This 1 AI Stock Will Make Millionaires

Okay, in this video, I'll share with you a new stock that I think is gonna make generational wealth for a lot of investors. But first of all, I have to ask you a question. If you've ever been to a vacation spot where everybody's going there, it's the most hyped up spot, it's absolutely packed with people, you can't move, you're sweating, it's ugly, it's hideous, it's expensive, it's absolutely unpleasant. The same principle works in the stock market. If something is already overhyped, if everybody piled in, you're not gonna be able to make the same money that people who invested years ago have made. We have made a lot of money investing in Palantir, over 1,400%. In video here three years ago, I made a video, I said it's the ultimate stock, another 1,000%. But this is not me saying, hey, I'm better than you. This is me saying, look, this worked because we followed the same principle I'm about to teach today, which is invest in the picks and shovel sellers of whatever the next gold rush is. Right now, the gold rush is AI. Everybody's chasing large language models, applications, and so forth and so forth. But the real money is gonna be made by the same people who sell the boots, the shoes, the tents, and the picks and shovels. That is why in video work years ago, that is why Palantir have changed my and also my community's life in ways I can't even imagine how to explain to you. But now, we have to take an honest look and say, look, there's still money to be made in video, there's still money to be made in Palantir, no doubt. But are there stocks out there which are not that hyped, which most retail investors, the sheep, are not aware of, which actually serve the same tactical purpose, which is picks and shovels infrastructure of the next gold rush, artificial intelligence? And the answer is yes, there are plenty of them. You just have to use your brain and think for yourself. And for months, we in the community, in my rock academy, me and my students, we were coming up with plays that fit that bill. A few months ago, back in March of this year, we actually brought up Constellation Energy. I added it to my top stocks list in the academy. Ever since then, it's up 50%, 49, sorry. Now, in June 1st, a month ago, I also said, let's take a look at VRT, another foundational infrastructure play in AI, picks and shovels. Again, this was a month ago. It is now up 18%. Just a few days ago, we added a third stock based on that same principle, and now it's already up 5% in just a week. The thing is that even though it sounds like everybody's piling in, this is still empty. Everybody's still looking here and here, and it's fine because it's shiny and it's beautiful and it's new, and look, I've made money on it, and I can just sit and talk about that all day long, but me continuing to bang on about these companies, it's not gonna make you money. I have to find new opportunities for you that will give you the edge for the next five years, not me talking about how great we did for the past five years, and that is why I want to share with you this third stock. I don't want a gatekeep. I want to give it away, and I want you guys, my regular viewers, all to have it because I want you to succeed, so don't click nothing, don't smash nothing, don't buy nothing. You're getting this absolutely for free, so what you're gonna get today is kind of an executive summary of the two-hour lecture we had in the academy where we absolutely broke down, deep dove, and talked about everything about this stock, so today I'm gonna give you an executive summary about 10 minutes, but I'm gonna give you the main highlights and the important stuff, okay? So the first thing I want you guys to understand is that the best analogy, in my opinion, of how AI works, at least on the foundational level, is understanding how chips are made because AI, on the foundational level, is the chips, right? It's a semiconductor business, and if you actually look at it like baking a cake, it will all start to make sense, and I know it sounds weird. How does a cake have to do with AI, infrastructure, foundational place, semiconductors? What the hell are you talking about? So if you recall, a few videos ago, we actually broke down the whole process of how chips are made for AI, for artificial intelligence, and I told you what I think is the best of every single category out here, 10 categories, 10 optional plays for you guys to research. In today's video, I wanna focus on one specific company, which I shared with my academy members about a week ago, which I think is absolutely under the radar and has some of the best numbers, fundamentals, and potential I have seen recently in the stock market, and I wanna share it with you just like I shared about a week ago with my academy members. Of course, they get it first because they're in the academy, but today, you're gonna get a glimpse of what kind of work we do at the academy, okay? Now, this company is the world's best in design and EDA. I'll talk about what EDA is, but essentially, this is step one and two, the idea and the recipe, right? This is basically the concept and the recipe of how, what kind of chip, for what kind of purposes. Now, this company actually scored, believe it or not, 125 on my scorecard. I'll show you in a second, using stock MVP, how this has a perfect score, which is something we haven't seen a lot. And if you just kind of wanna boil it down to one way of explaining it, this is the backstage mastermind of AI, okay? This is basically the foundational stage, the stage one of the entire AI value chain. This is the beginning, the ground level, where you wanna get in and make money because nobody's looking here. Everybody's looking Palantir, NVIDIA, and OpenAI, but this is where the money's gonna be made because nobody's gonna be looking here, okay? Now, this company is called Cadence. The ticker is C-D-N-S, Cadence. They essentially allow you to build the blueprint to run a complete simulation and verification process on your semiconductors, on your chips. This is the EDA Electronic Design Automation Process Kings, okay? They will allow you to design, they will allow you to simulate, basically run through the entire one, two, three, four, five through 10 processes simulated like in a flight simulator without actually the risk of crashing. And they will give you optimization and verification. And in this industry, mistakes are costly. If you've made a mistake, if you need a change, and you're ready in step five or six, this is the equivalent of crashing a jetliner. It's absolutely unthinkable what the amount of damage for the manufacturer will be in this case. So having the ability to run through a complete simulator, whatever design you build with Cadence, and that simulation being completely integrated with DSMC, we'll talk about that in a second, essentially gives you the training and the skillset that pilots get in the simulator, but in the chip industry. This is absolutely insane stuff. Now, I've actually talked about it, and I said that I think that this is kind of the way to look at it, right? So if you look at what's going on right now in this industry, so demand for AI in general is going crazy. That means that demand for everything that is the foundation of AI is going crazy, whether it be data centers, whether it be energy solutions, which we talked about, both Constellation Energy and VRT are stocks. I've added to my top stocks list and have made a lot of money since. But also for Cadence, Cadence is in the same process, right? Everybody's building chips right now, everybody. We've got the hyperscalers, we've got MetaApple, everybody's building it, and there's only three companies in the world who actually do what Cadence does. We've got, of course, Cadence, we've got Siemens, and we've got Synopsys. So in a market where this is one of the hottest commodities ever, there are only three competitors, and Cadence is kicking butt. It is absolutely blowing the other two guys out of the water insanely. It's not even close, and I'll show you in a second why Cadence is the fastest growing for a reason. Think about the cloud services business where Azure is kicking butt. This is even crazier. Okay, Cadence is taking over. Now, basically what we have here is the ability to design your own chip and then run through the entire production system, kink out all the kinks, work out all the mistakes, make all the changes you need before you spend a single dollar, and before you waste two years of production cycles. Before. This is priceless for manufacturers, okay? The cost of making a mistake in this process is tens, if not hundreds of millions, and Cadence is essentially a combination of, believe it or not, a flight simulator and an insurance company, all kind of in one. I know that sounds crazy, but it's literally what they do. Now, they have double-digit growth. I'll show you in a second. That's absolutely insane. They're completely full-stop shop. They're not only focusing on specific electronic design automation only, they have a lot of other stuff as well. I said insane switching costs, but I think they're insurmountable. Once you're in Cadence, you don't leave. It's impossible. And they're fully integrated with TSMC, which is a massive benefit, which means they're a one-stop shop, they're the most innovative out of the three competitors, and they're fully integrated with TSMC, which is the world's biggest, best, and pretty much monopoly of a foundry. And the founding example is the bakery. So these guys are working with the best bakery in town. Now, if you look at the numbers, I pulled up the example here of Cadence versus Synopsys, the two main competitors in this sector. We've got Cadence growing at 20%, Synopsys at 0.5. We've got Cadence growing EBITDA at 20%, Synopsys minus 16%. 24% growth in operating income, negative 8.4% for Synopsys, plus 14% free cash flow, negative 1%. And of course, 30% operating margin versus 20% operating margin. I think you can clearly see why these guys are the fastest growing in the industry, but I'll ask you a question. Well, these numbers, they come from somewhere, right? Where's the origin of this? Why are they doing so much better? Number one is because they're the most complete and they give you the full-stop shop completely. And number two is because they're the most innovative and they already are working on the next stage and the next gen, which they'll monopolize already because nobody else is even close. So they're pretty much like ASML or TSMC. They dominate their category to the point where the other ones are basically almost irrelevant. And if you look at it from the client side, right, they're looking at this and saying, well, we've got no inventory, so we don't have to spend money on inventory. Nobody's leaving, so we have an absolutely, insanely low churn rate on customers. Multi-year cycles to design a chip, it's three to five years, and then another three to five years to update, upgrade, et cetera, et cetera. And then you have new chips coming into the system all the time. You've got recurring revenues nonstop. Price escalator, you ever heard about it? Outside the NBA when contracts go up every single year, well, Cadence actually charges more every year you stay with them. And the clients are locked in. And the reason they're allowing themselves to be put through all of this, the clients that is, is because eventually the return on investment for Cadence for every single client is massive. So even though Cadence is basically behaving like a drug dealer, naming the price and doing whatever they want, it's still an amazing deal for their clients. The ROI is insane. That's why they're putting up with it, because it's that good. They're mission critical. You cannot build AI without Cadence. They're absolutely monopolistic. Revenue is up 100% of the past five years, and they're quite literally indispensable in the AI value chain. And yet, not really hyped. I haven't heard a lot of people talk about them, right? Now, it's not just about following trends, obviously, but these guys, they create the trend, right? They were the first to deploy actual AI, AI automation inside the EDA process. And now they're pioneering the whole photonic design tools, which is the next gen of the chip design cycle. They're already dominating and innovative in the current gen, and they're lining up the next gen dominance, the same way ASML does, the same way PSMC does. All of these monopolistic plays, they behave the same, and it's no surprise they are the fastest growing. And I think it continues from here. So at this point, you would ask, well, why Cadence, right? Well, look, it's a cheat code of a company. You've got predictable growth. The ability to disrupt this category is mind-bogglingly insane. You've got 10-year cycles. You've got cash with no hardware. You have basically every single secular trend you can think of built in, baked in into what they do. There are no hype, no hope, just a great freaking business. And I'll show in a second what the stock did, and you'll be surprised. So if you hop on to stock.mvp, you can get it at stock-mvp.com. It's a software I built for you. You can analyze any stock in two minutes. You can try it out for one week for free. No strings attached. Go to stock.mvp, get it, try it out. So on stock.mvp right now, revenue growth 20%, but look at this, operating expenses up 10%. So again, you know I love a company that can grow revenues a lot faster than expenses. If I'm double revenue growth versus expense growth, I'm a scalable business. That's the sort of business I absolutely love, and Cadence has exactly that. Now, if you take a look at this thing right here, look at this, negative net debt, which means they have more cash than debt. Love it. 85% gross margin, 30% operating margin. The margins are insane, and the forward PE is 45. It's not in the 200s, 300s, 400s, 500s like a Palantir. 45 forward PE for all of these great fundamentals. And now here comes the kicker. Over the past year, the stock done nothing. 2% over the past year. With all these great fundamentals, with all this AI boom, the stock is flat for a whole year. And at the same time, this is from stock.mvp as well, by the way, if you look at this thing, well, you'll find out one little secret is that while everybody is ignoring this, look at this from stock.mvp. We have double purchases than sales from insiders. Red means insider sales. Blue means insider buys. For the past six months, double insider buying than insider selling for a stock that's flat, and the fundamentals are insanely good. And this brings me to my next point. I always talk about this. My dream scenario is this. I wanna buy businesses that are improving while the price is flat, okay? This is the perfect setup. Business is booming, 20% revenue growth, 30% operating margin. They're monopolizing. They're growing. They're killing the competition. They're already working on the next stage. The total adjustable market is growing like crazy. And the price for the past year is 2% increase. That's it. What happens when you have the setup? Eventually, like I said, the best friend of a good business in the stock market is time. And eventually, the fundamentals are gonna push the price up. And again, the same thing that happened with the other stocks we talked about years ago, and people did not wanna go in. They're gonna be saying, well, Tom, how did you know? How did you know? Because we did the work. That's exactly what we do in the academy. We do the work. We don't guess. We don't gamble. We do the work. The scorecard is perfect, by the way. 125 out of 125, more cash than debt, 20% growth. Margins are above 30%. Only 1% short interest. It's scalable. It means that basically revenues are growing faster than expenses. Shareholder return is very good over the past few years. There's a massive moat. Great CEO. It's recession-proof completely because of a 10-year cycle and design cycles. It's on every secular trend. It's mission critical. You name it. It has every single thing in the scorecard. And that is why on our stock MVP scorecard, this is what we have. For the next five years, the price targets are 70% bear case, okay, 188% medium case, and our bull case for the next five years is 306%, $1,200 per share. And if you wanna learn how to do this for yourself, you're more than welcome to join the academy, patreon.com forward slash Tom Nash. Join the Roick Academy. Become a part of what we do. You could have seen this lecture in full, the whole two hours, about a week ago. You could have seen Constellation Energy 50% ago, about three months ago. And you could learn how to think for yourself and find these other stocks if you join the academy, okay? And again, like I always say, it's risk-free. Join, try it out for 30 days. Don't like it? Money back guarantee, no problem at all. Would love to see you there. Next up, we have some amazing things. Go to the academy, sign up, join. I'll see you there. Peace.