Best Seven: Defense, Light, AI, Cyber
finanzers@finanzers
−11.5%
since Oct 10
The idea
I believe AI, photonics, defense, and cybersecurity are tied together: more AI demand means more computing, which increasingly moves on light, while defense budgets shift toward drones and software and every AI system needs securing. This basket holds seven Nasdaq names across those four layers, two picks each in photonics and defense for a bit of spread, one each for AI compute, hyperscale, and cybersecurity, weighted close to even since every position is high conviction. I keep a small cash reserve to add if one of these names drops.
What it owns
- AI data centers are hitting the limits of copper wiring, and companies moving data with light are becoming the constraint in how fast clusters can scale. · Lumentum HoldingsIt makes the lasers that move data with light inside AI data centers, which are becoming a bottleneck as clusters scale, and this holds if demand converts to orders without major price cuts or customer losses., Credo TechnologyIt makes the chips and cables that connect AI servers within and between server racks using light, and this holds as long as cloud companies choose it for new AI infrastructure builds.26%
- Military budgets are shifting toward drones and battlefield software, favoring technology companies over traditional defense contractors. · Palantir TechnologiesIt provides software that helps militaries and large organizations analyze massive datasets with AI, so this position holds as long as government contracts and commercial customers keep growing fast., Kratos Defense & SecurityIt builds low-cost autonomous jet drones designed to operate alongside fighter pilots, and this position holds if drone programs continue getting funded and test flights convert to production orders.25%
- It builds its own AI chips and models while operating a major cloud business, so it both invests in AI and earns from it across multiple revenue streams. · AlphabetIt builds its own AI chips and models while operating a major cloud business and search engine, so it both invests in AI and earns from it across multiple revenue streams.14%
- Companies deploying AI need to secure it, and security budgets are rarely cut even in downturns, making this a durable spending category. · CrowdStrikeIt sells the security platform that many companies already use to protect their AI systems, and this holds as long as subscription revenue keeps growing and customers add more of its products.14%
- It supplies the chips that power most AI models, and this position holds as long as spending on those chips keeps growing faster than custom alternatives. · NVIDIAIt makes most of the chips that power AI computing, and this position holds as long as spending on those chips keeps growing and custom chips from cloud companies remain a small portion of the market.14%
- Cash7%