Data centers, fueled by Big Tech’s AI ambitions, are driving U.S. power consumption to record highs, with 2025 and 2026 projected to set new benchmarks. Vistra’s shares have already soared 280% in 2024, outpacing Nvidia’s 178% and making it the S&P 500’s top performer. This growth is fueled by surging demand from AI infrastructure, advanced manufacturing, and electrification trends.

Trump’s reported executive orders to streamline grid connections and allocate federal land for data centers could supercharge Vistra’s trajectory. These policies aim to address bottlenecks in power supply, particularly for hyperscalers like Amazon, Microsoft, and Google, who are racing to build AI data centers. Vistra’s nuclear assets, like the Comanche Peak plant in Texas, and its natural gas fleet are ideal for co-located data centers, which demand reliable power close to generation sources. Vistra will likely be a key beneficiary, alongside peer Constellation Energy (CEG).

Vistra’s recent moves underscore its AI focus. In May 2025, it acquired seven natural gas plants for $1.9 billion, adding 2.6 GW of capacity at $743/kW—a bargain compared to new-build costs. The deal, expected to close by early 2026, enhances Vistra’s ability to serve high-demand markets like PJM and California. Additionally, Vistra’s nuclear fleet, the second-largest behind Constellation Energy, is exploring uprates to boost capacity by 10% by the early 2030s.

Valuation: Premium but Justified?

Vistra’s valuation appears rich, trading at ~24x forward earnings, nearly double the S&P 500 utilities sector’s 16x multiple. Its price-to-sales ratio is also elevated, reflecting high investor optimism. However, this premium is arguably justified by Vistra’s growth example revenue is expected to grow 19% this year).

Wall Street remains bullish, with all 15 analysts rating Vistra a “Strong Buy” (1.27 on a scale of 1 (strong buy) to 5 (strong sell)). Further, upward EPS revisions (green bars in the table) for 2025 and 2026 signal underappreciated growth potential. Vistra’s capital allocation is also shareholder-friendly, with $6.3 billion returned since 2021 via buybacks and dividends, and $2 billion more planned through 2026.

Risks to Consider

Despite its strengths, Vistra faces notable risks. Environmental concerns are significant, as it was ranked the top U.S. CO2 emitter in 2020 and 2024, producing 1.5% of national greenhouse gas emissions. This could attract regulatory scrutiny or alienate ESG-focused investors. Customer concentration is another risk; while Vistra hasn’t secured a major data center deal like Talen Energy’s Amazon pact, its reliance on hyperscalers could expose it to contract volatility.

Competition from peers like Constellation Energy, which has inked deals with Microsoft, and NRG Energy poses a threat. Vistra’s failure to announce a data center deal has frustrated investors, contributing to a 20% stock drop in February 2025. Finally, industry cyclicality and regulatory uncertainty, particularly in Texas and PJM markets, could delay data center agreements.

Comparing Vistra to Peers

Vistra isn’t alone in the AI energy race. Constellation Energy, with its nuclear focus, surged 81% in 2024 and trades at a similar premium. GE Vernova, benefiting from grid upgrades, offers broader exposure but less direct AI leverage. Talen Energy’s Amazon deal highlights the potential for big contracts, but Vistra’s larger scale and diversified portfolio give it an edge. Unlike smaller players like Oklo, Vistra’s established infrastructure and cash flow ($4.56 billion in 2024) provide stability.

The Bottom Line

Vistra Corp is a standout in the AI megatrend, fueled by its unmatched scale as the U.S.’s largest competitive power generator and its strategic bets on nuclear and natural gas. Trump’s executive orders could unlock new opportunities, amplifying Vistra’s role in powering AI data centers. Pelosi’s $1 million investment underscores its allure, though her track record is no guarantee. Despite a premium valuation and risks like environmental scrutiny and deal delays, Vistra’s 280% surge in 2024, robust fundamentals, and Wall Street’s “Strong Buy” consensus make it a compelling pick.

Personally, I’m optimistic about Vistra’s ability to secure a game-changing data center deal, and its diversified portfolio mitigates cyclical risks. If you’re bullish on AI’s insatiable energy needs, Vistra is worth considering. But as always, weigh the risks and do what’s right for your portfolio. The AI energy revolution is just getting started, and Vistra is set to benefit.

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While Wall Street has been bashing Palantir hard, the longs (including Wedbush Securities’ Dan Ives) have been right all along as the artificial intelligence (“AI”) megatrend continues. This report reviews Palantir in detail (including its wide-moat business model, AI growth trajectory, current valuation and risks), compares the shares to the other top 10 growth stocks in Ives’ new AI Revolution ETF (IVES), and then concludes with my strong opinion on investing.

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Palantir: Climbing the Wall of Worry

For some brief high-level color and perspective, you can see in the following table that very few Wall Street analysts have rated Palantir a “Buy” over the last three years.

Yet despite persistent high negativity, the share price has continued to climb dramatically and most negative Wall Street analysts updated their price targets only AFTER the gains (see chart below).

So congrats to the longs, who have owned the shares despite the negativity, and that includes Dan Ives who owns the shares (in a big market-cap-relative overweight) in his recently launched AI Revolution ETF (IVES); you can see Palantir among his top 10 holdings in the table below (the names are sorted by weight in the IVES ETF, as per the “Notes” column, more on the other names in this table later).

Also noteworthy, the green bars in the table above are upward EPS revisions from Wall Street analysts (this quarter, next quarter, this year and next year, respectively), thereby again demonstrating the strong earnings momentum for Palantir, much more so than other top AI stocks.

Palantir: A Wide-Moat Business Model

Palantir is an amazing, high-growth, software company benefiting from the big-data and AI revolution. It has expanded from its Gotham software platform serving government entities (which is incredibly difficult to break into, but highly lucrative once you have) to launching and rapidly growing its more commercially-focused Foundry software platform (despite a constant drumbeat of loud naysayers). And it also launched its AI Platform (“AIP”) right as the megatrend was beginning to ramp and thereby catching massive new business tailwinds that many previously thought impossible.

And what makes the company’s economic moat so impressive is that once you capture these types of customers, they are much more likely to expand the relationship than they are to end it (as evidenced by Palantir’s increasing net retention ratio, a key SaaS metric (Software as a Service) which was over 115% in 2024 (and increased every quarter)) and then climbed to 124% in Q1 2025. Plus, unlike other companies, Palantir actually builds high-quality customer solutions, as evidenced by this impressive quote from the company’s colorful CEO, Alex Karp:

"Also because the playbook backed by venture capitalists and supported by analysts has always been make the thinnest technology possible that is misaligned with your enterprise and hire the most and best salespeople so the enterprise gets moderate value while having its high revenue exported in a parasitic manner to the cheers of insiders and the pain of retail investors and we obviously rejected that."

Additionally, you can see Palantir’s strong gross and net margins, and high expected revenue growth, in the earlier data table. Impressive. Also noteworthy, the company just became GAPP profitable in the last three years, and that net margin continues to expand as Palantir grows and benefits from economies of scale. In particular, SaaS is a great business (highly scalable) to begin with, and Palantir’s growth is being dramatically accelerated by the big data and AI megatrends (i.e. right place, right time).

AI Growth Trajectory

“Artificial Intelligence isn’t just another tech trend; it’s a generational shift, a technological wave on the scale of electrification or the birth of the internet.” That’s the view of Dan Ives (and his research team) and I agree. AI is a very big deal. It’s a megatrend.

For example, the following chart gives some flavor for the size of this opportunity in the years ahead (AI still has a lot of room to run).

The chart above suggests, that despite the strong gains we’re already seeing from top AI stocks (see our earlier table) there is still a lot of room to run.

And for perspective, here is a quote from Microsoft CEO Satya Nadella (another big AI player, but in the hyperscaler space):

“AI is the defining technology of our times. It’s augmenting human ingenuity and helping us solve some of society’s most pressing challenges.”

Current Valuation

You can see in the earlier table that Palantir is uber expensive on traditional valuation metrics like price-to-earnings (P/E) ratio and Price-to-Sales. Yet that has been the case for several years now, and it hasn’t stopped the shares from posting incredible gains (and the longs have made a lot of money, to the chagrin of Wall Street naysayers).

However, to put things in a little more perspective, here is a look at how Palantir now ranks in the S&P 500 in terms of market cap (it’s the 23rd biggest company) and in terms of sales (it’s only the 460th biggest). That’s quite a discrepancy, and a tribute to the market’s strong belief in Palantir’s ongoing sales growth.

Again, on traditional metrics, and even compared to its incredibly powerful growth trajectory, Palantir looks very expensive. But that hasn’t stopped the shares in the past from climbing higher.

The Risks:

In addition to a very rich valuation (as described above), Palantir faces several additional big risk factors that investors should consider.

Government Contract Dependence: Between 41% and 60% of Palantir’s revenue comes from government contracts (and 75% of that is US). And federal budget cuts are always a big risk (and they could have a very negative impact on Palantir in particular). That said, it seems the human workforce may be more at risk, as AI continues to shrink workforces around the economy. Nonetheless, this is a risk.

Reputational and Privacy Concerns: We saw just this month how quick Palantir was to respond to negative political rhetoric out of Washington DC. However, Palantir’s surveillance capabilities (used in military and immigration operations) are perceived as highly controversial by many, and these are ethical and regulatory risks that could alienate clients and/or investors.

Competition: Palantir’s faces competition from well-funded big tech, such as Microsoft, Amazon, and Google (which offer cloud-based analytics platforms with integrated AI capabilities, such as Azure, AWS, and Google Cloud, respectively). Further still, specialized data analytics companies like Snowflake, Databricks, and Tableau (owned by Salesforce) also provide alternative solutions that directly challenge Palantir’s Gotham and Foundry platforms. However, Palantir has been able to consistently overcome competition via its niche differentiation and thereby allowing high growth to continue. Also, the company’s long-term contracts and reputation for handling sensitive data have created high switching costs thereby adding additional resilience against the competition.

The Other Top 10 AI Revolution Stocks

You can see in our earlier table (which includes the top 10 names in the Ives AI Revolution ETF), Palantir isn’t the only high-growth megatrend play in town. For example, Nvidia has similar high growth (arguably better) and a significantly lower valuation (plus its graphics processing units are basically ground zero for the entire AI revolution). Also, Meta has better gross margins, a compelling P/E ratio versus its growth and a young CEO who seems dead set focused on building an even greater business. And if you look at analyst ratings and price targets (for what they are worth) all 9 of the other companies are more compelling than Palantir.

Also worth mentioning, the position sizes of the other nine companies in the AI Revolution ETF are much more consistent with their market caps and weights in the S&P 500 index. Whereas Ives is really going out on a limb with his top 10 bet on Palantir despite its relatively much smaller market cap and absolutely miniscule sales, relatively speaking. He (and all the other Palantir longs) have been very right with this bet thus far, and Palantir’s very-sticky high revenue growth remains on an impressive trajectory (thanks to its niche position in the AI megatrend, which still appears to just be getting started). You can view all 30+ holdings in the Ives AI Revolution ETF here.

The Bottom Line:

The AI megatrend is very real and Palantir is a truly exceptional company. If you are looking to play the AI megatrend more broadly, the Ives AI Revolution ETF is a quick way to get exposure to top names (and it has been gaining new assets/investors at a very fast pace). But if you are looking to avoid its 0.75% expense ratio, simply buying top names, such as Palantir, may be a better approach for you.

Personally, I have had tremendous success owning Palantir, and I am extremely confident in the AI megatrend (I currently own 12 of the names in Ives’ 31-stock ETF, with one new one very high on my watchlist).

However, at the end of the day, you need to do what is right for you. While Wall Street has been bashing Palantir hard, the longs have been right all along. And by trusting their own gut—and doing what's right for their own individual situations—they'll be right again!

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My Personal top 10 AI Growth Stocks, Ranked…

Top 10 AI Growth Stocks (Ranked), Big Disruptive Upside

If you are getting AI revolution fatigue… don’t. While some names are more volatile than others, this megatrend is still just getting started and there are plenty of stocks that still have lots of disruptive upside. In fact, I rank and countdown my top 10 in this next report, starting with an “honorable mention” and finishing with my very top ideas.

Before getting into the specific names, it is important to remind you that investing is a goal-focused exercise, and everyone’s situation is different. You may want to consider a few of the names in this report as just one part of your prudently-diversified/concentrated portfolio. And if you are not a pro (or at least an expert-level investor) speak with an investment advisor or tax professional before you start investing.

So with that backdrop in mind…

let’s get into my personal top 10 AI growth stock rankings and countdown…

Read the full subscriber-only report now

Before getting into the specific names, it is important to remind you that investing is a goal-focused exercise, and everyone’s situation is different. You may want to consider a few of the names in this report as just one part of your prudently-diversified/concentrated portfolio. And if you are not a pro (or at least an expert-level investor) speak with an investment advisor or tax professional before you start investing.

So with that backdrop in mind, let’s get into it…

Honorable mention:

Palantir (PLTR)

Palantir is one of the most impressive growth stocks you are ever going to see. It has expanded from a private business with many government contracts (which is a very challenging business to break into, but also very lucrative once you have) and into additional high-growth and high-margin commercial businesses (something the naysayers said they couldn’t do; I love it when negative people are proven wrong). What’s more, the company launched its Artificial Intelligence Platform (AIP) right at the time the AI megatrend was ramping up, and this has launched its growth (and share price) into the stratosphere (incredible!). However, it’s the recent amazing run up in share price that keeps this once out of the official top ten (it’s only an “honorable mention”), but this is still an incredible software (as a service) business that may well prove the naysayers wrong yet again!

You can read my latest report on Palantir here.

10. Nebius (NBIS)

This is the only name in the top 10 that I don’t have a separate writeup for (and I don’t have a position in, yet), but the opportunity is potentially so good that I needed to add it to the list. Nebius has an important partnership with Nvidia to build large-scale GPU clusters in an “AI-native” cloud environment/ datacenters (that basically allows hyperscalers to get up and running fast with the latest Nvidia Blackwell chips). And for perspective, in the most recent quarter, Nebius reported impressive 385% year-over-year revenue growth (reaching $55.3 million) driven by strong ongoing demand for AI compute power. Yet despite its high-growth trajectory, Nebius remains relatively under the radar, trading at a forward price-to-sales ratio (~12.5x based on 2025 revenue estimates) significantly lower than hyperscaler peers.

I’ll have more to say about Nebius in the near future, but for the time being, you can see how it compares to other top AI companies (in the following table) based on various valuation metrics (and more).

9. Tesla (TSLA)

Continuing with the theme of proving the naysayers wrong, the CEO of Tesla (Elon Musk) has done this before (by basically taking on The Big 3 Automakers, with electric vehicles, and winning). However, Musk is also an extremely hated person right now (by many people) for political reasons (he took over Twitter and also has been partnering with the Trump administration), and as a result (of that and the fact that sales growth has fallen off a cliff), Tesla shares are still well below their all-time highs.

However, Musk has set his sites on another massive market opportunity, this time driven by AI, with his plans to turn Tesla’s into fully autonomous vehicles driving themselves (and passengers), and it will be coming to a city near you soon, if Musk gets his way. Not only does this add to the value of Electric Vehicles, but it also potentially opens a massive trillion-dollar-plus growth opportunity in the ride hailing industry (because self-driving vehicles are potentially significantly less expensive than physically manned Uber and Lyft vehicles). The uncertainty and challenges of this opportunity are so high that Tesla is not ranked higher in this report, but if Musk succeeds with autonomous vehicles taking over the ride-sharing industry, these shares can still go dramatically higher from here.

You can read my latest writeup on Tesla here.

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Astera Labs is growing rapidly because it solves datacenter bottlenecks created by the AI megatrend. It also has several competitive advantages and strategic partnerships (e.g. Nvidia, Amazon) allowing it to capture a significant share of a large and growing market (cloud data and AI). This report reviews the business, the high growth, total addressable market, current valuation and risks, and then concludes with my strong opinion on investing.

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Astera Labs:

Founded in 2017, Astera Labs (ALAB) began trading publicly (in March 2024) at a time when few other companies were going public—a positive nod to its disruptive growth (revenue grew 45% year-over-year in 2023) and high demand for AI solutions.

Based in Santa Clara, California (a semiconductor hotbed), Astera Labs is a fabless semiconductor company that specializes in high-speed connectivity solutions for cloud and AI infrastructure. Specifically, the company addresses performance bottlenecks in data-centric systems, enabling efficient, low-latency data transfers critical for AI and cloud computing workloads.

For example, according to co-founder and CEO, Jitendra Mohan:

“AI workloads have shattered the traditional unit of compute, ushering in what we call “AI Infrastructure 2.0”—where all the servers in an entire rack function as unified computing platform rather than collections of individual servers. The continued exponential leap in computational requirements has pushed us beyond what traditional server architecture can handle.”

That’s basically the problem Astera Labs is solving, and for some perspective:

“The numbers tell the story of an industry hitting the limits of traditional architecture. Google’s PaLM demanded 6,144 chips in early 2022, already a massive scale by historical standards. Yet just months later, OpenAI’s GPT-4 training run required approximately 25,000 A100 GPUs, a 4x increase that shattered previous assumptions. Meta’s infrastructure evolution illustrates the acceleration: their Research SuperCluster started with 16,000 A100 GPUs in 2022, but by March 2024, they were operating clusters with 24,576 H100 GPUs each for training Llama 3. The pace has only intensified. xAI brought online a 100,000 H100 GPU system in September 2024, representing a 16x increase in cluster size in just two years.”

High Growth and Large TAM:

As mentioned, Astera Labs revenue grew 45% in 2023 (right before its IPO), but then grew 242% in 2024, over 144% (to $159.4 million) in Q1 2025 (year over year), and analysts are projecting revenue over $1.9 billion by 2029. This high growth is being fueled by the AI megatrend.

And the company estimated its total addressable market (TAM) opportunity at over $17 billion, including data center interconnects. The market is expanding rapidly due to the ongoing proliferation of AI, cloud computing, and high-performance computing applications. Furthermore, the open standard for AI connectivity positions Astera to capture significant market share from hyperscalers (e.g. Amazon, Alphabet, Microsoft) as they transition to scale up their AI architectures (thereby requiring thousands of interconnected GPUs).

Competitive Advantages and Strategic Partnerships

Astera Labs’ focus on emerging standards (e.g. CXL and PCIe 6.x) makes it most relevant for next-generation AI infrastructure. And its open standard “plug-and-play” interoperability has been rigorously tested with the main GPU and memory vendors thereby reducing integration risks for clients.

Atera’s strategic partnerships with hyperscalers (e.g. Amazon, Meta and Google) and its leadership role in the UALink Consortium, enhance its ecosystem influence. Further, the company’s ability to offer comprehensive connectivity solutions (from signal conditioning to smart fabric switches) sets it apart from competitors like Broadcom and even Nvidia’s Mellanox division.

Valuation:

From a valuation standpoint, Astera Labs may appear expensive (recently trading at over 31x sales), but after taking into consideration the extraordinarily high sales growth trajectory (77% this year and 28% next year), combined with the large TAM, competitive advantages and growing AI megatrend, these shares are arguably much more reasonably priced (and potentially significantly undervalued relative to what lies ahead). In fact, the 14 Wall Street analysts covering the shares rate them a “strong buy.”

Furthermore, you can see in the table above that upward EPS earnings revisions (green bars in the table above) have been significantly positive (for this quarter, next quarter, this year and next year, respectively) often an indication of short-sighted analysts underappreciating the high-growth trajectory (i.e. good for shareholders). Astera Labs is also already significantly profitable (see net margin, +8.4%, above) another good indication of financial health.

Risks:

• Nvidia Partnership: Astera’s partnership with Nvidia poses a significant risk. For example, Astera solutions are deployed within Nvidia Hopper and Blackwell platforms, which drives dramatic revenue, but also poses a risk if Nvidia were to face setbacks or diversify suppliers away from Astera. As mentioned, Astera has competitive advantages (such as its more comprehensive solutions), but its reliance on Nvidia poses a significant risk (even though it’s a huge advantage right now).

• Customer Concentration is also a risk worth considering. Even though Astera doesn’t publicly disclose revenue per customer, it seems Amazon is likely big partner (based on disclosure of Amazon having warrants to purchase more Astera shares). Nvidia is also a big customer (as described). And Microsoft and Alphabet are also disclosed customers and likely big ones considering they are among the main hyperscalers fueling AI and datacenter growth. Further, Intel was historically a large customer, but that relationship has been shrinking, relatively speaking, as Astera works to diversify customer concentration risk.

• Competition is another risk. For example, Astera is currently around a $15 billion market cap company—a large cap stock—but still small in comparison to established players like Nvidia, AMD and Intel—who have dramatically superior financial wherewithal if they were to choose to build out internal solutions instead of Astera’s. Although the chance of this seems low at the moment (because the industry is currently so focused on simply keeping up with demand) as the cycle changes, so could the competition.

• Industry Cyclicality is another risk. It seems the AI megatrend is still in its early innings based on a wide variety of market reports and hyperscaler disclosures. However, given the high customer concentration and historically cyclical semiconductor industry, Astera could face significant risks from any market wide slowdowns (business cycle, tariff driven or otherwise).

Conclusion:

Astera Labs presents a compelling investment opportunity thanks to its important role in the AI megatrend (it solves connectivity bottlenecks), combined with its dramatic growth trajectory. And contrary to initial sticker shock, its valuation metrics are arguably very compelling as compared to its tremendous ongoing growth rate (Wall street rates it a “strong buy” and the shares can easily 2x considering growth is set to more than 2x in the coming years while profit margins will expand for this already profitable young business, and the long-term TAM is even dramatically larger still).

However, Astera Labs is not without significant risks (including customer concentration, competitive threats and overall semiconductor industry dynamics and swings), and for this reason the shares should only be considered within the constructs of a prudently concentrated high-growth portfolio. I have no position at this time, but Astera Labs is high on my watchlist and I may add shares in the near future.

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It’s a bit of a turnoff to see a 30-year-old stock marketing itself as an Artificial Intelligence play (considering that’s a megatrend that only just started to ramp within the last 2-years). Nonetheless, Innodata (INOD), a data engineering company, is finding its niche (capitalizing on the surging demand for high-quality AI training data) and hitting its stride (5 “Mag 7” clients) with a lot of room to run (massive TAM) and a reasonable valuation (8x sales). This report reviews all of that, plus risks, and then concludes with a strong opinion on investing.

About Innodata:

Founded in 1988 and headquartered in Ridgefield Park, New Jersey, Innodata operates through three business segments (1. Digital Data Solutions (DDS), 2. Synodex, and 3. Agility), but the DDS segment is the primary revenue driver (it provides AI data preparation and model training services). INOD serves many market sectors and currently has contracts with 5 of the Mag 7.

Regarding, the other two business segments, Synodex digitizes medical records, and Agility supports marketing and PR with content distribution platforms.

Growth:

Innodata is growing rapidly courtesy of the AI megatrend (and the need for quality data, in particular). Revenue grew 120% in Q1 (year-over-year), and INOD estimates 40%+ growth for 2025 (again, driven by expanding AI data services, new customer wins, and account expansions, specifically in generative AI, agentic AI, and trust & safety solutions).

Furthermore, the total addressable market (“TAM”) opportunity is huge. For example, Morgan Stanley estimates $300 billion in 2025 capex from tech giants on generative AI. And INOD estimates at 40% compound annual growth rates in their TAM through 2032.

Valuation:

From a valuation standpoint, INOD trades at 8.3x sales, expensive, but not really when you consider revenue is to grow by +40% this year, and more next year.

The company is also profitable (more than you can say for a lot of other high-growth companies), and the 4 Wall Street analysts covering this small cap stock currently rate it a “strong buy” (1.25 on a scale of 1 to 5).

Risks:

Innodata shares face plenty of risks, considering it’s a small cap stock with a significant portion of revenue coming from just a few clients. Although the company doesn’t disclose clients, they did just disclose they have contracts with 5 of the Magnificent 7 companies, and the largest client accounts for $135 million (run rate) of the company’s total ~$238 2025 revenue estimate (so one client account for nearly 57% of revenue).

Another risks is simply that it is a volatile high-beta stock tied strongly to the economy and the AI megatrend in particular. Any bad news or near-term earnings weakness could drive these volatile shares lower in a hurry.

The Bottom Line:

If you are looking for a picks-and-shovel play on the AI megatrend, Innodata is carving a high-growth niche in preparing training data for big tech and others. It’s a market area that is growing fast with a large TAM. Obviously, there are big risks, as described, but within the constructs of a prudently-concentrated high-growth portfolio, owning shares could be worth considering. I have no position at this time, but may add shares in the near future.

If you enjoyed this read, the best compliment I could receive would be if you shared it with one person or restacked it.

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We've all been the target of anger, but few as much as Tesla (TSLA) CEO, Elon Musk, after he purchased Twitter and joined forces with Trump. However, an examination of his body of work at Tesla reveals he brilliantly created the modern electric vehicle ("EV") industry in anticipation of renewable energy becoming a significantly larger portion of the US electric grid (see chart below) and thereby enabling EVs to ultimately be powered more by clean energy and less by the dirty fossil fuels that dominated the grid and powered EVs when that industry began. It was a brilliant innovation that improved quality of life in the US, and he seems, presciently, about to do it again. This report is about the existential total addressable market opportunity Full Self-Driving (“FSD”) technology creates for Tesla, including competitive advantages, valuation, risks and concluding with my strong opinion on investing.

The Importance of Innovation:

Before getting into the details, and to briefly provide some high-level perspective, Warren Buffett is rumored to have once said about investing:

“First come the innovators, who see opportunities that others don’t. Then come the imitators, who copy what the innovators have done. And then come the idiots, whose avarice undoes the very innovations they are trying to use to get rich.”

Musk innovated the modern EV industry, many other companies around the globe are now imitating it, and as the market gets saturated, a new batch of third "i's" will continue to try to compete. Meanwhile, Musk has set his eyes on a new innovation; another very large market opportunity where his business can scale wide and far, quickly.

Understanding Full Self-Driving (“FSD”)

Autopilot and FSD are Tesla’s driver-assistance technologies. They currently operate in “supervised mode” (which requires driver oversight); however Tesla’s goal is “unsupervised mode” (i.e. where the vehicles drive themselves entirely). This technology and goal has the potential to unlock a massive robotaxi network opportunity (and potentially transform the entire transportation industry as we know it). And Tesla expects a small fleet (10 to 20) of its full self-driving vehicles to begin hitting the roads in Austin, Texas within the next few days.

Estimated Total Addressable Market (“TAM”) for FSD

The TAM for FSD is massive, considering the global transportation market’s size (think taxis, busses, trains and more) and FSD’s potential to disrupt it. For example, the ride-hailing market alone (think Uber) is projected to reach nearly $250 billion by 2030, with autonomous vehicles potentially capturing a significant share (due to lower operating costs). And if Tesla deploys a robotaxi network, some estimates suggest a TAM of $1–2 trillion globally for autonomous ride-hailing by 2040 (due to reduced labor costs and increased vehicle utilization).

Tesla’s existing fleet of over 5 million vehicles (already equipped with FSD capacity via software update), combined with its ability to scale production (faster and more efficiently than competitors—more on this in a moment), positions Tesla to potentially dominate this massive market opportunity. Further, potential FSD subscriptions and licensing to other manufacturers could add billions in recurring revenue (at a $99–$199 monthly subscription rate).

Tesla’s Competitive Edge Over Uber

Tesla has a big advantage over Uber (the current dominant ride hailing service) in the increasingly imminent autonomous market. Specifically, Uber relies on human drivers (who account for ~70% of ride costs), while Tesla’s FSD may eliminate driver costs entirely.

Further, Tesla’s vertically integrated approach (Tesla controls hardware, software, and data collection) gives it a dramatic advantage. For example, its vehicles generate real-time driving data and thereby update and refine FSD’s training models faster than competitors. On the other hand, Uber’s autonomous efforts (such as its partnership with Waymo) depend on third-party technologies, thereby limiting control and scalability (whereas Tesla’s fleet is already FSD-capable via software updates). Moreover, Tesla’s brand loyalty (arguably) and EV expertise enhance its competitive advantage.

Tesla’s Competitive Edge Over Waymo

Tesla FSD also competes with Alphabet’s (GOOGL) Waymo. However, Tesla’s massive fleet (over 5 million FSD-capable vehicles, generating real-time data) gives it a huge advantage over Waymo (with only around 700 vehicles, operating in limited cities, and relying on costly “lidar” sensors). Estimates have FSD’s technology as potentially $10,000–$15,000 less expensive, per vehicle, versus Waymo’s $100,000+ retrofit efforts. Tesla CEO, Elon Musk, recently acknowledged this differentiator saying:

"The car is very expensive, made in low volume. Teslas are probably cost 25% or 20% of what a Waymo costs and made in very high volume."

Tesla’s fleet size is a huge advantage, and its data and cost structure are hard to match. However Waymo’s has some advantages, such as regulatory approvals and operational robotaxis giving it a head start, but again Waymo is dramatically limited by scale as compared to FSD.

Valuing Tesla’s Potential:

Tesla appears extremely expensive on traditional valuation metrics. For example, with a current 123.9x forward price-to-earnings ratio, the stock appears most obviously overvalued to many investors.

However, at this point, Tesla’s valuation hinges on the success of FSD in disrupting the transportation market, which will potentially unlock massive growth, cash flows and profits.

And to put the importance of FSD in perspective, CEO Elon Musk recently said:

“If we don’t solve full self-driving, Tesla’s value is basically zero.”

It seems clear that FSD is an existential opportunity for Tesla investors, but nonetheless it can also make sense to consider the company’s valuation using a sum-of-the parts approach, considering FSD, plus automotive and plus energy storage. For example, here are some very high-level “back-of-the-envelope” calculations:

Energy Storage Business: With $10.1B in 2024 revenue (10% of Tesla’s total revenue), up 67% from 2023, and with a gross margin of around 24.6%, we could assign a 10x price-to-sales multiple (this assumes many years of high growth) to value Tesla’s energy business at $101B. Obviously, this estimate includes lot of big assumptions and “what-ifs,” as well as a high-degree of uncertainty.

Auto Business: Tesla’s auto segment (electric vehicles, leasing, and regulatory credits) generated $85.1B in 2024 revenue (85% of Tesla’s total revenue, up only 1% from 2023, and with a gross margin of around 17%), we could assign a 5x price-to-sales multiple (this assumes the company returns to growth as Musk refocuses on the business) to assign a value of $425.5B for Tesla’s auto business. Obviosuly, this includes a lot of assumptions (especially considering increasing competition from EV imitators and new competition).

FSD Business: Considering Tesla’s current market cap is around $1.2T, and we’ve estimated the other two main segments to be worth ~$526.5B ($425.5B + $101B), that means FSD must be worth at least $673.5B (1.2T - 526.5B) for the shares to be fairly valued. That is a huge (673.5 unicorns) valuation for a business segment that is not even a real business yet (it’s just an idea in “research & development”). However, considering our TAM estimates earlier, it’s not unreasonable to believe the FSD segment can be worth dramatically more than $673.5B if it is successful in the FSD robotaxi market.

For example, Tesla shares currently trade at ~$360, but Wall Street firms like Wedbush say it’s worth $390 (with a bull case of $650, citing optimism about FSD) and ARK Invest previously saying it’s worth $2,600 per share by 2029 (estimating ~90% of Tesla’s enterprise value and earnings in 2029 will come from robotaxis). However, the average Wall Street price target is more bearish, recently at only $290 from the 36 firms covering it.

Clearly there is a lot of uncertainty and “what-ifs” involved in Tesla’s valuation, but if it is successful with FSD and the robotaxi industry then the shares are worth dramatically more than the current price. Said differently, Tesla is a highly speculative investment that is absolutely not for everyone,

Risks:

Obviously, Tesla shares face huge risks (most of them surrounding FSD execution risk) that investors need to consider. For example:

FSD Trust: Fully self-driving vehicles are pretty scary if you ask me. And it seems Tesla will need to achieve nearly perfect reliability to gain consumer trust. Any FSD accidents could quickly destroy investor confidence. However, this was the case when Tesla EV’s first entered the market, and several highly-publicized car fires damaged the share price, but only temporarily. Tesla overcame those challenges.

FSD Adoption: Robotaxis require consumer buy-in. And cultural resistance still exists, despite the fact that FSD robotaxis will likely be significantly cheaper than Uber (potentially $0.50/mile vs. $2/mile), easier (and more cost effective) than car ownership, and “greener” (due to EVs being powered by increasingly cleaner energy grids).

Loss of Freedom: To some people, a car represents freedom. However, considering the extent to which FSD “stalks your every move” (it records everything) you are giving up some freedom. Not to mention, you’re also giving up control to a robot technology (i.e. “robo” taxi), and you’re still limited by EVs needing to be “plugged in” somewhere (instead of just fueling up and going). Nonetheless, compared to busses, trains, motor scooters and more, FSD robotaxis will be a big step up for many.

Regulatory Hurdles: FSD needs regulatory approval, akin to Tesla’s reliance on EV credits in its early days. Musk’s relationship with President Trump could expedite federal support, but local regulations vary, and FSD deployment could face significant delays.

The Woke Mob: As mentioned, Musk is basically hated by a large percent of the US population because of his political alignment (he has shown support for the current White House administration as per his previous leadership of so-called DOGE). Groups that once praised Musk for improving the environment by advancing the EV industry now reject anything he does. “DOGE is just becoming the whipping boy for everything” said Musk in a recent interview as he announced he would be scaling back his work leading DOGE (to focus more on his businesses) following big profit losses for Tesla.

Buffett’s Wisdom on Politics and Investing: Legendary investor, Warren Buffett, cautions against mixing politics with investments. For example, he once stated on CNBC:

“If you mix your politics with your investment decisions, you’re making a big mistake.”

Whether you agree or disagree with Buffett and/or Musk, Tesla’s stock has absolutely faced huge volatility and financial pressure due to politics. However, despite near-term pressures, if Tesla is successful with FSD then its long-term fundamental attractiveness can drive the share price dramatically higher.

The Bottom Line:

If you think Elon Musk is a horrible person and you want him to fail into oblivion, I personally encourage you to succeed in that mission, legally and with civility. But regardless of your opinion, he is an exceptional example of following your dreams, to build something great, despite adversity and in the face of naysayers telling you it's not possible.

There is a good chance Musk will do it again with FSD as he has presciently positioned himself for success in a large market opportunity that is about to materialize (and improve millions of lives) much quicker than many people envision. However, the risks are very real, and investors may want to consider owning shares as only one part of a prudently-concentrated portfolio of high-growth disruptive opportunities.

At the end of the day, you need to do what is right for you (that’s how markets work). But if FSD succeeds, Musk may be about to “better the US again.”

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The most important company in the world right now is Nvidia (NVDA), and it’s set to announce earnings on Wednesday, May 28th after the close. Governments, other companies (large and small), and billions of people all rely increasingly on Nvidia’s computer chips directly and indirectly. And considering the massive Artificial Intelligence (AI) megatrend, demand for Nvidia’s Hopper (H100 and H200) and Blackwell chips dramatically exceeds supply (as incredible value-adding use cases are only just beginning to be discovered). This report reviews Nvidia’s business, growth potential, five important channel checks (suggesting Nvidia will surpass its revenue and EPS guidance), valuation, big risks, and then concludes with my strong opinion on investing.

Business Overview:

Nvidia is basically ground zero for the AI megatrend, a very large market opportunity that is already dominated by Nvidia (roughly 90% of all AI is run on Nvidia chips), and that market is expected to grow at nearly a 36% (CAGR) through 2030.

Specifically, Nvidia’s graphics processing units (GPUs), dominate in data centers, gaming, and automotive sectors, and the data center segment alone (basically where cloud AI happens) generated $39.3 billion in revenue last quarter (over 80% of Nvidia’s total revenue). Further, Nvidia’s CUDA software platform and DGX Cloud strengthen its AI ecosystem (moat) with partnerships across hyperscalers and neocloud providers (more on these partners later).

So with that backdrop in mind, let’s get into some Nvidia channel checks suggesting growth remains extremely robust.

Channel Check 1: Hyperscaler AI Investments

The AI hyperscalers (i.e. large scale cloud service providers with massive compute requirements) are demonstrating the demand for Nvidia chips is still accelerating.

For example, Meta (META) (a big Nvidia customer) just recently raised its 2025 capex estimate to $64–$72 billion, citing “hard-to-meet” AI compute needs. And Amazon’s is expanding its collaboration with Nvidia on AI for services like Bedrock. Further, Microsoft’s (MSFT) $80 billion FY2025 AI data center budget (with 52% capex growth), is driving demand for H100 GPUs in its Azure cloud platform. Further still, Elon Musk (TSLA) recently announced that his xAI will be implementing 1 million GPUs outside of Memphis (mostly Nvidia chips, some AMD chips) which basically equates to a $30-40B purchase order to Nvidia.

All of this recent information bodes well for Nvidia’s upcoming earnings announcement.

Channel Check 2: Neocloud Provider Growth

As another indication that Nvidia chip orders are outpacing forecasts, the neocloud providers (offering Nvidia GPU-based cloud services) are scaling very quickly.

For example, CoreWeave (CRWV), which started trading publicly in March, just reported first quarter revenue of $0.98B (420.3% year-over-year growth) with 70% tied to hyperscalers leasing Nvidia GPUs. CoreWeave also has a revenue backlog of $25.9B, and is in advanced talks with Alphabet (GOOGL) to lease Nvidia Blackwell chips to Alphabet.

• As subscribers know, I wrote about CoreWeave, in detail, last week (it was issue #001 of The Disciplined Growth Investor.

Also, Nebius Group (NBIS), another neocloud provider, just reported $55.3 million in revenue (+385% year over year), driven primarily by the core AI infrastructure business (i.e. Nvidia). Further, private firms like Lambda, Crusoe, Nscale, DeepNight, CloudGenera, and TEN AI are all expanding. This all bodes well for Nvidia.

Channel Check 3: Wall Street Analysts

Analysts appear increasingly optimistic about Nvidia’s upcoming earnings. For example, Morgan Stanley recently noted a rise in Nvidia’s rack shipments to 1,500 in April from 1,000 in Q1, projecting 73% data center revenue growth. Also, Loop Capital reiterated a Buy rating on Nvidia noting that “Blackwell's autumn ramp up expectations will carry the stock.” And Raymond James just reiterated its strong buy rating on the shares. And as you can see in the table in the valuation section of this report, analysts rate the shares a “strong buy” (1.32 on a scale of 1 (strong buy) to 5 (strong sell)) and suggest more than 20% upside.

Channel Check 4: TSMC’s AI Chip Production

Taiwan Semiconductor (TSMC), Nvidia’s key foundry (i.e. outsourced chip producer), reported a Q1 2025 year-over-year revenue increase of 41.6% (in NT), while net income and diluted EPS increased 60.3% and 60.4%, respectively. And CEO C.C. Wei highlighted “insatiable” orders for Nvidia’s Blackwell GPUs. In fact, the company is now expected to spend between $38 billion and $42 billion on capex for 2025 (up from $29.2 billion in 2024); a good sign for the industry and Nvidia growth.

And the company’s April sales (up 22.2% month-over-month, and 48.1% year-over-year) suggest AI infrastructure ramp remains quite healthy (a good sign for Nvidia’s future).

Channel Check 5: Geopolitical AI Demand

Geopolitical dynamics are boosting Nvidia’s demand. For example, Saudi Arabia’s new $20 billion AI chip deal with Nvidia (along with a new AI “factory” partnership) underscore Middle Eastern interest in AI and Nvidia. Also, US onshoring efforts (backed by the Trump administration) have prompted Nvidia’s “several hundred billion” US-manufacturing commitment (also leveraging TSM’s $100 billion U.S. investment). So even though the US has imposed export restrictions of Nvidia chips to China (costing an estimated $5.5 billion in Q1), the business remains very much alive, well and growing from a bigger picture level.

Nvidia’s Current Valuation:

As mentioned, Nvidia remains very highly rated (strong buy) by Wall Street analysts (as you can see in the table below). It is extremely profitable (55.9% net margin), and remains compelling on a forward PEG (price/earnings to growth) ratio, especially considering its high growth, dominant market position, and the long legs of the ongoing AI megatrend. For reference, you can also see several of the AI hyperscalers and neocloud providers mentioned earlier in the table below.

Risks:

Geopolitics is perhaps Nvidia’s biggest risk right now, ranging from tariffs (as mentioned earlier) to international supply chain issues (the industry is highly cyclical and prone to delays resulting from supply and demand imbalances). Nvidia already recently announced a $5.5B hit from China tariffs (as mentioned), and considering US onshoring, middle east efforts, and the volatile tariff dynamics (considering who is in the White House) more volatility may persist.

Hyperscaler Concentration is another big risk. For example, 50% of Nvidia’s revenue comes from just a few clients, and any signs of spending slow downs could cause the shares to fall. However, as mentioned in the hyperscaler section of this report, the current growth environment continues to look promising, especially considering the healthy growth trajectory of the AI megatrend.

Competition: As mentioned, Nvidia dominates the AI GPU market with overwhelming market share and strengthened by its ecosystem (CUDA) moat. Nonetheless there is competitIon from AMD (AMD) and ongoing efforts by hyperscalers to develop in house chips. Not to mention the threat of new compute technologies, such as DeepSeek, which could dramatically shift the demand for Nvidia chips (i.e. enabling higher compute with less GPUs). Nonetheless, Nvidia remains the clear industry leader fueling the overwhelming majority of the dominant AI megatrend.

The Bottom Line:

It’s been a particularly volatile high-growth period for Nvidia, and the company is set to announce earnings on Wednesday, April 28th (after the close). Considering the strength of the AI megatrend (as described in the channel checks above) it seems likely for Nvidia to surpass the street’s ~$43B revenue and ~$0.83 earnings-per-share estimates. Not to mention, CEO Jensen Huang is a superstar at prudently and conservatively managing expectations (the company frequently outperforms). The real question will be any new insights on the short-term impacts of geopolitics (tariffs), the rate of acceleration for the Blackwell ramp (by how much is demand exceeding supply?) and the ongoing strength of the longer-term AI megatrend (which is perhaps one of the most profoundly disruptive technologies in some time). Long Nvidia.

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Generative-AI cloud platform, CoreWeave (CRWV), announced exceptional revenue growth this past week. And the company is delivering on its mission to help hyperscalers, such as Microsoft, get up to speed quickly with early access to leading Nvidia GPUs. And even though the shares likely have dramatically more price upside ahead, there is one massive tail risk investors need to be aware of.

Before getting into the dangerous tail risk, let’s quickly review what this company is and why it is growing so fast (and likely to keep growing fast).

About CoreWeave:

CoreWeave (CRWV) is an AI-focused hyperscaler providing a cloud platform optimized for generative AI workloads (it started trading publicly on March 28, 2025 via IPO). And unlike traditional cloud providers, its infrastructure supports GPU and CPU compute, storage, networking, managed services, and more, tailored for AI model training, inference, and VFX rendering. And with 33 purpose-built data centers, CoreWeave leverages Nvidia GPUs to deliver scalable, high-performance solutions for enterprises and AI labs.

Surging Revenues:

The short answer is that CoreWeave revenue is surging because of the massive AI megatrend. For some perspective, CoreWeave just reported $982 million in Q1 revenue (exceeding street estimates of $853 million) and representing 420% year-over-year growth (wow!). The company also raised guidance, forecasting $4.9B–$5.1B for FY 2025 revenue, representing an impressive 363% growth. Also important to mention:

• CoreWeave secured a $4 billion contract with open AI during Q1, thereby boosting it revenue backlog to $25.9B.

• CoreWeave also recently acquired Weights & Biases, adding 1,400 AI labs and enterprises as clients, and enhancing its software and AI development capabilities.

• Nvidia owns a 7% stake in CoreWeave

The Big Tail Risk…

The traditional saying in finance and investing is “high risk, high reward.” And in the case of CoreWeave, there is a very high risk underpinning its massive revenue growth and high share price upside potential.

and pardon my French, but…

…CoreWeave is a Classic “Sh!tCo”

Although not explicitly stated, a strong argument can be made that CoreWeave was created (or at least is experiencing massive revenue growth) because it is allowing the big boys (Microsoft, Meta, OpenAI and any other hyperscalers that want to join in) to unload their massive AI capex risks onto another company (i.e. CoreWeave).

Hyperscalers like Microsoft, AWS, and Google face immense capex pressures to build and maintain AI-optimized infrastructure, with billions spent annually on GPUs and data centers. CoreWeave, by specializing in GPU-accelerated cloud services, offers a tailored alternative that hyperscalers can leverage through partnerships or contracts, as seen with Microsoft’s role as a major client (contributing significantly to CoreWeave’s 2024 revenue). This allows hyperscalers to access scalable AI compute without directly bearing the full capex burden of building similar infrastructure themselves.

• Note: Customer Concentration: 77% of 2024 revenue came from two clients (Microsoft and Meta), posing potential risk.

Why “Sh!tCo” Status Matters

CoreWeave’s Sh!tCo status doesn’t matter one bit to a lot of investors right now because the skies and clear and sunny (i.e. AI demand is growing dramatically). However, when growth eventually slows (and it will eventually slow) CoreWeave runs the risk of being burdened with dramatically more infrastructure than it needs.

CoreWeave May NEVER Be Profitable:

And since CoreWeave is NOT profitable (Q1 EPS was -$1.49), it runs the risk of NEVER being profitable. CoreWeave may eventually be nothing more than “the fall guy” for big tech, absorbing the capex losses when AI growth eventually slows. CoreWeave is essentially taking the risk off of Big Tech companies by basically forcing CoreWeave to hold the bag (for all the expensive AI datacenter infrastructure).

And in case you don’t know, when Sh!tCo’s fall—they fall hard.

The Bottom Line:

I have every expectation that CoreWeave shares will continue to rise rapidly in the months and quarters ahead (barring any dramatic new macroeconomic disruption—which is entirely possible, especially under the Trump Administration) as I also expect the AI megatrend to continue ramping up dramatically (demand still exceeds supply—the ideal situation for a business).

However, at the first signs that AI megatrend growth is slowing—you might want to reduce your exposure to these shares (because when they fall—they’re going to fall hard). Moreover, this is why if you are going to own shares, you’re going to want to consider owning them as only one part of a prudently-concentrated goal-focused portfolio.

Overall, these shares are very attractive (lots of upside), but they come with big risks. Be smart, and do what’s right for you.

If you enjoyed this read, the best compliment I could receive would be if you shared it with one person or restacked it.

If you want to join a community of disciplined growth investors, check out The Disciplined Growth Portfolio. You’ll get instant access to more top stock idea reports plus the holdings in my Disciplined Growth Portfolio.