This article was originally published on Halloween, 2018, but we’re getting a ton of new questions about it so they must be running the ad heavily again. The ad has NOT been updated in any meaningful way, but some significant things have changed for this stock over the past year (though the stock price is right around where it was a year ago), so I’ll go through and add a few updates here and there as warranted.
Paul Mampilly is pitching his Profits Unlimited newsletter with a long spiel about artificial intelligence (AI), which seems to mostly be a tease from a presentation he recently made on stage at a Banyan Hill “Total Wealth Symposium” in Las Vegas (well, in September of 2018 — so it was “recent” when the ad started running).
And we like to think for ourselves, of course, so I thought I’d dig into the clues he drops and see if we can name that stock for you — maybe you’d love his newsletter, maybe you’d hate it, but if you subscribe to a newsletter just to find out about a secret stock… well, odds are pretty bad that you’ll be able to think rationally and independently about that stock afterward. Lots of biases get in the way, including: We all have a tendency to justify purchases, so you’ll probably want to love that newsletter because you just paid for it… and most investors end up being very strongly influenced by the first piece of information they receive about a particular stock, so if you buy into this “76,000% gains!” pitch without any context, you’re setting yourself up for disappointment.
So with that said, what’s the story? Mampilly here is pitching us on the huge growth in artificial intelligence… here’s a little taste of the ad:
“Major consulting firms predict this technology will create 2.3 million jobs in the next two years and give businesses the chance to raise profits, across the board, by nearly 50%.
“Which is why the big money is piling in.
“Microsoft has dedicated $12 billion to this technology.
“IBM is investing $15 billion.
“Google is spending $30 billion.
“Intel has already put up $32 billion to acquire multiple startups in this space, for the single goal of pushing this technology forward.”
And the 76,000% number that he throws out as red meat for us is just pulled from a big picture speculation:
“At $20 billion, this technology is tiny compared to the internet, smartphones and computers.
“However, the world’s leading researchers estimate it will explode into a $15.7 trillion industry in the next five years, growing bigger than all of these — COMBINED.
“That’s a 76,000% growth.”
You can throw around pretty much any numbers you want for that kind of big picture stuff, they won’t mean anything. Yes, we concede the artificial intelligence is a massive focus of most big tech firms, and is making its way into every part of the economy… but it’s almost impossible to even rationally guess at what the size of the “A.I. market” might be now, let alone what it might become, and we don’t even know what those numbers mean — Sales? Market capitalization? Profits? I have no idea. For context, the United States annual economic output, as measured by GDP, is just shy of $20 trillion. The world’s GDP (or GWP) is closing in on $90 trillion. Will AI, however you describe it, account for 20% of global economic activity?
But anyway, yes, we know that AI is big, and that tech companies and manufacturers and advertisers and product developers and pretty much everyone is trying to use artificial intelligence to make smarter decisions more quickly.
Man, maybe I should get me some of that AI. I do everything slowly, and am rarely as smart as I hope.
So how is one to make money from this idea? Mampilly says he’s identified a catalyst that will bring this technology forward… much like the assembly line was for the automobile, or miniaturization for the computer, or email for the internet. Something that turns a developing technology into a huge economic force.
What is it? Well, let’s see what he says:
“…. this company has developed THE catalyst that will cause the most important technology in the world to reach mass adoption.
“just like people doubted the use of the automobile, computer and internet, people have doubted this technology too!
“That’s because it’s been stuck in this range for the last 30 years.Are you getting our free Daily Update
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“But they’re not focusing on the ONE catalyst set to usher in this breakthrough any day now.
“Nor have they zoned in on the one, little-known Midwestern company that holds THE KEY.”
He runs through a bunch of examples of big potential in medicine (diagnosing disease), law (document review), retail (inventory planning), self-driving cars, etc. And then we get more on this catalyst…
“AI Just Got Its BIG Catalyst….
“You see, in order for AI to work, it has to also be able to learn — and ‘retain’ — all the information it gathers and apply this knowledge to new tasks.
“To do that, it needs one thing … A LOT of memory.
“That’s really why AI has been stuck in this range for the last several decades.
“Over the last 30 years, computing power has risen exponentially, as much as a trillion-fold. And the number of internet users has increased 25,000% since 1995, generating quadrillions of bits of data.
“The company that can create a new class of memory — that will power artificial intelligence — will stand to become the most valuable company in the world … because that new class of memory will be the catalyst for AI launching it into mass adoption.
“And today, one company in America’s Midwest has done just that.”
Aha! Now we begin to get some specifics…
“This company is the undisputed leader in memory technology. Their memory chips have been described as ‘the crude oil of the 21st century.’
“… artificial intelligence will soon begin solving major world problems like pollution, disease and hunger. It will also give every business the chance to increase earnings by nearly 50%.
“Which is why I am convinced this Midwestern company is the No. 1 stock you should buy, as AI ignites a $15.7 trillion revolution, surging 76,000%.”
And we get a few clues about large investors in the company:
“David Tepper, the highest paid money manager on Wall Street, has dumped 20% of his portfolio into this one stock — a $1.9 billion investment.
“It is the top holding in Vanguard’s popular Selected Value Fund, to the tune of $4.4 billion.”
And some big partners and financial details to throw into the mix:
“This company has already signed a $2.5 billion deal with Apple and an $8 billion deal with Intel. With this latest innovation, it expects its memory business to quickly grow to $62 billion.
“This stock trades at just five times earnings….
“Best of all, you can buy a stake in this company for as little as $50….
“Company earnings are up 94% over the past year. And they’re heading higher.”
While the Thinkolator chugs away on those clues, we’ll note this bit of Mampilly’s opinion for posterity:
“This stock is an absolute bargain at today’s prices.
“If you’re going to invest in any one company the next decade, this company should be it.
“It will be like buying Ford, Microsoft, and AOL … before they surged 250,000%, 105,000%, and 70,000%.”
“Buying this stock today will be like buying Netflix 10 years ago — setting you up for gains of 14,000% or more.”
So who is it? Well, I confess that this was a pretty easy one just going by the clues that were dropped along the way, though after chewing on the Thinkolator’s results for a little while I did waste some time trying to match the photo that Mampilly showed in his demonstration to illustrate that “midwestern company,” just as a bit of final confirmation.
But, the joke’s on me — he apparently just bought a stock photo of a generic suburban office building and used that… maybe it has some relation to the company he’