Missed Out on Nvidia? This AI Found 2 Stocks Instead VIEW IN BROWSER Tom Yeung here with your Sunday Digest. Last week, we wrote about an investing strategy reminiscent of the popular Eat This, Not That! diet book series. After all, if you had a magic sorting hat that could separate all stocks about to go down (or eliminate all unhealthy foods), anything remaining must be good for your health and wealth. I used a lithium versus coal example to illustrate the stunning simplicity of favoring high-performing sectors over shrinking ones. However, this strategy doesn’t necessarily provide the timing for these long-term moves. Some of the best industries can remain undervalued for years. Other times, fast-growing firms like Nvidia Corp. (NVDA) can rise so quickly that many investors miss out. What’s needed is a system that can also help you identify the best times to invest… something powerful enough to sense what will happen in the next six months… or even the next 30 days. That brings us to what InvestorPlace Senior Analyst Luke Lango calls Nexus. It’s an AI-powered system that helps determine when a stock is about to enter Phase 2 – a breakout moment where major returns happen. Nexus has a phenomenal track record. Over the past several months, it’s identified AI winners including: - Palantir Technologies Inc. (PLTR). 290% gains in five months (and a subsequent well-timed sale).
- AppLovin Corp. (APP). 500% gains in five months.
- BigBear.ai Holdings Inc. (BBAI). 100% gains in just a few weeks.
In fact, Luke is so confident in his system that he’s issuing an AI Income Challenge, to see how many people can use Nexus to generate cash – potentially turning $5,000 into $30,000 – in the next six months. You can see more details here. Now, as you watch the presentation, you’ll quickly notice that many of Nexus’ top picks are AI-related companies that have not yet taken off the way Nvidia has. These stocks are still in their early Phase 2 stage of growth, giving AI investors a second chance at AI-powered returns. Let’s dive in this week with two examples from Nexus… | Recommended Link | | | | Elon Musk just secured an $29B handout from Tesla’s board to help “keep his energies focused.” It’s an obscene reward when the company’s much-hyped pivot from EV to AI is still unproven, and its Optimus robot has zero pre-orders. But there’s a much better play here… a little-known robotics stock already landing the kinds of huge deals Tesla can only dream of. This company’s robots are in such high demand, it’s already facing a $23 million backlog. Get the name, ticker and analysis free. No paywall. No strings. Full story here… |  | | The Chinese AI Startup In January, a small Chinese startup named DeepSeek shocked the world by launching a chatbot that outperformed all but the very best Western models. The chatbot, DeepSeek R1, quickly became a hit among app users, creating a new competitive threat to American AI firms. Since then, Chinese AI companies have continued to innovate. In July, Alibaba Group Holding Ltd. (BABA) launched Qwen-3, an advanced chatbot that’s only four to five months behind Alphabet Inc.’s (GOOG) and OpenAI’s frontier models. Then in August, humanoid robots from Hangzhou-based Unitree outperformed even the best American versions at the World Humanoid Robot Games. That’s why investors should pay attention to a growing Chinese startup named WeRide Inc. (WRD), which has become a leader in self-driving technologies. WeRide was founded in 2017 by Tony Han, the former chief scientist of Baidu Inc.’s (BIDU) autonomous driving unit. He quickly received funding from a Renault-Nissan-Mitsubishi alliance and Nvidia, among others. The promising firm has since become China’s second-largest provider of robotaxi services behind only Baidu’s Apollo Go. In July, WeRide announced that total revenues had surged 61% thanks to significant growth in the Middle East (where it now operates the largest robotaxi fleet in the region) and a new partnership with China’s Chery Group. Its fleet size is now roughly the same as Waymo’s. Luke’s Nexus system believes a new surge is on the way. It awards WeRide one of the top scores in its universe of over 5,000 stocks… and likely for good reasons. On August 21, WeRide unveiled one of its most ambitious projects yet: a one-stage, end-to-end advanced driver assistance system (ADAS) created in conjunction with Bosch, a leading supplier of components and systems to automakers. This system integrates the “sensing” and “acting” of self-driving vehicles into a single unit, making it a one-stop solution for automakers’ self-driving needs. This WeRide-Bosch project is scheduled to enter mass production later this year. The opportunity here is vast. Many traditional automakers lack the programming talent to build self-driving technologies, and WeRide’s partnership with Bosch provides a compelling alternative. WeRide could eventually become its own “Tier 1” auto components supplier. In addition, the company’s robotaxi services continue to rapidly expand. On August 6, the company began testing robotaxi services in Beijing, and we should expect more soon. It’s also notable that WeRide’s $1.7 billion enterprise value is minuscule compared to Waymo’s $45 billion valuation, even though both firms have similar robotaxi capabilities and fleets. So, don’t be surprised if this top-scoring AI pick from Luke’s Nexus system soon begins its upward leg of Phase 2 growth. And the American Version Meanwhile, American companies have also been working frantically to stay ahead, especially in Physical AI. The best-known names in robotics, like humanoid robot maker Figure AI and Kratos Defense & Security Solutions Inc. (KTOS), have already been bid to multibillion-dollar valuations, reducing potential future returns. Yet, Nexus has managed to find one Physical AI company that’s still early in Phase 2: Ondas Holdings Inc. (ONDS). Ondas is a fast-growing provider of industrial wireless networks and commercial drones. It was the first company to receive certification by the Federal Aviation Administration for an automated aerial security drone, and it has continued to improve on its products. In June, it secured a $14.3 million order for its commercial Optimus drone system. This is likely just the start. In 2023, Ondas acquired Iron Drone, an Israeli firm developing an autonomous counter-drone system. The two companies combined their technologies and launched a commercial version the following year. This new drone-in-a-box system combines surveillance, precision strikes, and aerial threat interception into a single offering. In other words, it’s a military-grade drone used to hunt other drones without GPS, radio jamming, or dangerous munitions. Here’s how the company describes it: Launched from a designated pod, the intercepting drone flies autonomously towards targets under radar guidance, then identifies and "locks on" to the target using proprietary computer vision and artificial intelligence (AI) capabilities. The intercepting drone follows the target, then incapacitates and captures it and using a ballistic net and a parachute to safely lower it to the ground. 
Interest has been steadily growing, especially in the wake of Ukraine’s Operation Spiderweb, where 117 attack drones were used deep inside Russian territory to destroy a dozen high-value aircraft. (If a similar drone attack targeted a U.S. airport, Ondas’ Iron Drone would be safer than firing weapons blindly into the sky.) Within a week of the operation, the White House issued an executive order, “Unleashing American Drone Dominance,” to “accelerate testing and to enable routine drone operations, scale up domestic production, and expand the export of trusted, American-manufactured drone technologies.” In April, Ondas secured a $3.4 million deal with a European defense contractor on behalf of a government client. Then, earlier this week, the firm inked a $2.7 million contract with a separate defense contractor for multiple drones – likely a test with the U.S. military. The company also recently completed an initial government-led counter-drone program in Europe and Asia, which management believes paves the way for a long-term Homeland Security deployment. That should put Ondas on a hypergrowth track. Revenues are expected to triple to $24 million this year, and then almost triple again to $64 million in 2026 (and again to $185 million in 2027). A direct U.S. military order for these drones could turn Ondas into a $10 billion business overnight. Of course, this Boston-based startup is a risky bet. The company is not expected to break even until at least 2028 and has little experience in selling projects directly to the Department of Defense. Its historical cash flows are also poor, given its startup nature. The firm was forced to raise $173 million of fresh capital this summer, diluting existing shareholders by almost 20%. However, the Ondas opportunity is even larger. The U.S. military has now seen the havoc that drones can cause, and Ondas provides a solution that’s showing up at the right place and at the perfect time. Finally, shares are up just 45% this year. That leaves far more upside on the table than firms like Kratos, which has already seen a 145% surge. The Accelerating Nature of AI Investing Most people consider 1977 the birth year of the modern personal computer. That year, the Apple II, Commodore PET, and Tandy TRS-80 all made their debuts. Adoption was relatively quick by historical standards. It took roughly 17 years for half of Americans to begin using personal computers – far shorter than the time it took a similar number of us to adopt home electricity (43 years) and the automobile (40 years). However, 17 years is still a pretty long time. And that meant investors had many second chances to identify and buy stock in that era's PC makers. Since then, technological adoption has continued to accelerate. It took just six years for smartphones to be adopted by half of Americans, and only three for AI-powered chatbots to achieve the same feat. That means there are fewer second chances than ever before to invest in the latest technologies. Smartphone investors needed to act relatively quickly to buy the winners of the 2010s. Meanwhile, Nvidia’s 10X rise happened in just 30 months We’re going to see new AI startups achieve similar gains in even shorter timeframes as technology continues to improve at an exponential rate. Fortunately, Luke’s Nexus system helps us overcome this challenge, identifying companies in their prime stage of growth – a moment when the biggest, fastest stock moves are captured. During the AI Income Challenge, he’ll discuss more on how the Nexus system works, including its ability to beat dividends, options, or any other “traditional” income strategy. Click here to watch Luke’s presentation and learn about the opportunities he’s now seeing in this fast-moving market. Until next time, Tom Yeung, CFA Market Analyst, InvestorPlace P.S. Due to travel conflicts, I’ll bring you your next Sunday Digest on Sunday, September 7. | 
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