In the AI era, the biggest investing mistake may be assuming today’s leaders will still dominate tomorrow.
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Hello, Reader.
If you were to compare human beings to companies, there aren’t many similarities to hang your hat on.
For starters, we are, obviously, alive, and companies are not.
However, companies are living, breathing organisms – they just so happen to subsist on a steady diet of market-share gains and/or expanding profit margins.
And also much like us fragile humans, companies enjoy a lifetime of indeterminate length. But their lifespans do eventually come to an end.
Most investors ignore or overlook this important reality. They tend to think of their core investments as “forever stocks.”
But that sort of perspective can be a dangerous one – especially now that artificial intelligence is running amok in the global economy. AI will conquer and replace established companies that may seem indomitable today, if not immortal.
That’s the process an Austro-Hungarian economist by the name of Joseph Schumpeter called “creative destruction”… and it is an inescapable facet of economic lifecycles.
As investors, therefore, we cannot afford to bemoan new technologies like AI; we must embrace them. Companies will come and go, whether we like it or not.
Take Blockbuster Inc., for example. It was the king of the hill in the movie rental business. But then along came rental channels that provided a measure of efficiency, like when Netflix Inc. (NFLX) began offering DVDs by mail.
So, at my flagship service, Fry’s Investment Report, our mission is to cozy up to the up-and-comers and steer clear of the down-and-outers.
Unfortunately, because the process of creative destruction resembles a chaotic war zone, we cannot always identify the winners or the losers immediately. But there’s an essential two-part test that can help cut through the fog of war to provide clarity and insight, long before the hostilities end.
The test relies on one word: efficiency.
Since the process of creative destruction is a war of efficiency, the creator-victors of this war either develop and market efficiency gains or put them to use. The “destroyee”-victims do not.
It is the secret sauce that converts upstart companies into world dominators.
Recent geopolitical events, such as the ambiguous U.S.-Iran peace deal over the weekend, which have caused confusion about when the Strait of Hormuz will open, highlight the importance of efficiency. Companies that quickly adapt or secure their supply chains using advanced technologies like AI will become victors.
So, when analyzing new investment opportunities or evaluating existing positions in your portfolio, ask yourself these two questions…
- Is this company introducing a significant efficiency boost, relative to the established, market-leading product or service?
- Is this company applying new technologies to boost the efficiency of its operations?
If the answer to either question is “Yes,” congratulations – you’ve probably got a creative winner on your hands.
If the answer to both questions is “Yes,” you’ve definitely got one.
The inverse is also true, of course. Companies that elicit a “No” answer to both questions are heading for the “destroyee” side of the creative-destruction spectrum.
Efficiency gains do not always show up immediately in financial statements, but they do appear eventually in various ways: expanding profit margins, a growing market share, rising revenues, or all of them at once.
This wide array of efficiency gains is evident in our Fry’s Investment Report portfolio.
They’re from companies that could profit enormously as they deploy AI technologies across their operations and potentially see gains not unlike those of companies that put internet infrastructure to use in the dot-com era and went on to dominate the global economy.
Click here to learn about my favorite companies that are growing most efficiently in today’s market.
Now, let’s take a quick look back at what we covered here at Smart Money last week.
Smart Money Roundup
Three Reasons Why Louis Isn’t Chasing SpaceX… and What Investors Should Do Instead
June 14, 2026
An early investor in SpaceX, like Ron Baron with his $22 billion pre-IPO investment, is likely to profit from the company’s recent IPO. However, this doesn’t necessarily mean that buying SpaceX stock is a good decision for you.
In Sunday’s guest essay, Louis Navellier goes over what history tells us about the risks of IPO bets, why the lack of data should signal you to stay away, and more. Click here to read the full issue.
Nvidia Returned 30% Last Year, but This Stock Could Return 1,000%
June 13, 2026
setting new records and showing potential for at least another 30% upside, I believe investors can find better opportunities. I’ve shifted my focus away from semiconductor and data center stocks and am now exploring third-wave AI companies: “Enablers.” Continue reading to learn about one of my favorite little-known energy companies supporting the AI expansion.
Cisco Did It in 2000, and These Four Stocks Could Do It Next
June 11, 2026
With nearly 50 years of investing experience, InvestorPlace Senior Analyst Louis Navellier has witnessed the market’s evolution from the PC revolution to the internet boom and now to the AI buildup. This long history provides him with a unique perspective on how these changes have shaped AI investment strategies today. On Thursday’s Smart Money, Louis highlights four companies he believes will be winners of the AI infrastructure surge.
Everyone’s Chasing SpaceX, but We’re Going After Something Better
June 10, 2026
SpaceX may be an impressive catch, but it’s not guaranteed to be a smooth or profitable journey. I believe the opportunity for the astute speculator lies elsewhere – in the companies doing the unglamorous, essential work that makes space travel missions possible.
As SpaceX’s IPO headlines capture investors’ attention, let’s dive into why investing in companies downstream of SpaceX is a better choice than buying a stake in the IPO itself.
Looking Ahead
As conflict in the Middle East persists, with peace agreements fluctuating and oil fortunes in flux, one thing remains clear: the rapid progress of AI.
This week, I’ll explore how the current forces of AI and oil are creating unique investment opportunities in the energy sector. Then, I’ll highlight a specific area within the sector poised for significant gains.
Make sure to stay tuned to your inbox.
Regards,
Eric Fry
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