The stock market has taken a beating thus far in March, with the S&P already down 8.6% from its February peak. Worse yet, all the major indexes have fallen back to their pre-election levels.

Not surprisingly, this has led to a rising tide of pessimism about the market and the economy, including increased fears that the U.S. may soon fall into a recession.

That anxiety is clearly seen in the Cboe Volatility Index, commonly known as the stock market’s “fear gauge.” As of March 11, it’s up 62% for the year.

However, Yardeni Research, a respected investment strategy consulting firm, is more optimistic and suggests that investors take a longer-term view.

Betting on the Resilience of the U.S. Economy

As the firm said in a note released in the second week of March, “We continue to bet on the resilience of the American economy. We expect that pro-business policies, as they emerge, will boost longer-term confidence, allaying short-term uncertainties related to Trump 2.0.”

Much of the blame for the market’s woes is falling on President Trump’s tariff policies and the uncertainty they have created.

According to Tom Essaye of the financial research firm Sevens Report Research, it’s not the tariffs themselves that are causing all the trouble. He says it’s “the sort of just complete chaotic, whiplash-infused, seemingly directionless policy. That’s the issue.”

Michael Arone, chief investment strategist at State Street Global Advisors, echoed those concerns saying, “Many investors support the president’s pro-growth business agenda, but the administration’s frenetic approach to policymaking is unsettling.”

President Trump: “What We’re Doing is Very Big”Another factor is the President’s apparent willingness to accept a recession as the price to be paid to bring America back from the brink of disaster. On Fox News’s “Sunday Morning Futures,” President Trump told host Maria Bartiromo that the U.S. should expect a “period of transition” as his policies take effect.^[1]

And indeed on February 28, the Federal Reserve Bank of Atlanta’s GDPNow model forecast a 1.5% contraction in real U.S. gross domestic product in the first quarter of 2025.^[2]

The president’s willingness to accept the possibility of a recession took many by surprise. As Sevens Report Research’s Tom Essaye told Barron’s, “It appears that the administration has a higher pain tolerance than perhaps the markets assumed initially.”

However, like Yardeni Research, the President is taking a long-term view, telling Bartiromo, “What we’re doing is very big. We’re bringing wealth back to America. That’s a big thing… it takes a little time, but I think it should be great for us.”

Expect a Rally in the S&P

For its part, Yardeni is bullish on the economy and the markets. It says there is only a 20% chance of a recession and an 80% chance of “outcomes that are bullish for U.S. stocks.”

Yardeni’s optimism is shared by Neil Shearing, group chief economist at Capital Economics. According to Shearing, “While the outlook has clearly soured, we think fears that the global economy is on the cusp of a major slowdown are overdone.”

Capital Economics does expect U.S. economic growth to slow to between 1.5% and 2% in 2025. This is “weak by U.S. standards,” according to Shearing, but it’s “well above the rates of growth experienced in Europe.”

Furthermore, Capital Economics expects “a renewed tech-led rally in the S&P 500 over the course of this year.”

This optimism is shared by investment advisory firm DataTrek Research, which while noting the market’s current problems in a note, also says, “we are in the bullish camp on this point, and remain positive on domestic large cap equities.”

The bottom line is despite turbulence in the financial markets, investors would be well served to avoid succumbing to short-term fears and to take a long-term approach instead.

Investors who are able to weather the current volatility may ultimately find themselves well-positioned when optimism returns to the markets in the months ahead.

The stock market has been in turmoil for the last two weeks thanks to uncertainty about the President’s trade policy… followed by widespread surprise at the extent of Trump’s trade war, as he announced higher tariffs on friend and foe alike.

Since its February 19th peak, the S&P has fallen more than 17% — wiping out trillions of dollars in wealth in just a few weeks and taking the S&P back to nearly 10% below where it stood on the day Trump was elected.

Despite the market’s collapse, the President has said, “I’m not even looking at the market.” He and his advisors believe the pain investors are enduring will be short-lived and more than made up for by a market boom that will follow a reset of global trade agreements.

The President Cares More Than He’s Willing to Admit

However, some financial experts are skeptical that the President doesn’t care about the stock market’s performance.

Take Tom Lee, the co-founder and head of research at Fundstrat, an independent financial research firm. Lee is famous for his near spot-on forecasts of where the S&P would finish in 2023 and 2024.

In a message to his clients, Lee wrote, the “market fury is not due to a reaction to a trade war, but rather, in our view, the fact the White House broke a core covenant of capitalism — stable and predictable regulatory environment.”

According to Lee, Trump wants the market the rally in order to validate how he’s handling global trade. He also needs public support, which according to some polls is beginning to wane.

Furthermore, a market crash could also have the potential to help cause a recession, which is the last thing Trump wants.

Declining Market Could Cost Republicans Control of Congress

Also important is a rising fear that if the President’s policies don’t get fast results, the Republicans could lose control of Congress in next year’s mid-term elections.

That’s exactly what happened to Republicans following the McKinley tariffs of 1890 and the Smoot-Hawley Tariff in 1930.

In the 1890 mid-terms, Republicans experienced a landslide defeat, losing nearly half of their House seats.

In the 1932 elections that followed the enactment of Smoot-Hawley, Republicans lost control of both houses of Congress. And both Senator Reed Smoot and Representative Willis Hawley lost their seats.

The fallout from Smoot-Hawley is especially galling to Republicans as it helped usher in decades of dominance by the Democratic Party.

It seems unlikely President Trump is willing to risk that kind of legacy for himself.

With that in mind, Lee expects the President to moderate or even reverse his trade policies if the market continues to fall.

O’Leary: “Everybody’s Willing to Cut a Deal”

And he’s not alone. Billionaire “Shark Tank” star Kevin O’Leary believes the tariffs are part of a larger negotiation package and that the President will quickly negotiate his way towards removing or reducing them.

As O’Leary told Fox Business, “I believe in economics driving everything at the end of the day, and I don’t think the Trump administration is stupid. They know they’ve gotta start negotiating deals and show the world what the outcome of this is gonna be.”

As a result, O’Leary expects U.S. trading partners to race to the negotiation table. As he put it, “Everybody’s willing to cut a deal.”

Meanwhile, influential voices such as Lloyd Blankfein — former Chairman of Goldman Sachs — is urging the President to delay the tariffs by at least six months to provide adequate time to negotiate new and better trade deals.

He’s been joined in his calls for a tariff pause by billionaire hedge fund manager Bill Ackman — who supported Trump’s 2024 campaign, and has taken a great deal of heat for doing so.

The Commerce Secretary’s Head May Already Be on the Chopping Block

According to FundStrat’s Tom Lee, the President may already be laying the groundwork for pulling back. And he may even have a fall guy if the markets continue to tank.

Lee cites a report from Politico saying that, according to White House sources, Commerce Secretary Howard Lutnick — an especially loud supporter of the tariffs — could be poised to take the blame.

Insiders reportedly blame Lutnick for the unexpected severity of the tariffs, which go beyond anything Wall Street expected.

The bottom line is that even if the President’s trade policies continue to tank the stock market, he will eventually reverse course, either because he is successful at negotiating new trade agreements or simply out of political necessity. And that could be sufficient to send the market soaring to new highs in the months ahead.

The bogeyman of AI stocks has been summoned.

In late January, Chinese artificial intelligence company DeepSeek released an open source Large Language Model rivaling OpenAI’s ChatGPT, Google’s Gemini and Meta’s Llama.

The LLM, which was supposedly developed in only a few months with a budget under $6 million, is significantly more efficient than competitors and, consequently, 20 to 50 times cheaper to use than OpenAI’s o1 model.

The stock market’s reaction to the DeepSeek release was immediate, and, for a hot minute, there was blood in the streets on stocks even tangentially related to AI.

Tech darling Nvidia’s (NASDAQ: NVDA) shares plummeted nearly 18%, marking the largest single-day loss in its history and setting a new record for the biggest one-day loss for a single company in U.S. stock market history, erasing approximately $465 billion from Nvidia’s market cap.

The day’s other big losers included Vistra Corp (NYSE: VST), an electricity generation conglomerate with significant nuclear power holdings, and Arista Networks (NYSE: ANET), a purveyor of (among other things) cloud networking services for large AI data centers.

As if that wasn’t enough for the poor, beleaguered markets …

… after a small bounce back, additional volatility hit the market later that week as President Trump announced tariffs on trade with Mexico, Canada and China.

The tariff threat was later rolled back (for now) … but many retail investors are still reeling from the amount of uncertainty injected into the markets in a relatively short period.

So what’s the best way to take advantage of the trend?

3 Ways to Play a Crazy Market

If you’re looking to protect your portfolio while still capturing upside, you have a few options.

1. Defend

When markets get choppy, stable, dividend-paying stocks could help smooth out the ride.

Companies that sell essential products or services like food, beverages, and personal products tend to weather stock-market hurricanes with a reassuring stability.

Johnson & Johnson (NYSE: JNJ) is a classic example. With its mix of pharmaceuticals, medical devices, and consumer health products, JNJ has reliably provided investors with a port in the storm for decades.

Plus, with a 3% dividend yield and a low beta of 0.55, it provides reliable income and lower volatility — an excellent safe harbor in turbulent times.

Another “classic” example would be one of Warren Buffett’s favorite investments — Coca-Cola (NYSE: KO). This beverage behemoth has provided Buffett with stunning returns in the vicinity of 2,437% over the last few decades … while providing up to $700 million in dividends annually.

Neither stock dramatically outperforms the S&P until you zoom your chart out to 30+ years … but then again, the S&P doesn’t pay dividends.

If you are looking for longer-term, reasonably reliable gains while also receiving an income from dividends, playing “defense” could be a good strategy for your portfolio.

2. Parry

In fencing terms, a “parry” is a move that both defends and sets up for an attack … and that might be just the right move for a certain type of investor when the market’s going nuts.

This type of investor might consider using that volatility to their advantage by “buying the dip” when a high performing stock with solid fundamentals suddenly lurches downward.

In the DeepSeek panic noted above, several solid companies plunged more than 15% … but a few days later two of the three had rebounded as much as 20% from trough to peak.

Investors who kept their wits about them during the chaos of trading on January 28 had the opportunity to pick up some well performing, large cap stocks at a pretty decent discount and see an immediate ROI.

This is a more aggressive play, so be cautious as you are doing your due diligence on a potential investment; more than one investor has bled trying to catch a falling knife.

3. Attack

The most aggressive play — the high risk, high reward option — is to lean into the volatility and try to seek out an aggressive growth stock in the sector that’s primed to deliver outsized returns.

For example, President Trump’s outspoken desire to unleash American energy as a tool for American prosperity has the potential to dramatically affect the domestic oil and gas landscape.

His “Drill, baby, drill!” rhetoric hasn’t yet moved the needle for major producers like Chevron (NYSE: CVX), Occidental Petroleum (NASDAQ: OXY) or ExxonMobile (XOM) … but some smaller producers like Prairie Operating Co. (NASDAQ: PROP) have seen dramatic double-digit stock growth over the last month.

The growth isn’t the only thing dramatic about Prairie’s chart. The more observant readers will notice that the swings between company’s peaks and troughs are significantly larger than the bigger producers … but in that volatility lies the potential for what could be explosive growth.

Warning: Math Ahead

As of this writing, the stock is sitting around $8.60 with a $197.38 million market cap. The company released a 2025 EBITDA forecast between $100 million and $140 million and capex estimated at roughly $100 million for 2025. Additionally, the company has relatively low debt.

Based on a valuation formula called the Enterprise Multiple, some back-of-the-napkin math indicates that the company is currently trading at a 1.58x-2.21x multiple.

What does this mean?

It suggests that PROP is potentially undervalued compared to its peers — trading at a relatively low multiple compared to the broader oil and gas industry, which typically sees EV/EBITDA multiples between 4x and 8x.

If the company’s stock starts trading more in line with the industry average, the market cap could shoot up anywhere between $396 million to $1.096 billion.

That’s a huge range … and it’s not guaranteed that Prairie will ever hit those lofty heights.

But with Trump shouting from the rooftops that American energy is going to see a renaissance … this company could potentially be an aggressive investor’s vehicle to fairly significant returns.

The bottom line?

No matter how you choose to play market turmoil — defend, parry or attack — volatility isn’t necessarily something to fear …

… It’s something you could potentially profit from.

Make a plan, do your due diligence, then execute.

Famed investor Cathie Wood’s ARK Invest made headlines earlier this week with a significant adjustment to its portfolio, notably selling off its holdings in small module reactor (SMR) tech company Oklo Inc. (NASDAQ: OKLO).

Oklo, a nuclear power startup backed by OpenAI’s Sam Altman, has surged recently, rising 20% to $31.25 on January 21 and an additional 6.6% to $33.27 early on January 22.

The company is up as much as 311.65% over the last six months, blowing away competitors in the uranium and nuclear energy space as well as indexes like the S&P.

Nuclear power start-up Oklo Inc. has outperformed the market over the last six months, handing certain investors significant returns. Source: Barchart.com

Notably, at the same time Wood was locking in her profits with Oklo, ARK Invest increased its position in Cameco Corporation (NYSE: CCJ), one of the world’s largest uranium producers.

It’s surely no coincidence that this repositioning happened a day after President Trump announced a potential $500 billion private sector investment to fund infrastructure for AI, including a joint venture called Stargate with OpenAI, SoftBank, and Oracle.

This AI infrastructure initiative is expected to dramatically boost electricity demand, with tech giants looking to nuclear power as an inevitable solution.

That “inevitability” could be why Wood has reconfigured her portfolio away from the explosive but unproven tech company (Oklo) to the staid but profitable commodity play (Cameco).

Though in the same general sector — nuclear energy — the two companies are an exercise in contrast.

Despite making certain investors a tidy profit with its triple-digit stock price growth, Oklo is pre-revenue and has no definitive sales agreements as of the time of this writing. And though the company’s investor materials note that it is making good progress toward its goals, it is still burning cash at the rate of approximately $24.9 million a year.

Compare that to uranium giant Cameco — a far more established company that is revenue positive (to the tune of $2.8 billion in the most recent fiscal year) with a profit margin of about 4.17%.

ARK Invest’s nuclear shuffle could simply be an exercise in locking in profits from a higher risk, higher reward investment then reallocating to a lower risk investment that still has the potential to outperform the market in general, as Cameco has done over the last 2-3 years.

But it is interesting to note that the strategy involves moving away from a specific technology and toward a company that is going to fuel that technology.

By way of analogy, it could be akin to selling Ford or GM in favor of investing in the one thing both companies’ products need: gasoline.

Oil and gas companies like Exxon and Chevron have provided investors with significantly more attractive returns over the last 35 years than automotive stalwarts like Ford and GM. Source: Barchart

ARK Invest’s partial divestment of a nuclear reactor tech company in favor of a uranium producer could be an exercise in risk reduction … or it could be a sign that Wood expects uranium producers to break out sooner rather than later.

Either way, one thing is for sure: One of America’s most famous investors appears to be bullish on the country’s nuclear future.

Walgreens is a dog…

In fact it’s been a dog for the better part of ten years now.

Walgreens Boots Alliance (WBA) – Monthly

In 2024, it earned itself a spot in the annual “Dogs of the Dow” portfolio. And it was, in large part, the reason that portfolio underperformed, losing 3% while the average as a whole was up nearly 13%!

The company lost over 64% on the year.

It’s lost just over 90% of its value since mid-2015.

The reasons for its tale of woe have been developing for a number of years and basically boil down to two factors: bad business decisions and struggles within the industry.

But it, like some other once-big names, has come to realize the error of its ways and is working to make a turn around.

Can they make it happen?

The Struggling Fall from Grace

The bad business decisions started all the way back in 2020 when Walgreens invested $6 billion for a majority ownership stake in a doctor-staffed clinic operator called VillageMD. The strategy followed an industry trend connecting medical service providers to pharmacies to create one-stop health solutions.

The plan was, “to open 500 to 700 “Village Medical at Walgreens” physician-led primary care clinics in more than 30 U.S. markets over five years.”

Business did not grow as projected. In the first three quarters of 2024, Walgreens’ operating loss grew to $13.1 billion.

A bigger issue, however, has been one that’s hitting the whole industry… getting paid.

In the drug business, the vast majority of prescriptions are paid for by insurance rather than customers directly. To that end, insurance companies hire “middlemen” known as pharmacy benefit managers (PBMs) who negotiate discounts and rebates from drug manufacturers and then set prices with pharmacies.

The PBM industry, dominated by three companies (all owned by insurance companies), exerts a huge amount of pressure on the pharmacy industry. And its been doing so for — wait for it — the past 10 years. About as long as Walgreens has been taking it on the chin.

According to reporting:

The reimbursement pressure that Walgreens experienced can be seen in its U.S. retail pharmacy gross margin, which fell from 28.2% in fiscal year 2014 to 17.9% in fiscal year 2024, ended in August.

That’s a problem.

Is a Turnaround in Progress?

In the face of talk that it could be bought out by a private equity company, Walgreens has been taking some serious steps to right this ship…

Plans to expand have been sharply curtailed and as newly-installed CEO Tim Wentworth informed the market:

“We believe in the future of these businesses and intend to remain an investor and partner [in VillageMD], but as part of our persistent focus on value creation for WBA, we are collaborating with leadership toward an endpoint to rapidly unlock liquidity and enhance optionality and position them for additional growth.”

Understanding the need to cut bad investments is always a good first sign of a serious turnaround. But in addition, the company is also slashing internally:

The company said last quarter that it surpassed its goal of reducing expenses by $1 billion and announced a plan to shutter nearly 14% of its store locations. It will close 1,200 of its 8,700 stores that it said are unprofitable over the next three years, including 500 stores in fiscal 2025, which ends in August.

Again, early signs are promising.

Last week, Walgreens reported its first quarter earnings (ending Nov 30) and gave Wall Street a pleasant surprise.

EPS came in at 51 cents vs. the street’s estimate of 37 cents. Revenue was a huge beat as well coming in at $39.46 billion vs. $37.36 billion.

That was the good news. The less than glowing news was that the company didn’t change their earnings outlook for 2025. Nor did they include sales guidance in their report. (Last October they guided at $147 billion to $151 billion for FY 2025.)

Still, you gotta take your good news where you can.

And the market did.

Walgreens Boots Alliance (WBA) – Daily

How they deal with the issue of reimbursement will remain to be seen.

But for now, WBA may be worth keeping an eye on.

It’s a sad commentary on the state of the US economy.

We wrote about it in an earlier post…

Not so long ago, when the US economy was a value-based engine, the stock market could be considered a decent measure of economic activity.

Manufacturing companies who produced and sold more products earned more money. And investors in those companies were rewarded with higher share prices and often dividend payouts.

Everyone’s a winner.

Today we no longer live in a traditional value-based economy. Sure, we have industries that produce stuff that’s sold here and around the world. But more and more that continues to change.

Today, and for the past roughly 50 years, the stock market has turned from a measure of an industrial economy into a tool of financial elites.

A means to make money from money. Period.

The latest chapter appears to have finally hit home.

A Shadow of Its Former Self

Originally formed in 1901, US Steel (X) became the first $1 billion company and was one of the key drivers of the US’ global economic dominance during the era.

Global advances in steel production technology, however, soon saw US Steel’s market dominance fade.

In 1991, X was removed from the Dow Jones Industrial Average after 90 years.

Today the company is only one of four major US steel manufacturers and ranks third in both steel production (as of 2023) and market cap. According to Reuters:

U.S. Steel has reported nine consecutive quarters of falling profits amid a global downturn in the steel industry.

And that has come while protective tariffs from the last two administrations have been in force — an attempt to level the price playing field against none other than China who dominates the steel production industry today.

Over a year ago, however, a major suitor turned up knocking on US Steel’s door. Nippon Steel (NPSCY), Japan’s largest steel producer made an overture to acquire US Steel and in December 2023 a tentative deal was announced.

Nippon Steel bid $14.9 billion for a company that’s only worth $6.9 billion today. They also offered, “a last-ditch gambit to give the U.S. government veto power over changes to output.”

No luck…

Just last week, President Biden officially blocked the acquisition citing national security concerns. (Full disclosure: President-Elect Trump promised to do the same thing.)

US Steel stock dropped 6.5% on the news. Over the past year, the company is down over 36%.

It’s understandable that the US would want to protect one of its key industries from foreign ownership.

The problem (and sad reality) is the steel industry is not so important in the US anymore.

The other reality is that Japan is a close ally of the US, not an adversary.

Over the past decades, the US has seen the vast majority of its steel producing capability offshore itself overseas. (Not unlike the semiconductor industry.)

Another reality is that to reclaim it today, would be a tall, if not impossible, order.

Given the importance of the industry, maybe some form of “ally-shoring” would be a viable solution to rebuild an industry…

Just Do It…

It’s the slogan that launched a giant.

With inspiring ads featuring the greatest athletes of the day — from Michael Jordan to Bo Jackson to Tiger Woods — they aligned their brand with greatness. And they made greatness accessible to anyone willing to put on a pair of their shoes and accept the challenge.

And after going public in 1980 for a modest $0.18 a share, the company grew to become a sportswear juggernaut, at one point commanding 48% of the athletic shoe market.

But over the past two years, while under the leadership of CEO John Donahoe, those fortunes have taken a turn for the worse. The company’s stock has lost over 50% of its value.

And now Nike seems to be taking its own advice.

Just Doing It

John Donahoe took the reins at Nike in January 2020. After overseeing the company’s post-pandemic bounce to its all-time high share price in 2021 — in large part due to Netflix’s 2020 documentary The Last Dance about Michael Jordan and the Chicago Bulls’ final championship season which reignited a massive demand for Air Jordans — the company consistently lost market share.

Until finally…

June 28, 2024 is a day many Nike employees and shareholders won’t soon forget. It’s when their stock value fell 21 per cent, making it the single worst trading day in the company’s history. This plunge came after Nike released their fiscal fourth quarter 2024 results a day earlier, where the brand announced Q4 revenues were down two per cent and they also expected fiscal Q1 2025 revenue to be down in the double digits at approximately 10 per cent.

Nike took its own advice and just did it.

The company sent Donahoe to the showers and brought in former Nike insider Elliott Hill.

It’s worth noting that Donahoe is only the second “outsider” to lead the company. His unfamiliarity with sneaker culture may have been a factor in the company’s struggles.

A 32-year, career employee with Nike, HIll retired as “president of its consumer and marketplace division where he was responsible for leading all commercial and marketing operations for Nike and the Jordan brand.”

Now with an insider back in charge, the company is hoping to be able to right the ship.

Nike’s Wild Ride (NKE 3-Year Chart)

In a year of high profile CEO moves — Pat Gelsinger out at Intel, Brian Niccol in at Starbucks — Nike has followed suit.

And the prospect for another CEO driven turnaround is in play…

Seems like everything went right in 2024.

The S&P 500 spent the year making new all time highs soaring nearly 30% on the year.

After its major halving event (cutting rewards to miners) Bitcoin powered into the end of the year crashing through the $100,000 level.

And in yet another Festivus feat of strength, the Nasdaq Composite (2,500 shares strong) blasted through the 20,000 level.

In truth, much of this year’s performance in the stock market has been the result of the mega-cap sector: Those trillion dollar-plus market cap companies heavily involved in the AI boom. If you factor out their weighting in the S&P 500, the index’s performance on the year is cut by about half. (It’s only up about 15% which is more in line with the small-cap Russell 2000 has done.)

But alternate measures aside, the AI sector is booming and appears it will keep booming for the foreseeable future.

This week’s stock spotlight is on one of those drivers.

The Boom in Broadcom

Broadcom Inc. (AVGO) is one of the tech stocks that’s muscling its way into the Mag-level club having just eclipsed $1 trillion in market cap.

Broadcom is involved in both the semiconductor industry as well as infrastructure software — namely software in the cloud computing biz.

Last week, AVGO released its fourth quarter earnings. CNBC reported:

Broadcom reported better-than-expected fourth-quarter earnings on Thursday and said artificial intelligence revenue for the year more than tripled.

AI revenue had reached $6 billion from less than $2 billion at the beginning of the year.

Add to that the fact that revenue from its chips segment also grew 12% year-over-year and you’ve got a damn hot stock.

Broadcom Inc. (AVGO) YTD

The market literally stampeded on board. And this is no doubt excellent news for the company.

But there are two things investors should take note of.

First, you can see a similar gap higher back during its June earnings release. Prices followed through for a couple sessions, but then consolidated over 20% lower, testing the stock’s 200-day moving average.

The other thing you’d want to look at is the company’s valuation at current levels. At these post-gap prices, shares are trading at a P/E of 195. (That means you’re paying $195 for every $1 of earnings.)

A lot of tech companies have gotten pretty heady in the past. But things have settled to more realistic valuations. META’s P/E is only around 29. MSFT is only 36. Even the big dog in the AI pack — NVDA — is only sporting a P/E of 53.

Broadcom has moved into some lofty valuations.

And while the future may be bright for this newly minted $1 trillion behemoth, investors might do well to exercise some patience when looking at it.

What a week for tech stocks.

A sci-fi-level technology known as “quantum computing” is fast becoming a reality, and certain stocks in the field have seen explosive gains in the last week.

Quantum computing is based on the science of quantum mechanics — a theory in physics that deals with our world at the subatomic level. And things at the subatomic level operate a little differently than we understand them.

Where bits in the observable world are only 0’s or 1’s, bits in the quantum world (also known as “qubits”) can be 0’s, 1’s or 0’s and 1’s simultaneously.

If that concept makes your head spin, don’t worry about it; you don’t have to completely understand a new technology to potentially make a ton of money investing in it.

You can bet that most early IBM investors didn’t know exactly how its revolutionary, world-changing microprocessor technology worked … but those investors were able to see extraordinary gains as computing took over the world.

This new quantum computing tech has the same world-changing potential (maybe even more) as the microprocessor — and this rapidly developing technology is leading to some exciting opportunities for investors.

Here are three ways to play the trend … plus one bonus “sleeper” play for investors looking for aggressive growth potential.

Quantum Play #1: The 800-Pound Gorilla

For investors interested in doing some more due diligence in the area of quantum computing, here are three places to look for opportunity.

For those looking for the safest play in this up and coming field, look no further than Google (GOOG).

Google has been at the leading edge of quantum computing for years. And recently they just announced a major breakthrough in their technology.

One of the challenges that comes with this new quantum tech is the ability to scale it. Adding more and more qubits to a process increases the number of errors that are likely to occur. (This has been a challenge in the field since 1995.)

It appears that Google has finally designed a breakthrough with its latest quantum processor known as Willow. According to an article in Nature Magazine…

Researchers at Google have built a chip that has enabled them to demonstrate the first ‘below threshold’ quantum calculations — a key milestone in the quest to build quantum computers that are accurate enough to be useful.

“Below threshold” calculations drive the number of errors down, while scaling up the number of qubits processed.

According to a recent blog post by Hartmut Neven, the founder of Google Quantum AI:

Willow performed a standard benchmark computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion (that is, 10²⁵) years — a number that vastly exceeds the age of the Universe.

You read that right. Willow did in five minutes what it would take the most advanced supercomputer today 10,000,000,000,000,000,000,000,000 years to do.

And it did it while reducing the number of errors that occurred.

Needless to say, this is a HUGE breakthrough for Google.

Quantum Play #2: Leveraging Light Waves

For those looking for a more aggressive play, look no further than what’s becoming the hottest quantum stock in the market today… Quantum Computing Inc. (QUBT).

While Google is busy scaling, QCi has been attempting to carve out its own niche in the quantum field using a technology known as thin-film lithium niobate (TFLN) chips that leverage nonlinear quantum optics.

That’s a mouthful, but what it basically means is that QCi’s technology uses light to generate qubits. Where a computer today can only understand bits where a light is on or off, qubits generated from light can act like a dimmer switch. They can be on, off or anything in between. Nonlinear quantum optics is the science that allows their technology to create and work with these qubits.

While the company is relatively small — its market cap is only around $2 billion — it has recently announced multiple orders for their tech.

The first came from an unnamed “prominent research and technology institute based in Asia.” A week later they announced a second purchase order from the University of Texas at Austin.

And even more recently…

While the specifics of the orders weren’t completely clear in the press releases, the company’s share price exploded over 1,100% in the last month on the news.

Quantum Play #3: The Wild Card

Investors interested in more of a pure quantum play could look into Rigetti Computing (NASDAQ: RGTI).

The California-based quantum computing pioneer had a lot to be thankful for in late November as its stock popped following news that it had raised $100 million in a direct offering.

And that wasn’t the only good news coming out of Rigetti this year. It also announced that it had installed a 24-qubit quantum computer in the UK’s National Quantum Computing Centre.

As of this writing, the company’s stock is up more than 928.85% over the last 6 months, but analysts are mixed as to whether Rigetti is hitting a roof or if the company still has room to grow.

But with $100.5 million in cash reserves, growing partnerships worldwide, and fresh interest in its industry-leading quantum services, Rigetti could make a very compelling investment opportunity for the right investor.

Bonus Play: The Quantum “Sleeper”

Finally, if you’re an investor with a bit more risk appetite looking for an under-the-radar small-cap company that’s targeting a critical area in the quantum field, you might want to investigate Scope Technologies Corp. (OTCQB: SCPCF; CSE: SCPE).

Scope Technologies is a Canadian-based company that has developed, among other things, quantum-proof encryption technology.

This is no small area when it comes to the prospects of quantum computing. The prospect of calculating at quantum speeds offers the potential for amazing benefits. But it also brings with it the potential for enormous threats.

Consider what Google’s Willow chip just did — it performed a benchmark calculation in five minutes that an advanced supercomputer would take 10 septillion years to do.

Now think of that in terms of today’s computer security.

Cybersecurity company Hive Systems created a table estimating how long it would take a sophisticated hacker today to crack passwords of various lengths and complexities…

The bottom right corner shows the strongest password combination would take roughly 26 trillion years to beat.

That’s probably two-and-a-half minutes in Willow’s quantum time.

As the power of quantum computing becomes more and more mainstream, the need for equally powerful cyber defenses will skyrocket.

Streetlight Confidential Senior Editor Tim Collins has put together an in depth research report on the topic that you can access here.

Scope Technologies is a small firm — only about $45 million as of this writing — and, unlike the other stocks listed above, its stock hasn’t seen a ton of upward momentum yet. But the company has great potential in an area that will be more and more critical as this technology evolves.

AI may be the tech darling of the day, the future of tech (and investors’ bottom lines) is shaping up to be in the quantum realm.

Washouts happen.

But ultimately they can be for the good.

Take Cisco Systems.

Back during the 90s tech boom, Cisco exploded becoming priced so far ahead of its earnings, that after it got its bubble comeuppance it never regained its previous highs. Still, the company bounced back, grew steadily and in early 2011 began paying a dividend. It went from being a superstar growth stock to a reliable dividend payer.

Cisco Systems (CSCO)

And while the company still hasn’t rebounded all the way to its all-time high, it has experienced a solid bullish trend from its lows.

Cisco is now a good stock to own.

Today, another of the pandemic darlings may be getting ready to rise from the ashes.

Is Zoom Ready to Boom Again?

Zoom Communications (ZM) — formerly Zoom Video Communications (more on that in a second) — could be repositioning itself to a similar end.

During its pandemic heyday, it was adopted as a major growth stock — a company with massive growth potential. It traded from an IPO value of around $63 to a staggering $550-plus in a matter of months.

A little too far out over its skis, the company crashed back to reality.

These days, however, the company has been performing well financially. Its most recent earnings report saw the company beat estimates on both earnings per share ($1.38 vs. $1.31 estimated) and revenue ($1.18 billion vs. $1.16 billion).

Its bottom line numbers also showed some significant improvement as well: $207.1 million up from $141.2 million in the same quarter a year earlier.

Surprisingly, the stock sold off on the news.

But the company recently announced a major shift in its business direction. It dropped the word “Video” from its company name to signal its expansion into the field of AI.

In reaction, the company is introducing a number of artificial intelligence (AI) features. It recently unveiled its AI-first Work Platform designed to help enhance interaction and productivity through AI tools. This includes its Zoom AI Companion 2.0, an AI assistant that can perform tasks such as summarizing conversations, identifying action items, and helping compose messages.

And the company has plans to introduce more AI-driven features, designed to target specific industries.

Leveraging AI functionality in their software could be a critical move in an age of exponentially growing digital data.

Zoom Communications (ZM)

While it may never see its lofty all-time highs again, Zoom could be rebuilding for a Cisco-style comeback.

And it may now be a stock worth watching…