“I believe this is hands-down the BEST investment anyone can be in right now.

“And I think viewers will really benefit from spending a bit more time discovering the depth and breadth of this huge opportunity….”

Marc Chaikin has an ad out for his Power Gauge Report ($149 first year, renews at $199, 30-day refund period), and that little tease above is the most compelling part of the spiel, as he teases his “100X Starburst” stock pick… but we’ll go into it a bit and let you know which stocks he talks up and/or hints at beyond that “highest-conviction pick.”

Power Gauge is Chaikin’s system that rates companies based on financials, earnings growth, technicals (including the Chaikin Money Flow indicator, which is widely available to try to track institutional trends), and expert opinion, which is mostly related to insider activity and analyst estimates. That’s fairly similar to Louis Navellier’s Stock Grader system for stocks, essentially trying to take sentiment and narrative out of the picture by crunching the numbers and finding the stocks that have the best combination of current financials and improving sentiment.

In large part, what Chaikin still talks about is what he has always been known for, tracking where institutional investment money is “flowing” — whether big holders are buying or selling, really — and this is how he pitches that:

“… in a world of Project Glasswing-type initiatives – where information gets locked away, and power is gained and lost behind closed doors – tracking where money is flowing can be your greatest advantage.”

The basic gist of the ad “presentation” is that “Frontier AI” is going to reshape the world, and be much different than this first wave of chatbots — and he talks about it being centered in a particular building in San Francisco, so we know he’s mostly talking up Anthropic, which is widely seen as the current “frontier leader” in AI, thanks largely to their advanced Claude AI model which is paired with agentic programs and sold to enterprises, tuned for specific professional tasks like financial research and accounting, legal, or coding… and to the fact that their new model, Mythos, was feared for, (or marketed as, for the cynics), being too powerful for regular use until cybersecurity can catch up.

And yes, that coalition to “help cybersecurity catch up” is called Project Glasswing, also led by Anthropic, and is a big focus of Chaikin’s presentation.

From the ad:

“It won’t help to think of frontier AI as a faster horse-and-buggy situation… or even a leap from horse-and-buggy to automobile. It’s like going from a horse-and-buggy directly to time travel.

“Or better yet, a ‘jump to lightspeed’….

“… frontier AI can think, plan, reason, and act across any domain.

“At a level that meets or exceeds human capability…

“Without any input from humans.

“Frontier AI can code itself… and create new AIs.

“To the point where humans may have no idea how or why AIs are doing what they’re doing to achieve their goals.”

So we’re in the world of “Frontier AI,” sez he (and others, including Marc Andreessen), and Chaikin specifically notes that being in this “Project Glasswing” and being privy to Anthropic’s Mythos will be a key boost for those leading companies:

“Some people will get a head start. Others will fall behind.

“There are going to be clear winners and losers.

“And right now, my system is showing me a crystal-clear division between the two.”

Chaikin then runs through a bunch of current “buy this, sell that” recommendations from his Power Gauge system, whe he calls a “hitlist” and a “hotlist” … here’s the first one:

“Sell Tesla (TSLA), Buy Magna (MGA)….

“.. while Tesla was busy making headlines, Magna was busy making lucrative deals to put itself in the pole position for the age of frontier AI.

“Magna is currently rated ‘Very Bullish’ in my Power Gauge system….”

So this is sort of a “buy into all the autonomous driving ideas” recommendation:

“Nvidia has built what is essentially the brain of the AI-powered car of the future.

“But getting that brain inside vehicles and operating safely is an enormously complex job.

“That’s precisely the job that went to Magna. Which means they get paid every single time they install Nvidia’s AI into a car, truck, or commercial vehicle.

“Compare that to Tesla, a company that’s spent billions of dollars trying to build its own self-driving AI from scratch, and is just now sitting at about 1/20th of the customers its needs to justify that huge outlay.

“Whereas, with the stroke of a pen, Nvidia handed Magna the keys to the kingdom of the autonomous driving industry.”

Part of that is an argument that Tesla might be a victim of SpaceX, with investors drifting away from the unfulfilled (so far) promise of Optimus robots at Tesla and toward the also unfulfilled (so far) promise of orbiting data centers from SpaceX. We’ll see.

And Magna, which is probably the best-known auto parts supplier and also a fairly large assembler of new cars, looks pretty cheap at 10X forward earnings, with 10%+ earnings growth expected for next year… though that’s largely because investors hate auto companies these days, and I have no idea whether or not that will change over the coming years.

Next?

This pairing is, “sell Oracle (ORCL), buy Fabrinet (FN)” …

“It recently leaked that OpenAI’s own CFO told company insiders that OpenAI will not be able to pay back on their data-center contracts if their revenue doesn’t grow fast enough.

“And spoiler alert: it’s not growing fast enough….

“Oracle may be digging itself into debt to build the infrastructure for the world before frontier AI. Not the world that after it….

“The company I suggest buying instead of Oracle is called Fabrinet. The Power Gauge LOVES this company, currently rating it ‘Bullish.'”

Why Fabrinet? This is what Chaikin says…

“… while everyone talks about who’s building the advanced chips that power AI, no one pays attention to who’s building the high-speed superhighway that all the AI data travels on.

“Think mission-critical equipment like transceivers, photonic systems, and fiber optics — the physical core that makes AI run at the speeds it needs to run.”

I don’t know about that “no one pays attention” bit — optics have been arguably the hottest part of the AI “story” at times, and Fabrinet shares have tripled over the past year… but it’s at least true that FN stock hasn’t gone quite as bonkers as some of the smaller fiber optic plays, and it’s still relatively small, at least compared to Oracle (FN has a $20 billion market cap… ORCL is currently around $600 billion).

And FN stock trades at 40X forward earnings, which is awfully rich, of course, but it is also expected to grow earnings by 20-25% in future years, so IF they can keep that growth up, the valuation might well be justified.

A lot of those “might be justified” growth valuations around these days, of course — which is what folks mean when they say that the market is really perched on top of the AI buildout story, with growth very much dependent on capital spending remaining very high for new data centers and new chips and new networks to fuel the ongoing growth of artificial intelligence platforms.

And the final pairing? That’s where we get our “secret” starburst company… but it stars with, “sell Netflix”:

“Netflix is priced as if there’s still a velvet rope keeping your average Joe out of movie production.

“But in a world of frontier AI, that exclusivity disappears and Netflix completely loses its edge.”

But then it cuts off before the “buy” bit, and that’s where our “tease” comes in:

“It’s a dark horse that I believe is poised to be THE dominant winner in the age of frontier AI.

“The Power Gauge currently has a Bullish rating on it, showing plenty of strong buy signals.

“But there’s something even more interesting about this stock that makes it one of the most timely opportunities in the entire stock market right now.

“And, to be honest, it was something the Power Gauge alone wasn’t built to see.

“In order to understand why this stock is probably THE most interesting and potentially lucrative investment opportunity out there right now, I need to tell you about something called The Wall Street Blind Spot’…

“When a company has multiple businesses operating under one roof, the market struggles to understand each piece individually.

“And, since complex umbrella companies are hard to value, the market tends to value them for less than their worth.

“This blind spot is known as the ‘conglomerate discount.'”

Chaikin calls the corporate spinoffs and split-ups that sometimes are used to “undo” that conglomerage discount, the “Starburst” — here’s how he puts it:

“A ‘starburst’ is the most coveted and often the most lucrative type of spinoff in existence. In the simplest terms, it can break the company from a single entity into many entities in a single day.

“Meaning, it can unlock the full value of each one while allowing you to double… or even triple… the number of shares in your possession – in a single day.”

Chaikin highlights a few recent “starbursts,” including DowDupont’s breakup into Dow, DuPont, and Corteva, but the highest-profile “starburst” recently was probably General Electric, which “burst” into GE Aviation (GE), GE Vernova (GEV), and GE Healthcare (GEHC), though that was really also part of the “rescue” of the bloated old GE, which was buried in debt a decade ago… and it didn’t necessarily become an obvious winner until GE Vernova’s order books for new gas turbines suddenly exploded with the need for more natural gas power plants to provide electricity for the next generation of data centers.

So he’s looking for another “starburst”…

“… the final buy on our frontier AI Hotlist is a strong potential candidate for a historic starburst and, based on my research, it could unlock far more value for investors than both DowDupont and GE combined.”

And here’s how he hints at that “highest conviction” stock pick on the order form, so this provides a nice, abbreviated version of the bloviating tease:

“… my single highest-conviction pick for the age of frontier AI. It’s a conglomerate hiding three world-class companies inside it, including a streaming service that already eclipses Netflix, an autonomous car company already running circles around Tesla, and a cloud-computing division growing faster than Amazon Web Services.

“On top of that, this stock also gives you built-in exposure to two of the biggest anticipated IPOs in recorded history.”

So who is that, dear friends?

Well, it might come as a big of a surprise… but this “dark horse” is the third-largest publicly traded stock in the world, Alphabet (GOOGL, GOOG). Which, yes, has some under-appreciated assets inside the conglomerate, perhaps including YouTube and YouTube TV, autonomous driving platform Waymo, and AWS competitor Google Cloud, and is also a meaningful investor in both SpaceX and Anthropic, two of the hotter “upcoming IPO” stocks and two potential leaders in “frontier AI.”

Though we can also probably argue about just how under-appreciated those businesses are when the company trades at 28X earnings and 9X book value. This is not your grandfather’s “discount conglomerate.”

I won’t tell you not to buy Alphabet, that would be disingenuous — it’s one of my favorite investments of all time, and it is currently my largest holding.

But I will tell you that I think it’s a little overvalued right now, in part because Alphabet has gone from being a cash-gushing machine for 20 years, to now being a capital-intensive business that’s spending heavily to build out more data center capacity… including taking on a lot more debt, and even issuing more stock to fund expansion. Alphabet was probably the safest bet on AI two or three years ago, when they were wrongly perceived as a loser and “far behind” OpenAI’s ChatGPT, despite the fact that Alphabet was arguably the most aggressive AI pioneer for a decade before that… but Google’s parent is not seen as a loser any more, and the valuation reflects that, so it’s not as safe.

And yes, conglomerates often trade for a discount to their true value… and sometimes that value is “unlocked” by breaking up the company, which could happen with Alphabet someday, though, despite what Chaikin hints at in his ad about a coming “starburst” to offer up leading subsidiaries like Waymo and YouTube as separate companies, I don’t think that kind of breakup is seen as likely or a major threat right now (Alphabet has so far even been able to avoid having to sell the Chrome browser or Android mobile operating system in their ongoing antitrust case with the Justice Department, though regulatory anti-monopoly scrutiny continues).

So maybe there will be a more substantial “unlock” of that value someday, in a “starburst” or otherwise, with probably the most likely candidate for a spinoff being Waymo… if only because Waymo has raised a meaningful amount of outside capital over the past six years. (They’ve raised a total of about $25 billion to help limit their capital exposure and spread the risk a bit, but still own more than 75% of the company). The last estimate for Waymo’s value that I saw was $126 billion, but it’s still consuming a ton of cash as they build out fleets of autonomous vehicles with expensive sensor systems and try to perfect the robotaxi and compound their “first mover” advantage. But we should also note that Alphabet is currently a $4.3 trillion company, so even a $100-200 billion “hidden value” for Waymo wouldn’t move the needle very much (for the math challenged among us, $200 billion is 4.7% of $4.3 trillion).

And YouTube and Google Cloud are both meaningful drivers of Alphabet revenue and earnings today, with YouTube sometimes “saving” Google’s ad revenue growth in recent years, and Google Cloud’s rapid growth as an AI platform provider giving Alphabet its optimistic headlines over the past few quarters, so I don’t think we can make much of an argument that they’re “discounted” to a great degree because they’re “hidden” inside the conglomerate. Maybe that has been true at times for Alphabet/Google, particularly when it has traded at a big discount to the market from time to time over the past few years… but personally, I don’t think there’s a clear and obvious discount right now.

So yes, Alphabet is a great company, and maybe uniquely well situated to remain a leader in this “Frontier AI” age… but still, I’d say that pitching the third biggest company in the world as a “100X” opportunity strikes me as being at least a little silly, even 10X would probably be quite a stretch — after all, this is a company that was a hair away from supplanting NVIDIA as the world’s biggest company a couple months ago, before they took a little hit with AI buildout fears and their own secondary offering in recent weeks. Big often becomes bigger, but at some point even the giant redwood slows down as it reaches for the sun.

So there you have it… ready to bet on a “starburst” breakup of Alphabet, or think it’s otherwise discounted and set for a big run as an AI leader? Have other favorites that you prefer? Think the “sell Tesla, buy Magna” or “sell Oracle, buy Fabrinet” pairings are more interesting than “sell Netflix, buy Alphabet?” Let us know with a comment below.

P.S. We haven’t talked a lot about our reader reviews recently, but readers always want to know what other subscribers think about their newsletters — if you’ve got personal experience with Chaikin’s Power Gauge Report, please click here to share your opinion. And if you’ve got other investment newsletters you can review to help other readers, just click here to see all of our reader-provided newsletter rankings and reviews and contribute your own — don’t worry, it’s quick and easy.

Disclosure: Of the companies mentioned above, I own shares of Alphabet, Amazon and NVIIDA. I will not trade in any covered stock for at least three days after publication, per Stock Gumshoe’s trading rules.