Enough Already With 'AI' Stocks!

There is no surer way to fall into an investment trap than following the latest hot thing... That's as true with artificial intelligence ("AI") as anything I've seen in my career. Don't get me wrong... The rollout of generative AI is moving at a furious pace. But as a result, it's also likely leading to […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Enough Already With 'AI' Stocks! By Herb Greenberg --------------------------------------------------------------- [21 Triple-Digit Winners (AVG GAIN: 223%) in One Year]( That's what happened the last time this once-in-a-generation event occurred. Warren Buffett has $1.7 billion riding on this event happening again... and Big Short caller Michael Burry has staked 30% of his portfolio on it. [Full briefing here from a former Wall Street heavyweight](. --------------------------------------------------------------- There is no surer way to fall into an investment trap than following the latest hot thing... That's as true with artificial intelligence ("AI") as anything I've seen in my career. Don't get me wrong... The rollout of generative AI is moving at a furious pace. But as a result, it's also likely leading to extreme volatility of stocks tagged as "AI plays," even if they really aren't. In the process, short of this being a "trade," don't lose sight of what makes a great investment that very well may fall through the cracks. Consider grocery chain Kroger (KR). The other day [on Twitter]( I joked that maybe Kroger is now a play on AI because it uses AI in its stores... Just got back from Ralphs ($KR) and forgot to scan an item. The darned self-check realized I scanned 4 items when I really had 5. So... that makes KR an AI play!!!! That prompted a sharp investor who follows me on Twitter to respond... I know you're joking, and I'm certainly not saying $KR really is an AI play, but within its industry, KR actually has always been well-known as the tech leader. He attached a snippet to his tweet from a letter to investors he penned more than a decade ago... In it, he explained that in 1972, Kroger was the first grocery retailer in the U.S. to test electronic barcode scanners in its stores. And in 2008, it established its own research and development teams and lab, which resulted in the world's first 360-degree barcode-scanning system. He went on to say... Another significant innovation from KR is QueVision, which is an in-store traffic flow, production system that has reduced the time that customers wait in line to check out from four minutes in 2010 to about 26 seconds today, on average. QueVision is a combination of proprietary software and infrared cameras that are strategically placed throughout the stores. The company subsequently made several tech-related investments and acquisitions. With everybody so focused on AI, some companies are just better, AI or no AI... They've already incorporated AI and all sorts of technology into their operations... and they did so long before the arrival of ChatGPT and all things generative AI. Yes, they'll probably incorporate variations of the latest and greatest AI, but that doesn't mean they're an AI play. It means they're well-run and understand the role technology plays in improving their business. Or, as my friend tweeted... Also a long history of being extremely well-managed (Bernard Kroger, David Dillon, and current CEO Rodney McMullen are all widely considered among the best CEOs in the history of retail). And that's the point... Those are the kinds of companies you want to own. Don't get sucked in by the AI hype. Look for companies that have been ahead of the curve... and likely always will be. I'll note that I'm not recommending shares of Kroger, rather I'm using it as an example. The only research I've done on the company is weekly shopping in one of its stores. Plus, it's in the middle of trying to merge with peer grocer Albertsons (ACI). What's clear from on-the-ground observations and its overall performance is that Kroger is exceedingly well-run. In the end, that's all that matters. --------------------------------------------------------------- Recommended Link: [Overheard at Apple's Secret Meeting...]( A thousand people attended... NO CAMERAS were allowed! One invitee said every iPhone was wrapped with "tamper-proof stickers" to prevent photographs. At the event, Apple unveiled a device that “could eventually replace mobile phones.” Apple codenamed the device "N421"... But Michael Robinson calls it "iPhone Killer." To see how you could potentially profit from iPhone Killer... [Click here before July 26](. --------------------------------------------------------------- Moving on, my recent essay on IBM's (IBM) '[identity crisis]( sparked a few readers to write in... "I would not want to own IBM until I see a strong break out on the upside. If the rest of the world does clutch on, no matter what, then it's a poor buy for any increase value. Yes, I like the dividend but that doesn't get many investors anymore." – Roger S. "The only thing I can remember IBM for was typewriters, copiers, ditto and stencil copiers. IBM Selectric typewriters were the favorite of most secretaries prior to the daisy wheels (which I personally hated). International Business Machines has always been a blue chip to my knowledge, but I have no clue any more what this company's business entails. Same with Xerox." – Cee L. Herb comment: Cee, I spent more than a few years earlier in my career dazzled by the Selectric, when it replaced the old manual Underwoods and Royals in many newsrooms, years before computers. We still had gluepots and still had to cut and paste the old-fashioned way, but it was easier on the fingers. "IBM is a contractor and consultant to governments and businesses world-wide, building and maintaining computer data systems like for air traffic control, NASA, the census, social security, and the IRS. "They were dominant in the computer hardware business for years until other companies beat them out of the minicomputer and peripheral businesses, leaving only supercomputers and software, but their consulting services continued to grow. "Competition is growing in the consulting business, so that area could become tougher. IBM built a huge patent portfolio from their research and development activities, rivaling that of Bell Telephone Laboratories, which they use to drive innovation, collect patent royalties, and cross-license for business protection. "They remain on the cutting edge of scientific invention, producing 3,000 to 4,000 patents per year, more than anyone else, so it is entirely possible that the hardware side of business could become an area of growth again." – Karl S. Herb comment: Karl, to be fair, with all of those patents and innovation I'm still trying to figure out how IBM went from having the "Deep Blue" supercomputer that famously beat chess grandmaster Gary Kasparov to where it is today... viewed as a me-too in a world it dominated. A sustainable turnaround – key word, sustainable – would be one for the books. "IBM makes typewriters. I still have ribbons with red and black while I'm hoping they can pull one out of their archives. Eric is a smart man and a hell of a beach volley ball player." – Paul B. Herb comment: Paul, you're obviously referring to my friend Eric Fry, who writes Fry's Investor Report for our sister company InvestorPlace. (And, yes, I've heard about his volleyball.) He's recommending IBM because, in his view, even a whiff of positive news can cause the stock to jump. It's a big call. Thanks to everybody who wrote in! Regards, Herb Greenberg July 6, 2023 [Get a 60-day, 100% money-back trial to Empire Real Wealth by clicking here.]( --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. 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