Everyone is obsessed with Nvidia... But the best AI businesses don't exist yet... Other things are happening (I promise!)... Don't forget about gold... Walmart's healthy results... Value vs. valuation...
Most folks won't believe this...
I probably wouldn't if I did anything else for a living.
But there are other things happening in finance besides Nvidia's (NVDA) earnings report and the artificial-intelligence ("AI") infrastructure boom.
And some of those things could have an even bigger impact on your portfolio over the next year or so.
Sure, there are good reasons to be obsessed with the AI buildout and Nvidia's earnings (which we covered yesterday).
Nvidia has a market cap of $4.4 trillion, the largest of any company in the world. Everyone owns the S&P 500 Index in one form or another, and Nvidia has more influence over the index than any other stock.
Nvidia is also the top AI stock. So Nvidia is part of the AI gospel. AI is transforming lives and businesses everywhere. And Nvidia is minting money.
But Nvidia won't be the biggest company in the world forever...
During the dot-com boom, Internet equipment maker Cisco Systems (CSCO) was the largest company for a while. Today, though it has continued to grow its business, its stock price still hasn't eclipsed its dot-com-era highs.
I've noted before that "Top Dog" stocks – the largest market cap companies – tend not to stay that way. Today's Top Dogs won't be tomorrow's. As I wrote in my June 14, 2024 Digest:
In their 2012 paper titled, "The Winners Curse: Too Big to Succeed?," authors Rob Arnott and Lillian Wu found:
For investors, Top Dog status – the #1 company, by market capitalization, in each sector or market – is dismayingly unattractive. We find a statistically significant tendency for top companies in each sector to underperform both the overall sector and the stock market as a whole. In an earlier U.S.-only study, we found that 59% of these Top Dogs underperformed their own sector in the next year, and two-thirds lagged their sector over the next decade. We found a daunting magnitude of average underperformance, averaging between 300 and 400 [basis points] per year, over the next 1 to 10 years.
So if you want to underperform both the market and the semiconductor industry over the next decade, by all means, plow your savings straight into Nvidia.
There's a huge difference between obsessing over a single stock and understanding the massive impact that AI is destined to have on our world. So folks buying the top 10 S&P 500 stocks as AI bets will likely live to regret it.
You see, over the next few years, a slew of new businesses – and entire industries – will be created from AI.
No one today talks about the fiber optic cable build-out that happened during the dot-com boom. In that same vein, nobody will be talking about today's data center spending spree in 10 years. The most important AI businesses don't exist yet.
So start paying attention to other things going on in the world...
Nearly half the country probably hasn't heard of Nvidia, given that about 40% of Americans don't own stocks.
I was thinking about that fact on Tuesday, as Corey McLaughlin and I spoke with Epsilon Theory founder and Wall Street veteran Ben Hunt for an upcoming episode of the Stansberry Investor Hour.
I asked Ben what was on his mind right now. He said he's worried that the bottom 40% of Americans (based on socioeconomics) have essentially been cut off from credit. Credit is oxygen in the global economy. Without it, you turn blue and shuffle off this mortal coil pretty quickly.
Ben cited the recent bankruptcy of subprime auto lender Tricolor and the apparent fraud behind bankrupt auto-parts maker First Brands as examples of the deep stress among subprime borrowers. He likens these companies' failures to the July 2007 bankruptcy of two Bear Stearns high-yield credit funds. After that, the subprime mortgage crisis gained momentum and grew into a global financial crisis.
Today, Ben recommends avoiding financial stocks. He believes another shoe in the next credit crisis could drop in the next few months. (I'll say more about this in the November issue of The Ferris Report, due out next week.) If the timeline for the next crisis is like 2008, expect a wild ride in 2026.
But not all non-Nvidia news is bad...
Take the recent unemployment report...
As we reported yesterday, the nonfarm payroll data for September showed the economy added 119,000 jobs that month, more than double the 50,000 jobs economists expected. Frankly, anybody who takes Wall Street's expectations too seriously deserves to be surprised by the results.
The unemployment rate rose to 4.4%, but it's still near the multidecade low of 3.4% from April 2023. So the high-profile layoffs announced this year by companies like United Parcel Service (UPS), Verizon Communications (VZ), Amazon (AMZN), Microsoft (MSFT), and Meta Platforms (META) might not be as indicative of an impending unemployment crisis as some might imagine.
Now, if Ben is right about a financial crisis happening in the next year, we might still get an unemployment spike. Unemployment hit 10% during the great financial crisis.
And AI will certainly disrupt a certain amount of employment. But history has shown that transformative technologies tend to create new industries that nobody saw coming.
As I said in the October issue of The Ferris Report, some folks always resist the societal changes that technological innovations bring:
Their specific arguments and tactics shift over time. But one constant is the crippling fear that new, advanced technologies will lead to unemployment.
Legend has it that when William Lee first invented the stocking-frame machine in the 16th century, he requested a patent from Queen Elizabeth I. She denied his request... out of concern for textile workers' jobs.
Today, many AI pundits are making dire unemployment predictions. But we haven't seen those play out yet.
Then there's gold...
With all the focus on AI, people seem to have forgotten the huge move in gold prices. Even with its recent correction, gold is still up more than 50% so far this year.
Gold has risen 50% or more in a single calendar year only three other times since 1971 (when the dollar's final link to gold was cut)... in 1973, 1974, and 1979 – the longest and most consequential inflationary crisis in U.S. history.
In short, gold hasn't performed this way in decades. But that doesn't automatically mean we're headed into a new inflationary crisis.
As I'll explain in my upcoming Ferris Report issue, it likely means something very different, which most investors aren't thinking about right now. But by the end of 2026, it might be hard to think about anything else.
And as I told folks at our annual conference in Las Vegas last month, you should be more interested in a two-month 30% rise in the gold price than about whether the AI bubble is ending any time soon.
Walmart also reported quarterly results yesterday...
Revenues grew 5.8% last quarter compared with the same period last year, and comparable sales (a key industry metric) were up a healthy 4.5%.
The company said total spending increased among all shoppers, but gains among higher-income folks outpaced those among lower-income shoppers.
Management said the government shutdown, which halted funding for the Supplemental Nutrition Assistance Program benefits for lower-income families, is putting stress on these shoppers. It also noted that shoppers of all income groups were looking for bargains.
Bank of America recently published data showing that higher-income household spending on debit and credit cards grew 2.7% in October compared with the same month last year, compared with an increase of just 0.7% among lower-income households.
Summing up...
To build wealth in the long term, you need to look beyond the mainstream narratives. You need to consider the difference between value and valuation.
Value is the reality of an asset or a business's earnings power and investment potential. Valuation is the story the market is telling about it at any given time. This is a deeper understanding of investing that goes beyond the latest thing everybody is thinking about.
In Extreme Value, Mike Barrett and I use this strategy. When valuation gets far enough below value, we tell readers to buy. Otherwise, we tell them to sell or avoid.
It has worked well for Extreme Value subscribers, generating an average annualized gain of 13% since inception in 2002 and a 38% annual average over the past five years (as reported in our 2024 Report Card).
Mike's Select Value Opportunities service uses a similar approach and has generated a 13% average return since inception – during a period when the S&P 500 delivered a 9% average annual return.
I'm proud of what Mike and I have been able to achieve. Most people think value investing is dead, but the opposite is true. Understanding value and valuation is more important than ever.
As I showed above, most Top Dogs' valuations have been too rich to generate a good return. I see no reason why the current crop of Top Dogs – yes, including Nvidia – will perform any differently.
AI is a huge development, and Nvidia is an incredible company. I get why folks can hardly talk about anything else. But you should also ask what you're not reading or hearing about that might be important. You could be missing out on trends that might have a big effect on your portfolio in the coming months and years.
So look beyond the Nvidia and learn about other market trends – the good, bad, and in between. I bet you'll find there's a lot more opportunity to be had than what the noisiest narratives let on.
New 52-week highs (as of 11/20/25): Travelers (TRV).
In today's mailbag, feedback on yesterday's edition, which covered Nvidia's latest earnings and AI "bubble" talk... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"The following is Brave's chatbot's reply to my question about the Magnificent Seven recent insider selling/buying activity:
"'Recent insider trading activity among the Magnificent Seven (Nvidia, Microsoft, Amazon, Meta, Alphabet, Apple, Tesla) shows notable selling, but no significant buying has been reported in late 2025.'
"What people do speaks louder than what they say. I think Michael Burry is on target when he says, 'Early is not wrong.'" – Subscriber Luis A.
Good investing,
Dan Ferris
Medford, Oregon
November 21, 2025
